PhonePe, backed by Walmart, is preparing to launch its own Android app store this week which will offer zero commission for in-app purchases for developers. The app store is powered by technology from Indus OS, a company PhonePe acquired in 2021.
In this article, we will explore why developers are advocating for an alternative app store and examine the market opportunities for these platforms.
Developers’ Dispute with Google
In September 2020, Google temporarily removed Indian fintech giant Paytm’s app from the Play Store, citing a violation of platform rules. Later that month, several Indian startups, including executives from Paytm, MakeMyTrip, PolicyBazaar, RazorPay, and ShareChat, joined forces to explore the possibility of an alternative app store.
These executives, along with others, have voiced their concerns over the Play Store’s 30% fee and have expressed the need for a “Made in India” app store.
Founder and chief executive officer (CEO) of Paytm Vijay Shekhar Sharma (Photo credit should read SAJJAD HUSSAIN/AFP/Getty Images)
Google subsequently adjusted its commission structure and billing policies in response to industry feedback and regulatory requirements imposed by India’s anti-trust authority.
Furthermore, Google was urged by around 30 app makers to postpone the removal of their apps for violating Play Store billing rules until their Special Leave Petition was heard by the Supreme Court.
The Data
India boasts the highest number of app downloads, yet it does not rank in the top 10 or 20 countries for app spending. Sensor Tower reported that users in India spent $520 million on in-app purchases on the Play Store in 2023, mostly on gaming apps.
While India leads in downloads, the spending is significantly lower than countries like the U.S. Sensor Tower also indicated an increased share of in-app purchases on the Play Store in India, highlighting the dominance of Android in the Indian market.
Opportunities and Challenges
With over 750 million smartphone users in India, there is a vast opportunity for app developers to reach a large user base. PhonePe’s refusal to charge commissions from developers initially presents a promising opportunity for marketers.
However, building and sustaining alternative app stores is no easy task. Aptoide, an alternative app store, has managed to attract a significant number of downloads but operates in a nearly breakeven manner. Robust security and user value proposition are crucial for any new app store’s success.
Image Credits: Aptoide
PhonePe’s ambitious plans to tap into the growing smartphone user base in India and offer an alternative app store come with inherent challenges, including competing with established app distribution channels.
