Indian tech firms are growing frustrated with Google’s expansive power on their home turf.
On Sept. 28, Google announced a new global policy that would require app developers on its Google Play Store to use Google’s billing platform starting in September 2021. The policy effectively closed a loophole that allowed some developers to use alternative, non-Google payment systems for digital purchases on Google’s app store.
In a statement, Google said that the “clarification will not affect the vast majority of developers with apps on Google Play” given that 97% of developers on the store already use Google’s billing system.
In India, where Google dominates the market for smartphone operating systems, tech firms saw it differently.
They decried the policy as an example of Google’s monopolistic power, with Paytm, a digital payments app and India’s largest tech unicorn, taking the lead in criticizing the American tech giant.
“[Google is] talking about taking billions of dollars from tech startups of this country,” Paytm CEO Vijay Shekhar Sharma told Indian newspaper The Economic Times. Sharma called Google’s 30% commission on purchases a “Google Tax” that underscores its “monopoly.”
“How can someone other than the government announce a tax in this country and give businesses one year to comply?” Sharma asked.
On Monday, Google said that it will delay enforcement of the policy in India until April 2022 even as the policy takes effect in the rest of the world in September 2021.
“We are setting up listening sessions with leading Indian startups to understand their concerns more deeply,” Purnima Kochikar, director of business development of games and applications at Google Play, said in a blog post. Kochikar said Google pushed back the policy’s implementation to “clear any additional questions” and ensure that Indian developers had enough time to make changes.
Google has near total control of smartphone platforms in India, since its Android operating system and Play Store are used by roughly 95% of India’s smartphone users. The second largest operating system in India is the iOS system from Apple, a company that has long struggled to make headway in the Indian market.
Sharma told The Economic Times Google’s decision to delay was an admission of “guilt.”
In a note to Fortune, a spokesperson for Google did not directly respond to Sharma’s allegations and pointed toward Kochikar’s post.
This not Sharma’s first run-in with Google. He’d complained about its power in India after Google temporarily pulled Paytm’s app off its Play Store in India for allegedly violating Google’s online betting policies in late December. Sharma said Google acted “arbitrarily” in the matter while Google said its policies are “consistently” enforced.
And Sharma clearly sees the tech community’s rift with Google as an opportunity.
On Monday, his firm Paytm announced that it is launching its own mini-app store ecosystem to compete with Google’s Play Store.
Sharma said in a statement that the new app “empowers our young Indian developers” and enables customers to use “their preferred payment option.” He said over 300 firms including Indian companies like ride-hailer Ola, food delivery company FreshMenu, and online pharmacy Netmeds had already signed on to making mini-apps, though the companies have not pulled their apps from Google’s platform.
Indian technology research firm MediaNama said in a post that the “mini-app store” is similar to a mini-app initiative Paytm launched back in July. Paytm’s fresh announcement of the program this week, however, portrays it as a direct rebuttal to Google, which blocks alternative app stores on its platform.
“The politics of the situation here is that this is Paytm throwing down the gauntlet to Google,” MediaNama notes.
Meanwhile, Paytm and other Indian tech companies are reportedly drafting a set of recommendations they will present to the Indian government in the coming weeks that are aimed at limiting the power of Google and other American tech giants in India. In early October, 56 tech startup founders reportedly talked over Zoom specifically about how to curb Google’s influence in the country.
In India, Google is already facing an antitrust investigation over its payment platforms on Android. The probe follows a slew of European Union probes into Google that included the EU fining Google $5 billion in 2018 for anticompetitive behaviors on Google’s Android operating system and Play Store. After the EU fine, Google CEO Sundar Pichai issued a statement defending Google against the EU allegations.
“Rapid innovation, wide choice, and falling prices are classic hallmarks of robust competition, and Android has enabled all of them,” Pichai said. “Today’s decision rejects the business model that supports Android, which has created more choice for everyone, not less.”
Google’s Play Store is also facing a class action antitrust lawsuit in the U.S.
Google, meanwhile, appears more focused than ever on expanding in India.
In July, Google invested $10 billion into Jio Platforms, India’s largest tech conglomerate, saying that it would begin producing its own, low-cost smartphones for the Indian market.
“We think the time is right to increase our commitment to India significantly,” Sanjay Gupta, head of Google India, said in a July statement.
