Is Google overstepping its boundaries on its new billing system norms? Read to know!
Google’s new billing system, set to take effect on 26th April 2023, has sparked controversy among app developers and start-ups. Some have even taken a stand through legal action, approaching the Delhi High Court for relief.
But the question is – what exactly is Google’s new payment policy, and why are developers opposing it?
To understand this, let’s take a trip down memory lane to the film Lagaan, where villagers united against double taxation imposed by their British rulers. Similarly, app developers have united and have claimed that Google’s new policy is a form of “rent tax”.
So what exactly does this mean, and why are developers frowning on Google?
Let’s dive in and find out.
What’s Happening?
So, here goes the story. According to Moneycontrol, Google has recently announced that Indian app developers must use their Google Play Billing System (GPBS) for in-app purchases. If developers don’t comply with the norms, their apps could be removed from the Google Play Store within 14 days.
And this move was enough to start the controversy because developers believed that Google was breaching the Competition Commission of India (CCI) rules.
So, what are these rules about?
CCI had previously ordered Google to allow developers to use third-party billing systems.
And previously, GPBS required developers to pay for all app purchases through Google’s payment gateway, with Google charging a commission of up to 30% on each transaction. But in January 2023, Google announced changes to the system in response to the CCI’s orders. Now, developers could use third-party billing systems, but Google will charge a service fee of up to 26%.
Problems of App Developers
In October 2022, the Competition Commission of India (CCI) issued orders that Google cannot force app developers to use any particular billing system.
However, Google has come up with a brilliant solution through which it partly complies with CCI and partly does not. This rule was that app developers have to use their payment gateway for in-app purchases made outside of India but not for purchases made within India.
According to a report in The Hindu, Amit Ranjan, a former co-founder of SlideShare and entrepreneur, has stated that “many start-ups are against it as it takes away a large chunk of their revenue and will affect their profitability.”
What’s Next?
Shaadi.com founder Anupam Mittal has voiced his concerns on Twitter and accused Google of going against the Competition Commission of India (CCI) and Indian laws, and has called on the courts and the Prime Minister’s Office to intervene.
This issue has already reached the Delhi High Court, hearing a petition from the App Developers’ Alliance India Foundation (ADIF) on 19th April 2023. After the hearing, the court reserved its order on the matter.
It remains to be seen how this issue will ultimately be resolved, but it is clear that there is significant tension between tech companies and regulatory bodies in India.
*The article is for information only. This is not investment advice.
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