While speaking at Consilience 2023, a conference for online gaming companies held on April 24, Indian gaming companies sharply criticized the 30 percent commission charged by Google Play Store for in-app purchases.
Who said what:
- Deprives Indian developers of revenue to invest in game development: While a 30 percent commission might work in advanced markets like the US, in India it is necessary to ensure game developers receive more revenue to reinvest in game development, Sai Srinivas, Co-Founder and CEO of Mobile Premier League (MPL) pointed out. “Let’s evaluate the unit economics: if a developer charges 100 rupees, 30 rupees go to the Play Store or App Store and 70 rupees go to the developer. From that 70 rupees, they have to pay for hosting, user acquisition, and other expenses. My view is that we should provide Indian game developers with more revenue to invest in game development and build more games,” Srinivas elaborated.
- It is extortion: “The 30% jagirdari tax is extortion and I believe in India we should not allow anybody to do this, especially when you’re not an Indian company,” Manish Agarwal, Co-Founder of IndiGG, remarked. He also noted that Google’s commission on top of the Goods and Services Tax (GST) is a significant expense for consumers, and in a country like India, the focus should be on reducing friction in spending among consumers.
- Need government intervention and more third-party app stores: Krafton India CEO Sean Hyunil Sohn called for government intervention and also encouraged the development of third-party app stores to compete with Play Store.
- Rates need to be reevaluated as the industry has evolved: “When app stores and play stores were launched, the 30% fee was revolutionary compared to the 70% charged by OEMs or Telcos for game developers. At that time, it was a very good idea, but as the industry and business models have evolved, there needs to be a relook at the rates,” Anuj Tandon, CEO of Gaming, JetSynthesys, commented.
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Why does this matter: Gaming companies are the most impacted by Google’s commissions because they usually fall under the highest bracket (30 percent commission) because of their high revenue numbers. It is for this reason, Epic Games took both Apple and Google to court in the US in August 2020 in the first high-profile battle between app developers and app stores.
Play Store billing is in a mess in India currently: Until now, Indian developers, including gaming apps, used third-party billing systems like Razorpay or PayU to process in-app purchases made by users. Developers generally pay the payments processor a commission of less than 5 percent on these purchases. Google, however, now requires developers to use Google’s billing system and pay the company between 15 to 30 percent commission (depending on the revenue of the app) or use a third-party billing system and pay Google between 14 to 26 percent commission.
Indian startups, through the Alliance of Digital India Foundation (ADIF), have filed a complaint with the Competition Commission of India (CCI) alleging that Google is not in compliance with CCI’s antitrust order issued last October because of the exorbitant commission charged by Google even when developers use third-party billing systems. ADIF’s complaint is currently pending review. Separately, ADIF has also challenged Google in Delhi High Court asking for a suspension of the new billing policy. The court is yet to issue any order on this matter.
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