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Vijay Shekar Sharma, CEO of payments company Paytm, practically a household name in India, has declared war on Google for practices that he, along with a host of other CEOs of technology companies, considers unfair and monopolistic.
The dispute has now become India’s latest technology dispute.
The resentment against Google has been dormant for a long time, but outright hostility finally surfaced when Paytm was removed from Google’s Play store for what the search giant said was a violation of its policy due to Paytm participated in sports betting.
Sharma and Paytm were stunned, not just by being notified by a perfunctory email, which was later followed by a delisting, but because the indictment concerned a scratch card-based money-back function tied to a In-app cricket game, similar to what Google has done in the past through its own payments service, according to Paytm.
However, Google was adamant.
“Offering cash back and coupons alone does not violate our Google Play gambling policies. Our policies do not allow online casinos or support unregulated gambling applications that facilitate sports betting, including sports. fantasy newspapers in India, “he replied in an email. statement.
When Paytm discontinued its app offering, it was allowed to return to the app store a few hours later, but by then the damage was done. An enraged Sharma lashed out at the search giant, condemning his pushy behavior where he said he acted as “judge, jury, executioner and beneficiary.”
THE KINDEST COURT OF ALL
Behind this incident, of course, is a bigger problem that has aligned many of India’s tech startups with Google. It’s the same issue that infuriated Epic Games, the creator of global gaming sensation Fortnite, that is, it’s the policy of charging a 30% fee to app developers – a policy shared by Apple as well.
This 30% gatekeeper toll, as some have called it, applies to in-app purchases, as well as content-based subscription services like gaming, dating, and fitness. What is not taxed are things like clothing, groceries, or airline tickets.
Sharma’s rally against Google was quickly supported by online tech startup pioneer Murugavel Janakiraman, founder of India’s leading marriage site bharatmatrimony, now called matrimony.com, who has been campaigning against Google for more than one of each.
“It is a death sentence for digital companies and payment companies in India,” Janakiraman said. “How can companies survive paying 30% tax to Google and Apple?” added.
More than 90% of the 700 million smartphones in India use Google’s Android operating system, so there really is no alternative. According to a Financial express Report, Google Play hosts 131,625 apps from more than 26,835 Indian publishers.
But luckily for Sharma, he at least has one ally in the US Department of Justice which, just a week ago, filed the largest antitrust lawsuit against Google’s parent company Alphabet since against Microsoft at the end of the decade. 1990.
The last time the tech world saw a crisis of this magnitude surrounding monopolistic practices was in 1999, when Microsoft’s Windows operating system forced Internet Explorer, the company’s browser, on all PC users.
If a person bought a PC back then, as 95% of the population did, in all likelihood they would have used Explorer instead of the most popular browser at the time, Netscape, which has since become a vaguely nostalgic memory but confused.
The Justice Department sued Microsoft and the judge presiding over the case ultimately found the company guilty. Then the judge ordered their breakup. However, this never happened and the end result was more or less toothless.
Coming back to the present, here are some questions that Indian tech entrepreneurs face every day: Guess who has the largest share of the browser market in the world today? What is the largest mobile OS share in the world today? The largest app store in the world today? What about the most searches on the Internet?
The answer at four, as you may have guessed, is Google. This is the ecosystem that entrepreneurs have started to criticize against.
Meanwhile, for Google, the big question is how much should a gate toll be? Is 30% a carefully calibrated number that is related to the functioning of the Play Store infrastructure and its certainly enviable security around payments? Or is it just arbitrary?
“I think we’re realizing that 30% is too much,” said Phillip Shoemaker, a former senior executive at the App Store, in a recent New York Times Article.
Shoemake said it should be closer to 3%, which is 10 times less and something that is more in line with what credit card companies charge to process transactions.
However, Google has said that the number of app developers on Google Play offering in-app purchases is only 3% of the total, and only 3% of that 3%, in other words a miniscule amount, no use Google billing. system. In other words, Google thinks it’s not that important.
That, of course, doesn’t really address the equity issue when talking about the 30% figure. Another NYT report details that it was actually Apple that pioneered the 30% cut, borrowing that figure from its practice of keeping 27 cents of every 99-cent sale of a song on iTunes before moving the rest to record companies.
This was a time when there were limited payment options and thus not much resistance from content providers, but somehow this has become industry practice.
It makes perfect sense that both Apple and Google are married to that 30% figure, considering that Apple gobbled up $ 19 billion of its $ 63.4 billion in digital product sales last year, while Google racked up $ 10. billion of your $ 33.8 billion using the same strategy. Imagine what would happen to stock prices and option packages if that pie were cut in half.
But today, this supposedly anachronistic and arbitrarily calculated hangover of a number can cause a lot of trouble for both Google and Apple, especially with the bad legal winds that have started to blow against both companies. After all, Epic Games has stated that you could easily make a profit just by taking a 12% cut of in-app widgets from your own website.
Back in India, Paytm’s Sharma has launched an attack on Google in India. He has brought together many other service providers, including stalwarts from the Indian business and technology landscape such as Ola, Netmeds and Domino’s Pizza, among others, to come alongside him.
In a short span of time, Sharma has built a “mini-app store” on the Paytm site, where most of his cohort have said they intend to seek refuge and escape the unjust guillotine of the 30s sword. % of Google. You also intend not to charge fees for the service. It remains to be seen how efficient and attractive this proposal is.
Meanwhile, Google has extended its deadline for Google Play Store compliance to March 31, 2022 in deference to “local needs and concerns”, which Sharma immediately declared amounts to an “admission of guilt.”
Looking beyond whether there are sufficient grounds to protest Google’s 30% tax, there is an underlying reality that is undoubtedly stoking Sharma’s ire. Paytm was by far the leading provider of digital payments in India not long ago, dominating most of the market.
But in 2020, when it comes to digital payments using India’s Unified Payment Interface (UPI), Google Pay, which started operations last November, has raced at an impressive speed to the top spot at 40. % From the market. up close with Flipkart’s PhonePe. Meanwhile, Paytm has fallen to an unimaginable 15%.
This must cause Sharma great anguish, but it is also probably the most powerful example of the case he is trying to bring against the great father of the search.
