Google’s dominance in multiple areas has led it to face antitrust lawsuits in several countries, adding to regulatory challenges as it faces a historic antitrust lawsuit from the U.S. Department of Justice. In just a few weeks, the search giant’s business practices have attracted close scrutiny in Australia, South Korea and India. EU antitrust chiefs have threatened to split Google if it does not change its approach.
India is a more typical example of how Google’s troubles could undermine its future growth potential. More than 200 local start-up founders have teamed up to discuss with the government to stop Google from charging a 30 per cent commission on in-app purchases of smartphones, despite the company’s standard d’ort fees around the world. Although Google delayed implementing the new rules for six months after an outcry, India’s technology industry is determined to limit the tech giant.
Anupam Mittal, a prominent angel investor, said: “As a nation, can we give so much power to one or two monopoly foreign companies?” If India wants to build the next Microsoft or Alibaba, the government has to act now. “
The Indian government has said it is willing to investigate the largest companies and take strong action in the national interest. For years, companies like Apple have been banned from opening their own retail stores to protect local operators. “We have a lot of confidence in the government, they’ve taken decisive action over the last few months, and Google will have to take a step back,” Mittal said. “
Google has previously announced that plans to get local developers in India to pay and pay a 30 per cent commission through the Google App Store have been delayed until 2022. It marks an unusually rapid shift for the tech giant, which has often resisted government policies around the world. “We are holding meetings with India’s leading start-ups to gain a deeper understanding of their concerns,” Google wrote in a blog post. A Google representative did not respond to a request for further comment.
Alphabet, Google’s parent company, remains one of the most proud forces in the technology industry, with a market capitalisation of about $1 trillion. However, its share price has underperformed this year, rising just 13 per cent, as criticism of its approach has increased. By contrast, the Nasdaq is up 29%.
To meet investors’ high expectations, Google will have to take advantage of market opportunities similar to those in India. India is the second-largest Internet market after China and the largest growth market for smartphone users. Sundar Pichai, alphabet’s chief executive, was born in India and tried to build a “bridge” by allied with the region and vowing to invest $10bn in India.
Like many Western technology companies, Google has struggled to make more money from this huge internet user base, even though India’s per capita income is around $2,000. “A one-size-fits-all global policy doesn’t apply to markets like India, and Google will have to come up with something localized,” said Tarun Pathak, an analyst atCounterpoint, a market research firm. “
The US tech giant’s advantage is that 98 per cent of India’s smartphones run its Android operating system, in large part because the iPhone is too expensive for most locals. This makes it possible for consumers to become users of the Google App Store.
But the founders of local start-ups argue that Google’s 30 per cent commission is too high and harms the country’s developers. They also say the fees violate India’s ban on digital transaction fees. They are considering building an online market that can compete with Google’s App Store. Ideally, there would be government support to create viable Alternatives to Google.
Vijay Shekhar Sharma, founder of Paytm, India’s most highly valued start-up, has been an outspoken critic of Google. Not long ago, the company launched the Android Mini App Store, which allows local developers to distribute their apps for free without charging any in-app purchases. Later, at the paytm store’s first developer conference, Mr Sharma said his goal was to increase the number of apps in the store to 1m by next year.
Anup Jain, managing partner at venture capital firm, said: “This is not a mature ecosystem, with Google’s 30 per cent commission threatening the business model of many start-ups. “