Walmart-backed PhonePe gears up to launch its Android app store this week, powered by Indus OS technology acquired in 2021. Offering developers zero commission for in-app purchases, PhonePe aims to shake up India’s digital marketplace.
In this unfolding narrative, we delve into the motives driving developers towards alternative app stores and explore the vast market potential awaiting these platforms.
Developer Discord with Google
Back in September 2020, Google briefly ousted Indian fintech titan Paytm’s app from the Play Store for allegedly violating platform rules. This incident spurred a collective outcry among Indian startups, prompting discussions about the need for alternative app stores. Led by industry stalwarts like Vijay Shekhar Sharma of Paytm and Deep Kalra of MakeMyTrip, the coalition’s aim was to break away from Google’s stringent policies and foster an indigenous app store ecosystem.
In response to mounting pressure, Google made concessions, reducing its commission from 30% to 15% for the first $1 million in developer earnings. Subsequent regulatory rulings in India compelled Google to permit apps to use alternative payment processors, culminating in a significant policy shift by January 2023. Despite Google’s overtures, discontent among developers persisted, with nearly 30 app makers petitioning the tech giant to defer enforcement of Play Store billing rules.
While Google presents developers with the option of utilizing its billing system or integrating alternative payment gateways, the looming March 13 deadline to implement user-choice billing APIs adds urgency to the standoff.
The Metrics and the Momentum
India boasts the highest app download figures globally, yet its spending lags far behind. Sensor Tower reports a $520 million spend on in-app purchases in 2023, driven predominantly by gaming apps. However, while downloads in India outstrip those in the US fivefold, the spending discrepancy is a staggering 25 times lower.
Amidst this landscape, the Play Store’s share of in-app purchases grew from 56% in 2020 to 74% in 2023. Android’s pervasive presence in India, accounting for over 90% of smartphone usage, underscores the significance of alternative app store initiatives.
Navigating Opportunities and Obstacles
For PhonePe, the allure lies in India’s vast smartphone user base, projected to exceed 750 million by 2026. Offering developers a commission-free launchpad alongside enhanced visibility, PhonePe’s gambit hinges on capturing a significant slice of India’s burgeoning app market.
However, sustaining an alternative app store demands more than just rhetoric. Aptoide’s founder Paulo Trezentos emphasizes the imperative of delivering tangible value to users. Aptoide’s success in Brazil, India, and Indonesia underscores the immense potential of emerging markets, where ease of payment and enhanced user experience drive adoption.
As PhonePe charts its course, navigating the treacherous waters of app distribution, security emerges as a paramount concern. With Google’s Play Store grappling with fraudulent apps, PhonePe must fortify its defenses against malware while offering a compelling value proposition to users.
In India’s evolving digital ecosystem, the battle for app supremacy is heating up, with PhonePe poised to challenge Google’s hegemony and carve out its niche in the competitive app landscape.
