Home/ Companies / News/  Play Store tax sparks calls for an Indian alternative

App makers, developers and startup founders in India are calling for setting up an all-Indian app store to reduce the dependency on global tech giants who have increasingly come under criticism for alleged unfair practices aimed at cornering market share.

In recent weeks, Google said that while platforms are allowed to use their own payment systems through websites, or other stores, they will have to pay a 30% fee if they choose to use Google Play. Several founders and developers termed the decision unfair, saying that it can hurt businesses in India.

“India needs a local app store long term else 30% tax will eat up most businesses, is anyone trying to build one?" Harshil Mathur, chief executive officer of payments platform Razorpay, said on Twitter. Mathur’s tweet was met by Akash Dongre, co-founder of Indian app store, IndusOS, who plugged his platform in response to the tweet.

Meanwhile, industry lobby group Internet and Mobile Association of India (IAMAI) has sought a meeting with startup founders to resolve their concerns.

Vishwas Patel, founder of CCAvenues and chairman, Payments Council of India, said Google cannot “force" Indian developers to use the Google Billion and payment system compulsorily and then charge 30% commission.

According to Sudhir Naidu, who runs Indian video-collaboration platform Troop Messenger, everyone wants an alternative but there are no solutions in sight.

“Even Microsoft is not considered a competition today. Something completely new has to happen, but as of today, there’s no solution and even if you look for one, there is nothing," he said.

Even though Google said it will allow developers to sell their services through other app stores, or websites, the industry doesn’t see this as an option either. Naidu suggested that unless the government chooses to intervene, there may be no other solution. According to tech policy analyst Prasanto K. Roy, the government’s Mobile Seva Appstore has over a thousand apps and 85 million downloads, yet it is unknown among Indian users.

“I’m in the software-as-a-service (SAAS) market, but I could not find anyone who would come out and say that they will make a SAAS marketplace, which is a minute subset of what a Play Store is," said Naidu.

On the other hand, having India’s own app store may not be a solution anyway. Many look at it as a stop-gap of sorts. Roy said alternative app stores like Amazon Appstore and Samsung’s Galaxy Store will “simply not have the same traction" as Google Play. He said it’s not just their smaller numbers that will keep them from replacing the native stores, users are also driven towards Google Play by habit.

“Other app stores have not been able to catch up with Google Play because they lack network effects. Google’s Play Store is mandatory to make use of Google Mobile Services that includes other apps, such as Google Maps," said Manjunath Bhat, senior director analyst at Gartner. “Any app store is fundamentally a marketplace—and a marketplace thrives as a result of both supply-side and demand-side effects. That is, when you have both producers and consumers actively contributing to the growth of the market," he added.


Prasid Banerjee
An engineering dropout, Prasid Banerjee has reported on technology in India for various publications. He reports on technology through text and audio, focusing on its core aspects, like consumer impact, policy and the future.
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Updated: 01 Oct 2020, 07:19 AM IST
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