Challenges growing for Google Play store in India – what lessons are there for the development of Africa’s digital economy

9 October 2020

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Both Apple and Google have been under fire for the near monopoly they both have in different markets for app distribution. Google’s app store is facing a major challenge in India and as Android is the dominant OS in Sub-Saharan Africa this has more direct relevance for the continent. Russell Southwood looks at the fight in India and tries to work out the lessons for Africa.

Indian apps developers seem to have got up a head of steam over Google’s way of charging 30% for in-purchases. (Apple’s app store terms are identical.) The thing that lit the fuse for the dispute was that India’s top digital payments app Paytm was briefly taken down for the violation of certain Play Store policies last month.

As its founder Vijay Shekhar Sharma, and several other entrepreneurs pointed out 30% is a whole lot more than the 2% fee charged by credit card payment processors. Google and rival Apple, which charges a similar fee, have said the amount covers the security and marketing benefits their app stores provide. The marketing benefits are hard to quantify, particularly for African developers.

One Indian start-up executive was quoted in an article by Reuters as saying:” “A deferment (of the fees) is just not enough. The gatekeeper of the biggest application store should be fair and transparent.”

Nearly 99% of India’s half a billion smartphones run on Google’s Android mobile operating system. Some Indian startups say that this allows Google to exert excessive control over the types of apps and other services they can offer, an allegation the company denies. Globally, app developers have said a 30% fee is excessive compared with the 2% fees for typical credit card payments processors.

The spats have strained Google’s strong ties to Indian startups. It has invested in some and helped hundreds with product development. In July, its Indian-born CEO Sundar Pichai committed $10 billion in new investments over five to seven years.

The dispute has encouraged apps developers to mount a challenge to Google and they seem to have support from a Government Minister. On Monday, Paytm’s Sharma posted a newspaper clipping of Google’s decision to defer the fee, saying it “proves who is ruling us”.

In recent days, dozens of Indian entrepreneurs held calls to strategise challenging Google legally and by designing a local mobile application to list apps and reduce dependence on Google. Leading Indian newspapers carried a front-page ad from Paytm on Monday announcing the launch of a “mini app store”. “Calling all developers. Let’s build India’s Digital Revolution, together,” the ad said, adding there would be no payment charge when a Paytm wallet or a state-backed payment system is used.

Two senior Government officials told Economic Times the central government will consider requests from technology entrepreneurs to launch an Indian digital application store.India already has an app store for governance-centric apps, which can be scaled up to begin with, said one of the officials cited above. In addition, there is a need to also introduce policies requiring handset manufacturers to preload alternative app stores alongside popular offerings like Google Play, the sources said.

Weighing in on the issue, union minister for electronics and IT Ravi Shankar Prasad said in a post on Twitter that he is happy to receive suggestions from Indian app developers on how to encourage the ecosystem. “Encouraging Indian app developers is vital to create an #AatmanirbharBharat app ecosystem,” he tweeted on Thursday.

These challenges to the dominant app store in Africa raise more difficult issues for the continent’s app store developers.

As I noted in article back in May 2019 (see: https://www.balancingact-africa.com/news/telecoms-en/45260/the-vanishing-point-for-african-online-use-why-mobile-apps-will-have-a-tough-time-succeeding-africa) “when an African app developer loads up his or her mobile app, it’s going it into an online supermarket that has over 2 million products. Of these, apps in the Play Store, 60% are never downloaded”. According to Statista, in June 2020 there were 3 million apps.

But the number of apps produced in Africa is relatively small so chances are –whether their aspirations are global or local – they will simply get lost amongst the millions of other apps in the store. A few of Africa’s mobile operators (notably MTN and Safaricom) set up app stores to address the issue but none seem to have had much success, According to uptodown, the Safaricom Appstore app has had 11,213 downloads. What might make better sense would be to have an editorial listing of African apps by genre that might go some way to close the information gap.

Worse still, there is the issue of whether people actually use apps they download regularly. Most of the available data shows that smartphone users regularly on a daily basis 9-11 apps and 30 on a monthly basis.

More recent data from Andrew Chen, a general partner at venture capital company Andreessen Horowitz, from 125 million phones worldwide showed that after 90 days only 5% of downloads were active daily users. Of course, there may be a higher percentage that are monthly active users but it’s hard to build a business on such infrequent use. As Chen puts it:” The other way to say this is that the average app mostly loses its entire userbase within a few months, which is why of the >1.5 million apps in the Google Play store, only a few thousand sustain meaningful traffic”. (Yes, I know his figure for total apps in the store is different to Statista’s.)

In a continent short on marketing capital the chances of success with these odds are vanishingly slim. Chen includes a reworking of the average attrition rate for use on downloaded apps for Top 10 apps, Next 50 apps, Next 100 apps and Next 5000 apps. On the Next 5000 apps, the level of daily users after 90 days still dips below 20%.

Sub-Saharan app developers may benefit from developments in India and the USA if Apple and Google are forced to change their business practices for these effectively monopoly gateways. But in the meantime neither African governments, nor the continent’s fledgling developer community have the leverage that comes from numbers to take on these giants. As I said last time I wrote about this topic:”And the alternative? Well, it’s that thing called the internet and it works on smartphones in Africa. It’s an old trick but it just might work”.