Indian tech companies challenge Google’s billing policy in high court

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There seems to be no sign of relief for tech giant Google, as more and more Indian tech companies and startups are moving to the high court to challenge the former’s billing policy.

Following the footsteps of Shaadi.com and Matrimony.com, new-age startups such as Kuku FM, Unacademy, Truly Madly, and QuackQuack have filed a petition at the Madras High Court to challenge Google’s recent notice. The notice requires these startups to adopt Google’s billing policy or face the risk of being removed from the Play Store, according to a report by ET.

Over the past few weeks, Google has been sending out such notices via email to various digital startups.

According to sources cited by Inc42, the Madras High Court is scheduled to hear the matter on June 8, 2023. It has been learned that around a dozen or more Indian tech companies and startups will challenge Google’s notice in the coming days.

Inc42 has reviewed one of the notices received by an Indian startup, which states, “Your app uses a non-Google Play billing system to accept payment for access to in-app features or services, including any app functionality, digital content or goods (collectively ‘in-app purchases’).” The notice further adds, “Your app may be removed from or distribution limited to Google Play if you do not resolve this issue by June 15, 2023.”

Inc42 has reached out to Google, Unacademy, and Kuku FM for a statement and will update the story upon receiving their response.

This fresh development comes nearly two weeks after the Madras High Court temporarily barred Google from delisting Matrimony.com’s app from its Play Store, starting June 1, 2023. In an order issued on April 24, the court granted an interim injunction, restraining Google from removing the app due to non-compliance with its new user choice billing system.

The main point of contention revolves around Google’s user-choice billing system (UCB), which allows Google to charge a commission of 11-26% on in-app purchases made by users. Many companies have expressed concerns that this commission would significantly reduce their profits, as they operate with narrow profit margins in India.

Snehil Khanor, the founder of the dating app Truly Madly, questioned Google’s justification, saying, “They (Google) justify it saying that its investment in Android and Google Play were funded in part through the service fee (commission). But then why are other apps like Amazon, Uber, etc., not subjected to this 30% tax? Why this discrimination?”

Initially, Google had proposed the Google Play Billing System (GPBS) as the sole in-app purchase billing option, which would allow Google to charge a commission of 15-30% from app developers. However, in October 2022, India’s antitrust watchdog, the CCI, directed Google to not restrict app developers from using any third-party billing or payment processing services for app purchases or in-app billing on Google Play. The CCI also imposed a penalty of INR 1,337.76 crore on Google for its anti-competitive practices.

In April, ahead of Google’s implementation of the UCBS, the policy think tank Alliance of Digital India Foundation (ADIF) requested the CCI to urgently investigate Google’s “abusive dominance practices.” The body feared that the 11-26% service fee for in-app purchases would be detrimental to the Indian startup ecosystem.

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Indian tech companies challenge Google’s billing policy in high court

There seems to be no sign of relief for tech giant Google, as more and more Indian tech companies and startups are moving to the high court to challenge the former’s billing policy.

Following the footsteps of Shaadi.com and Matrimony.com, new-age startups such as Kuku FM, Unacademy, Truly Madly, and QuackQuack have filed a petition at the Madras High Court to challenge Google’s recent notice. The notice requires these startups to adopt Google’s billing policy or face the risk of being removed from the Play Store, according to a report by ET.

Over the past few weeks, Google has been sending out such notices via email to various digital startups.

According to sources cited by Inc42, the Madras High Court is scheduled to hear the matter on June 8, 2023. It has been learned that around a dozen or more Indian tech companies and startups will challenge Google’s notice in the coming days.

Inc42 has reviewed one of the notices received by an Indian startup, which states, “Your app uses a non-Google Play billing system to accept payment for access to in-app features or services, including any app functionality, digital content or goods (collectively ‘in-app purchases’).” The notice further adds, “Your app may be removed from or distribution limited to Google Play if you do not resolve this issue by June 15, 2023.”

Inc42 has reached out to Google, Unacademy, and Kuku FM for a statement and will update the story upon receiving their response.

This fresh development comes nearly two weeks after the Madras High Court temporarily barred Google from delisting Matrimony.com’s app from its Play Store, starting June 1, 2023. In an order issued on April 24, the court granted an interim injunction, restraining Google from removing the app due to non-compliance with its new user choice billing system.

The main point of contention revolves around Google’s user-choice billing system (UCB), which allows Google to charge a commission of 11-26% on in-app purchases made by users. Many companies have expressed concerns that this commission would significantly reduce their profits, as they operate with narrow profit margins in India.

Snehil Khanor, the founder of the dating app Truly Madly, questioned Google’s justification, saying, “They (Google) justify it saying that its investment in Android and Google Play were funded in part through the service fee (commission). But then why are other apps like Amazon, Uber, etc., not subjected to this 30% tax? Why this discrimination?”

Initially, Google had proposed the Google Play Billing System (GPBS) as the sole in-app purchase billing option, which would allow Google to charge a commission of 15-30% from app developers. However, in October 2022, India’s antitrust watchdog, the CCI, directed Google to not restrict app developers from using any third-party billing or payment processing services for app purchases or in-app billing on Google Play. The CCI also imposed a penalty of INR 1,337.76 crore on Google for its anti-competitive practices.

In April, ahead of Google’s implementation of the UCBS, the policy think tank Alliance of Digital India Foundation (ADIF) requested the CCI to urgently investigate Google’s “abusive dominance practices.” The body feared that the 11-26% service fee for in-app purchases would be detrimental to the Indian startup ecosystem.

Disclaimer

We strive to uphold the highest ethical standards in all of our reporting and coverage. We StartupNews.fyi want to be transparent with our readers about any potential conflicts of interest that may arise in our work. It’s possible that some of the investors we feature may have connections to other businesses, including competitors or companies we write about. However, we want to assure our readers that this will not have any impact on the integrity or impartiality of our reporting. We are committed to delivering accurate, unbiased news and information to our audience, and we will continue to uphold our ethics and principles in all of our work. Thank you for your trust and support.

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