IT ministers meet Google, startups on app suspensions

Officials from Google, as well as a delegation of startups whose apps have been banned on the Play Store platform, met union IT minister Ashwini Vaishnaw to discuss the issue. Separately, the startup delegation also met union minister of state for IT, Rajeev Chandrasekhar, to express their concerns of “discriminatory pricing by Google” towards them. 

Two senior government officials said on condition of anonymity that the Centre is currently evaluating and understanding the matter, but is unlikely to issue a notice imminently. “We are first looking to understand in detail the allegations of discriminatory pricing that the startups have spoken about—and we will look to take any adequate step in this regard only after careful evaluation,” one of the officials said.

Union minister of state for IT, Rajeev Chandrasekhar, said that the government will “take it up with Google for a sustainable and long-term solution”, to “create an ecosystem that will catalyze growth for startups.”

On this note, Snehil Khanor, founder and chief executive of homegrown dating platform, TrulyMadly, said: “Google does not levy a similar fee to the likes of Amazon or Uber, but is levying a steep fee towards a small number of apps on their platform that are dependent on them. This is a highly discriminatory pricing model, and the same has heavily affected our business model.”

While Google has restored most of the apps on the Play Store that were suspended for non-payment of its service fee on Friday, startup founders allege that the restored apps do not have a way to accept payments from users for subscription services or one-time purchases. “The restored apps have all been done through what Google calls its ‘consumption model’, where we can only mention to users that they can go to our website to purchase our services. This grossly disrupts our business model,” Khanor said. 

Google charges apps a service fee of 11-30% depending on the services they sell through their platforms. Those that sell “real world” services, such as e-commerce or ride hailing, are exempted from the fee. Instead, Google charges the fee to only those that offer digital services, which the startups have claimed is discriminatory. 

Since a Competition Commission order in 2022, Google also introduced the “consumption model” in India, which allows apps offering digital services to direct users to a browser webpage in order to accept subscriptions. On Saturday, Anupam Mittal, founder of People Group—which saw multiple apps suspended from the Play Store, told Mint that the consumption model will “grossly disrupt user experience, and therefore have a significant impact on business revenues.” 

The second government official told Mint that the government will not look to “abruptly interfere” with an established commercial business model, but confirmed that the Ministry of Electronics and Information Technology (Meity) will “look into the matter in close detail, before making any comment.” 

Multiple startups alleged on Monday that three days of suspension on the Google Play Store has reduced their revenue by half or more. Google has a market share of over 85% in India’s mobile phone market—leaving them with a vast majority in India’s internet ecosystem. Startups, to be sure, have relied on Google’s reach of consumers to grow their businesses. A senior executive with knowledge of proceedings at Google told Mint that the company highlighted this factor during its meeting with Vaishnaw on Monday. 

Startups are also relying on the Competition Commission to look for respite on the matter. Founders that Mint spoke with said that CCI had fined Google for anti-competitive market practices and abuse of market dominance. The competition regulator, in two individual orders, fined Google a total of ₹2,273.44 crore ($274 million) in October 2022 on these accounts. 

However, CCI had underlined at the time that the body is “not a pricing regulator”—and thus has no jurisdiction to regulate how a company may price their services.