1. Introduction:
– Walmart-backed PhonePe is preparing to launch its Android app store this week, introducing a zero-commission policy for in-app purchases for developers. The store leverages Indu’s OS technology, which PhonePe acquired in 2021.
2. Developers’ Discontent with Google:
– Several prominent developers in India have expressed dissatisfaction with Google’s commission rates and Play Store regulations. They believe that the Indian smartphone market’s scale offers better earnings potential outside the Play Store.
3. Google’s Response:
– In September 2020, Google temporarily removed Paytm’s app from the Play Store, prompting Indian startups, including Paytm, MakeMyTrip, PolicyBazaar, RazorPay, and ShareChat, to explore alternative app stores.
– Over time, other startup executives also criticized the Play Store’s 30% fee, advocating for a “Made in India” app store.
– Google subsequently reduced its commission to 15% for the first $1 million earned annually by developers from the Play Store in 2021. It introduced a user-choice billing program in 2022 and allowed all apps to use alternative payment processors in response to a ruling by India’s antitrust authority in January 2023.
4. Market Numbers:
– Despite being the top market for downloads, India does not rank among the top 10 or 20 countries by spending. Users in India spent $520 million on in-app purchases on the Play Store in 2023, with gaming apps accounting for more than half of that spend.
– Android holds a significant share of the Indian market, with over 90% of smartphone users.
5. Opportunities and Challenges:
– India boasts more than 750 million smartphone users, presenting a substantial distribution opportunity for app makers.
– PhonePe pledges no commission from developers initially, with no listing fee for the first year. The store aims to provide marketers access to millions of users but must focus on user acquisition and partnerships with phone manufacturers to achieve significant scale.
– Building sustainable alternative app stores remains challenging, as seen with Aptoide’s experience.
– Advocates like Rohit Kumar of The Quantum Hub emphasize policies promoting competition between app stores by facilitating user choice and alternative app installations.
6. PhonePe’s Strategy:
– PhonePe is banking on India’s projected billion smartphone users by 2026, offering a launchpad for developers under its accelerator program.
7. Security Concerns:
– Ensuring robust security against malicious apps and predatory loan apps is critical for PhonePe to convince users of its store’s value proposition over the default Play Store.
