Explained: Paytm vs Google App Store Row & Why Startups Are Angry

Google Play Stores wants to implement its billing system to collect 30 percent cut from apps on in-app purchases.

Amid growing calls among developers and founders for an Indian app store, Paytm, on Sunday, 4 October, announced the launch of its ‘Mini App Store’. The launch was accompanied by a pledge to help homegrown startups scale and “Indian developers to take their innovative products to the masses.”

Paytm founder and chairman, Vijay Shekhar Sharma, in a company blog post, said: “Paytm Mini App Store empowers our young Indian developers to leverage our reach and payments to build new innovative services.”

The announcement, splashed on the covers of leading newspapers on Monday, comes also at a time when Google, facing backlash from apps, has decided to defer its 30 percent commission on in-app purchases by a year, to 31 March 2022, and hold more talks with Indian start-ups on their concerns.

Amid brewing dissatisfaction among Indian startups and developers, against the growing dominance of Google and its Playstore, a group of 35-40 Indian founders – led by Paytm’s Vijay Shekhar Sharma – also held a meeting with the Union Electronics & IT Ministry on 3 October to articulate their grievances, according to a Medianama report.

As the app store battle looks set to intensify over the coming weeks, The Quint unpacks the clash and why Indian startups are taking on Google and what a desi app store may look like.

WHAT IS THE PAYTM MINI STORE ABOUT?

On 3 October, Paytm announced the launch of its “Android Mini App Store to support Indian developers to take their innovative products to the masses.”

According to the blog, “Mini apps are a custom-built mobile website that gives users app-like experience without having to download them, which would greatly benefit millions of citizens to save their limited data and phone memory.”

From an infrastructure perspective, Paytm says the Mini App store will enable small developers and businesses to set up low-cost, quick-to-build mini-apps which can be built using HTML and javascript technologies.

For those joining the platform, Paytm will provide “listing, distribution of these mini-apps within our app without any charges.”

For payments, developers will be able to give a choice of Paytm Wallet, Paytm Payments Bank, UPI, net-banking and cards to their users.

App-based service providers such as Decathlon, Ola, Park+, Rapido, Netmeds, 1MG, Domino’s Pizza, FreshMenu, NoBroker have joined the program.

IS IT REALLY AN APP STORE?

However, an import question to address is whether the Paytm Mini App Store is technically an app store. In other words, like Play Store or iOS, can one download apps onto one’s device from the mini app store?

It actually isn’t. Here’s why:

• An app store is a distribution platform that allows apps to be downloaded locally onto a user’s device. It can then be accessed without having to go to the app store anymore. In the case of Paytm’s Mini Store, the ‘apps’ have to be accessed through Paytm.
• The ‘apps’ on the Mini App Store aren’t really apps either. They are the mobile browser version of the apps that contain many of the same functionalities of an actual app. In fact, Paytm itself says, “Our Mini App Store offers direct access to discover, browse and pay without downloading or installing separate apps.”
• The new Paytm Mini App Store isn’t really new. In July, Paytm had launched its version of the WeChat super app called “Paytm Mini Programs”. It was an experiment in entering the hyperlocal commerce scene by allowing mobile websites and web apps to integrate with Paytm’s Mini Programs platform. This has now been rebranded as ‘Paytm Mini App Store’.

WHY THE DEMAND FOR AN INDIAN APP STORE?

Among the primary reasons is the market dominance of Google’s Android Operating System (OS), which comprises the Play Store. Google’s Android OS currently commands over 90 percent share of the Indian smartphone market.

According to reports, a growing sentiment among many Indian startup founders is that Google is abusing its dominant market position to squeeze revenues out of startups and imposing hard conditions on them in order to avail the benefits of being listed and discoverable on the Play Store.

The major concerns of the Indian startup community are:

Billing System: Google has declared its intention to start billing apps for in app purchases, such as subscriptions, virtual coins and other special paid features. This is done with objective to enforce the 30 percent commission it seeks from apps on Play Store.

Dominance: Google’s dominance in the Operating System (OS) market and by extension, its app store, has led to arbitrary imposition of rules or restrictions, say app owners, according to Medianama’s report. Simply put, for many startups, the cost of being outside of the Play Store’s network is too prohibitive.

National Security: Medinama reported that a key point raised in a WhatsApp group discussion among founders was the risk for Indian startups if the US does to the Indian startup ecosystem, what it did to Huawei. “This could be a national security issue,” according to the founder of an app.

PAYTM VS GOOGLE

Paytm has also had a few run-ins with Google and its Play Store in recent times. The latest was its temporary ban on 18 September from the Play Store, for violating its gambling policies.

Paytm had said that it had received communication from Google that their ‘Paytm Cricket League’ feature violated Google Play Store’s policies. It added that the app has removed the cashback component of the feature in an effort to meet the Play Store policy requirements.

The payments app has also announced a developers conference on 8 October for its Mini App Store and announced there will be no payment charges (unlike Play Store).

WHY DID MEITY HOLD A MEETING WITH INDIAN FOUNDERS?

Paytm’s Sharma hasn’t just stopped at launching an apparently rival ‘app store’. According to Medianama’s report, he also set up Zoom calls with 56 founders to discuss concerns surrounding Google.

That’s not all. On Saturday, 3 October, 35-40 Indian founders held an hour-and-a-half long virtual meeting with the Union Electronics & IT Ministry, to “discuss the grievances regarding App Store’s billing policy, its 30 percent commission,” CNBC reported.

Sharma was a part of the call, along with the founders of Matrimony.com, Shaadi,com, Dream 11, Sheroes, PhonePe, Map My India and others.

The Ministry has asked founders to submit a formal document detailing their concerns regarding the dominance of big tech and Google’s Play Store.