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MEITY holds call with startup founders on Google’s 30% fee

The Indian government’s Ministry of Electronics and Information Technology (MEITY) has given a group of Indian startup founders around two weeks to compile a document with issues with Google’s dominance in India, and other concerns around the dominance of large platforms in India. Held on Saturday, starting at 7pm over Microsoft Teams, MEITY heard grievances from between 35-40 Indian founders, with large parts of the call focusing on the dominance of Google and its 30% commission, for almost an hour and half. The move to impose 30% commission on transactions for digital goods and services in India, and the imposition of the Google Play store billing, has many Indian founders up in arms. Importantly, this morning, Google has announced that it is deferring this policy only for India till 2022, and that it will hold policy workshops, but we won’t be surprised if the pushback against Google continues.

In participation on the call, according to more than four sources that MediaNama spoke with, apart from MEITY Secretary Ajay Sawhney and other MEITY officials, were Paytm founder Vijay Shekhar Sharma, Matrimony.com founder Murugavel Janakiraman, PhonePe founder Sameer Nigam, Dream11 founder Harsh Jain, MapMyIndia founder Rohan Verma, Shaadi.com founder Anupam Mittal, Data Infosystems founder Ajay Data, Sheroes founder Sairee Chahal, investors Anand Lunia and Miten Sampat, Times of India Group’s Satyan Gajwani, as well as lawyer Suhaan Mukherjee, among others. Note that several participants also declined to speak with MediaNama about this call, given that MEITY requested that it be kept off the record. CNBC-TV18 was the first to report this call yesterday.

MEITY officials, several sources told MediaNama, sought examples from participants on how other countries have dealt with such dominance of global tech, and especially in terms of ensuring a level playing field, while at the same time suggesting that the government has to play a balanced role, and India has to remain a destination to invest in as well. Three founders told MediaNama that MEITY did not seem to be particularly inclined towards the protectionism sought by some of the speakers. MediaNama has requested MEITY Secretary Ajay Sawhney for comments, and will update if we hear from him.

Key points made on the call by founders (not all in agreement, readers should note), according to many sources we spoke with:

  • Something needs to be done because Google has a dominant market share in India of over 90%
  • Issues of arbitrariness and unfairness in enforcement, where, for example, the Mobile Premier League was prevented by Google from advertising on platforms owned by the Times Group, including Cricbuzz, Gaana etc, because the Times Group owns a mere 3% in Mobile Premier League.
  • The issue that Google’s control extends from the operating system to the app store, and hence there’s a need for mandating openness: Google cannot be the only app store with system permissions, and people should be able to install apps via other media.
  • The fact that Indian arms of foreign companies, like Google, Facebook and Twitter tend to claim in court that they are liable under Indian laws, and are not intermediaries.
  • That there’s a need to enable multiple application stores to address Google’s dominance in India
  • That foreign companies in India only have two types of employees: sales teams for making money from India, and policy teams which spend money to influence India’s public policy.
  • That one should think of the Google Play Store as a public utility in India, given the fact that they are a part of daily life.
  • The answer to the Google Play store is not a government owned Play Store. Several OEM’s also have their own Play Stores. There’s a need for more independent stores, like China has. This might need to be mandated since Google already controls the operating system.
  • That India may consider doing to Google, what TikTok has been forced to do in the US: TikTok eventually reached a deal to create a US subsidiary, TikTok Global, 20% of which would be owned by Oracle and Walmart.
  • That Google’s search results prioritise its own products, for example, in case of Maps.
  • That Google warns users that apps may not be safe if they are downloaded from outside the Play Store, and that the app store is governed by Google’s rules.
  • That Indian companies have had their apps pulled from the Play Store for days, without giving adequate reason.
  • That eventually India will also have to look at other layers of Internet enablement, including the cloud service providers, where 2-3 companies are dominating.
  • That even though for some fantasy sports companies, real-money gaming has been allowed by the Supreme Court of India, the Google Play store still does not allow these apps on the Play Store, and thus doesn’t abide by the Constitution of India.
  • That while it would be inappropriate to tell a private company to not charge what it wants to (30%), what is problematic is the forced in-app billing, which disallows apps from using billing mechanisms other than Google’s. There is a charge that many companies also charge for distribution.
  • That the 30% commission is excessive, and given how much Indian companies have to spend on customer acquisition on Google, the demand for 30% for closing the transaction means that Internet companies in India will not be viable.

Google’s Play Store policy changes

  • What is Google forcing upon apps? Google will now enforce its billing system on all apps downloaded from the Play Store, in a bid to collect a 30% commission on all in-app purchases. While this cut is not new, Google is now getting apps to pay up – apps are barred from taking users to in-app browsers or websites to make payments.
  • What purchases will the cut apply to? In-app purchases include app subscriptions, virtual coins, ad-free versions of apps, paid extra lives or characters, etc. Many apps currently bypass Google’s billing system and ask users to directly pay, such as via debit card or UPI.
  • By when do app-makers have to comply? New apps have a few months to comply (January 2021), and existing apps have a year (September 2021). Google said only 3% of apps sell digital goods, and of these, only 3% escaped the cut.
  • Do app-makers have a choice outside of Google? Google has deals with mobile phone manufacturers to pre-install its core apps, Search, Maps, and the Play Store, in exchange for deploying the Android OS. This has made the Play Store de-facto for developers to push their apps, leaving no real alternative, even though Google allows other app stores on Android phones. Google has also reminded everyone that developers can still use alternative payment methods outside the Play Store, such as on another Android app store or through their website – but in front of Google’s dominance, this is hardly a reprieve.

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Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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