The world is now full of smartphones and we use tons of applications on them. These applications enhance the basic experience of using a smartphone as well as provide tons of enhancements for utilities, services, games, etc. So, what is this magical place with so many options? An Application Store (generally abbreviated as app store) is a digital platform to host, distribute and download applications (generally abbreviated as apps). The most popular app stores are Apple App Store, Google Play Store, Microsoft Store, and Sony PlayStation Store, among others. However, in the world driven by smartphones, its Apple App Store and Google Play Store are ruling the roost, with around 2.2 million and 2.8 million apps respectively. These app stores are so embedded in our lives that we intuitively download and use an app from the app store provided on the phone, without even caring for what goes in the background.
While app stores are a necessity for end-user and developer experience, businesses have always shared a love and hate relationship with them. All app stores have stringent policies esp. concerning coding guidelines and monetization rules, not something that businesses using the storefront enjoy. Recent events in the world where Apple and Epic are fighting over the 30% store fees and Google making its payment system mandatory by October 2021 has brought up the discussion of app store monopolies of the two majors and has kick-started a discussion around creating an India app store – completely managed by Indians. Some of the startup majors in India have already had a brief discussion about this and the idea is gaining momentum.
So here we are trying to look at the possibility of an India app store from different angles.
IF an India app store were to be created, these might be the potential benefits
- An app store for Indians by Indians – For a population of over 1.3 Billion, smartphone users of 0.5 Billion, and an economy driven majorly by Information Technology exports, India doesn’t have a major contribution in the mobile OS ecosystem – except for publishing apps. An ecosystem for Indians by Indians could be an object of pride and major accomplishment.
- Locally Curated Apps – In the rush to acquire more and more apps, app stores are allowing every possible app. This has led to tons of copycat apps which leads to selection confusion. Also, many apps, from other parts of the world, may not be relevant to Indian users due to context. A local curated app store with relevant apps would reduce the number of apps but would lead to a higher quality of apps.
- Reduction in 30% Store fees – Businesses have always fought the 30% store fees that both Apple and Google charge. The ongoing battles between major gaming and music companies with the app store owners are a testament to the fact that 30% is now feeling like a big cut from revenues that companies are no longer wanting to part with. A smaller fee of 5-10% might ease the pressure of businesses, especially post COVID, and give them more money to spend on retaining employees as well as other business activities esp. R&D.
- Promotion of Local Startups – Startups are usually the most cash strapped and the condition of most is worse off since COVID. Any way to reduce the financial burden will not only ease the burn rate of existing startups but would drastically change the cash requirements of upcoming ones. This would promote more startups, and coupled with the Startup India initiative, might lead to the creation of more startups.
For a local app store, there would be tons of challenges too, including
- Very Expensive – Creating and maintaining an app store is a very costly business. It takes tons of resources to verify, secure, host, and distribute thousands of apps on a real-time basis. The bill just to host this may run into a few billions of dollars.
Any app store must spend money on
- Storage – to store multiple versions of thousands of apps.
- Processing Capacity – the system must be ready to handle thousands of requests per second at a very efficient rate, performance is the key to usability.
- Security – the store must be extremely secure to fend of bad actors of all kinds
- Tools – Along with providing already mentioned services, the store manager should provide state of the art tools to allow developers to communicate with the store.
- Feasibility with the existing ecosystem – Google Android allows installing apps from outside the Google Play Store. If Android 12 rumors are to be believed, Android would allow the loading of additional app stores along with Google Play Store for installing apps. This may work but the overall approach is still unclear at this point. On the other hand, Apple iOS is completely locked and does not allow installing any app from outside the Apple App Store. How would an India app store work with Apple iOS is completely unknown currently?
- Government Censorship – Another fear that app stores under Government control have is censorship. Now that the Government is actively involved in what apps and services enter the platform, it would have substantial control over what apps are approved or rejected. This may create conflicts that may be difficult for startups to resolve – both timely and monetarily.
- Government Surveillance – Just as censorship is a concern, there are risks of Government surveillance too. The Government could monitor every citizen on what apps they use, how they use it as may subsequently use it to monitor its citizens. Privacy laws in the country are still in the nascent stage and this form of surveillance may be disastrous without proper understanding and handling of PII (Personally identifiable Information) Data.
IF the Government decides to go ahead with the requisite legal and process changes to enable a well-regulated app store in India, these are the possible methods to fund this project
- Internet Tax – Add a component for Internet Tax for any company that earns most of its revenue from its users’ activities on the internet, say e-commerce or payment wallets. This fund could be used to build the app store as well as continuously maintain it to high standards.
- Voluntary funding from Orgs – Government could create an autonomous consortium of companies and work with them in a PPP (Public-Private Partnership) model. The funding could be driven from a smaller internet tax from all and a larger kitty fund from any startup that has an internet-dependent model and a high market valuation, say more than USD 50 million.
We ran through all possibilities that we see through the India app store and the pros and cons of having it for various parties. However, we still believe that a better approach to solving this problem would be dealing with the two app store giants and negotiating a bulk deal for all businesses registered in India. India has huge potential and has all internet and smartphone-based companies interested. In this scenario, if the Government could crack a deal of, say 10%, store fees for all Indian businesses, that would be a better deal for everyone than reinventing the wheel.