Google Play Store in India: Playing with Networks

In October 2020, Google LLC (Google) found itself involved in a controversy with both the Indian government and the country’s developers of mobile applications (apps). Google announced that it would be enforcing its global policy that required app developers to pay a 30 per cent commission on all in-app purchases of digital goods bought on Google Play, the company’s digital distribution platform for app purchases. Google’s announcement drew particular opposition in India. With 500 million smartphone users in India, of which 95.85 per cent operated on Google’s Android operating system, the app market was heavily skewed in favour of Google. In its goal to dominate the Indian app market, Google had to resolve several key issues. What advantages to users and developers could the company emphasize to justify imposing what India’s start-ups and app developers were calling a Google tax? Could a new competitor, such as the proposed platform from India’s government or from the technology start-ups, replicate those same advantages? How should Google respond to the complaints against the policy and the threats of antitrust action against the company?

This case is intended for use in undergraduate- and graduate- level courses on managerial economics, microeconomics, or strategic management. In a graduate-level strategic management course, it can be used to provide understanding of international strategies by digital platform firms operating globally in diverse regulatory environments. After working through the case and the assignment questions, students should be able to<ul><li>identify and infer the network externalities of digital platform firms and their role in creating firm-specific advantages;</li><li>examine how platform monopolies are created;</li><li>discuss the concepts of dominance and abuse of a dominant position; and</li><li>evaluate actions by regulators and competitors to mitigate monopoly and to foster competition in the global digital platform industry.</li></ul>

• Abuse of dominance, dominance
• Demand Side economies of scale
• Concentration, Network Effects
• Regulation