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Burning Issues

[Burning Issue] Paytm vs Google App Store Row

The altercation between technology giant Google and fintech major Paytm has brought the global debate around app store monopolies to India.

  • Paytm has been at odds with Google ever since the tech giant removed its apps.
  • Earlier this month, Paytm announced the launch of its Android Mini App Store to support Indian developers to take their innovative products to the masses.
  • Now this move has brought Google and Apple’s duopoly over being the only marketplaces for applications on their mobile operating systems into question.

The Beginning of Row

  • Paytm received communication from Google that their ‘Paytm Cricket League’ feature violated Google Play Store’s policies.
  • Hence, the payments and financial services app Paytm was temporarily removed from the Google Play Store.
  • Paytm in turn, removed the cashback component of the feature in an effort to meet the Play Store policy requirements.
  • And the app was back within a few hours.
  • According to Google, the features were akin to promoting gambling. Paytm has now blamed Google for not offering a level-playing field.
  • The issue escalated after Federation of Indian Fantasy Sports (FIFS) asked for clarity from the Google on what is allowed on the Play Store for the fantasy sports industry.

Surpassing Google’s monopoly: What is the Mini Apps store?

  • Mini apps are a custom-built mobile website that gives users app-like experience without having to download them, which would greatly benefit millions of citizens to save their limited data and phone memory.
  • From an infrastructure perspective, the Mini App store will enable small developers and businesses to set up low-cost, quick-to-build mini-apps which can be built using HTML and JavaScript technologies.
  • For those joining the platform, Paytm will provide a listing, distribution of these mini-apps within our app without any charges.

The ‘Price’ of getting listed on Google Play Store

The row has brought to the fore Google’s Play Store monopoly and its power to pull down apps that it feels violates its rules.

  • Google’s Android OS currently commands over 90 percent share of the Indian smartphone market.
  • Among the primary reasons is the market dominance of Google’s Android Operating System (OS), which comprises the Play Store.
  • There is a growing sentiment among many Indian startup founders is that Google is abusing its dominant market position to squeeze revenues out of startups and imposing hard conditions on them.
  • This is in order to avail the benefits of being listed and discoverable on the Play Store.

The major concerns of the Indian startup community are:

(1) Billing System:

  • Google has declared its intention to start billing apps for in app purchases, such as subscriptions, virtual coins and other special paid features.
  • This is done with objective to enforce the 30 percent commission it seeks from apps on Play Store.

(2) Dominance

  • Google’s dominance in the Operating System (OS) market and by extension, its app store, has led to arbitrary imposition of rules or restrictions.
  • Simply put, for many startups, the cost of being outside of the Play Store’s network is too prohibitive.

(3) Conflict of interest

  • Google being the platform for apps in India via its Play Store is also only opportunist player in the app ecosystem.
  • It is allegedly hindering others ability to acquire new customers through the “dominance” of their country’s digital ecosystem.
  • Google has a hammerlock on the Android ecosystem in India and this monopoly means companies like Paytm have to rely on Google playing fair with its rivals.

(4) National security

  • There is a risk for Indian startups if the US does to the Indian startup ecosystem, what it did to Huawei.
  • This could be a national security issue in turn for India.

(5) Unfair trade practices

  • Google was found guilty of abuse of dominant position and unfair trade practices by the European Commission for its strict and biased user policies.
  • It is already under investigation by the Competition Commission of India after an unidentified party complained the company was “unfairly” promoting Google Pay in India.

Making the monopolist accountable: A not-so-feasible option

  • Taking on a giant like Google in the Indian courts involves the hefty court and legal fees, and the battle will be incredibly long drawn.
  • It’s very easy to show that Google is dominant. But under the Competition Act, one has to show that what Google is doing is unfair trade practice or it’s an abuse of dominance.
  • Indian developers might have to fight a concurrent case in the US court as well which will indecisively rule in favor of the Google.

Way forward

  • Google’s presence in India’s digital ecosystem is only set to increase with the internet giant planning to invest $10 billion in the country over the next five to seven years.
  • All of this places a heavy responsibility on Indian regulatory authorities to implement tough oversight measures to ensure Google and other players don’t steam-roll the competition in India.
  • Presently it is upto the regulators to ensure ‘app neutrality’ in India.
  • A possible viable option for startup founders are other indigenous app stores like that of Indus OS, a Samsung-backed third-party store, has over 100 million monthly active users.

Conclusion

  • These days, there is a growing demand within the political sphere regarding data localization in India. Foreign firms are mandated to store payments information of users locally in India.
  • And India is not even that open anymore. It has also banned more than 200 Chinese apps in recent months. But with Google’s case, there can be no leap forward.
  • Policymakers need to wake up to obvious conflicts of interest in the internet domain which need to be regulated with a measure of sophistication.
  • Regulators need to stay ahead of the curve, as the country pivots decisively towards a digital economy.

References

https://www.businesstoday.in/current/economy-politics/the-inside-story-of-how-paytm-google-fiasco-unfolded/story/417052.html

https://www.thequint.com/explainers/explainer-paytm-mini-app-store-google-android-play-store-meity-indian-startups

https://www.thehindubusinessline.com/opinion/editorial/controversy-over-google-and-paytm-underlines-the-challenge-policymakers-face/article32679063.ece

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