Google faces a dilemma in its biggest market: India

Google could face potent regulatory challenges in India if the tide turns against it

Is Google planning on killing the SMS? Representational image | Reuters

So you dominate more than 95 per cent of the local market, are feted and courted by powerful people both in government as well as corporate circles, and your all-pervasive presence in the online space has made your iconic name both a noun and a verb.

Then why is it that Google, one of the world's biggest and most valuable tech companies, is feeling the heat in India, size-wise its biggest market?

In the past few days, biggies and newbies alike in India's internet space have publicly launched a mini-revolt against the tech giant. The Indian government, which collaborates with Google in a host of public service projects across the country, itself has broken its silence, reportedly asking the Indian companies to write in with their grievances. Google India itself has gone into damage control, meeting with app developers and hosting policy workshops.

Yet, the core issue at hand is unlikely to subside any time soon. And that perhaps may be the last thing Google wants, coinciding as it does with the damning US House of Representatives anti-trust sub-committee report which recommended that the company should desist from competing in businesses it controls, a direct pointer to the service at the centre of the storm, the Play Store app store.

“Google is a money collecting, money siphoning machine,” PayTM CEO and founder Vijay Shekhar Sharma minced no words in a TV interview, adding that Google was acting like a government, slapping a tax on app developers. Sharma was at the forefront of flagging off the Indian backlash against Google after it briefly threw out the PayTM app from its Play Store on allegations of promoting gambling. Though it was restored later, that did not stop Sharma from going on an indignant rampage, accusing the American company of different standards, in the process throwing the gauntlet by launching his own 'mini-app store'.

The issue has been in the making ever since the smartphone and app ecosystem came into being a little over a decade ago, coming into its own with the launch of the Apple iPhone in 2007.

Almost all the smartphones in the world run on either the Android operating system (OS) or Apple's iOS. Android runs the Play Store through which apps have to be downloaded into the phone, while iOS has its own, less imaginatively titled, App Store. The problem? While Apple has been stringent that apps can be downloaded and payments are done only through its App Store (iOS and Apple devices are mutually exclusive), Android had for long adopted a much more open-ended policy—the OS runs on many brands and many platforms and devices, and it was not particularly stringent about downloads and payments having to be done only through it.

Until recently, that is. With Google getting stricter about vetting apps and ensuring they don't run foul of its guidelines, many internet entrepreneurs have been rankled. The last straw was Google dictating that all apps downloaded through its Play Store need to do their in-app purchases and payments through Google's billing system, with a hefty 30 per cent commission.

Interestingly, while Apple has been strict about these rules and charges since inception (and running foul internationally with online biggies like the music streaming app Spotify and gaming giant Fortnite), Google's move quickly sparked off a flurry of opposition in India. Even indications that it was postponing its new billing rules for Indian apps did not cool down frayed nerves. Not surprising, as more than 95% of smart devices in India are estimated to run on Google's Android and its accompanying Play Store ecosystem.

“Unlike Apple's App Store, the Android inverse imposes no...restrictions -- anyone can create an app store through which mobile applications can be made available for everyone to download,” argues Rahul Matthan, a lawyer with the firm Trilegal in a recent column. “This means that any app developer who does not like the new terms of engagement of Play Store is free to list its apps on any of the other available app stores or—if they so chose—even set up a new app store just for themselves.”

Which is exactly what the Indian discourse has been veering into in the last few days, with Paytm taking the lead by establishing its own mini-app store, drafting in around 300 domestic players including Hungama and Ola. However, this is more like a light app which works within a web browser. There have also been talks on the lines of using other methods to bypass the Play Store.

While Google does not have much to worry about losing business share in a jiffy to such new entrants (its domination, accessibility and ease-of-use ensures that) its bigger worries are on two levels—one if the clamour for a national app store perks up the already 'vocal for local' ruling dispensation to toy with it, leveraging the massive user base in the country (Google is shut out of China, thus making India its biggest market by numbers, and crucial for future growth prospects). The move for data localisation, internet security would all then become potent weapons that could be used against the American giant, even if no one really expects it to get the overnight blow that the likes of TikTok and PUBG faced recently.

Second, and this could become an existentialist threat, is if the clamour for anti-trust moves against Google gains currency in India as well. It is not clear whether the Competition Commission can hold forth on a company registered in a foreign country, but it can certainly rain lethal blows on the manner in which Google operates in India.

TAGS

📣 The Week is now on Telegram. Click here to join our channel (@TheWeekmagazine) and stay updated with the latest headlines