Walmart-backed PhonePe is all set to introduce its very own Android app store, offering a unique opportunity for developers with zero commission for in-app purchases. The app store is built on Indus OS’ technology, a company that PhonePe acquired in 2021.
Key Takeaway
PhonePe’s launch of its Android app store with zero commission for in-app purchases presents a significant opportunity for developers in India. However, the company will need to navigate challenges related to user trust, security, and competition from established app distribution channels.
Developers’ Push for an Alternative Store
In September 2020, Google temporarily removed Paytm’s app from the Play Store, citing a breach of platform rules. This incident led to the formation of a coalition by Indian startups, including executives from Paytm, MakeMyTrip, PolicyBazaar, RazorPay, and ShareChat, to explore an alternative app store. The primary motivation behind this move was to address concerns such as Google’s 30% fee and to advocate for a “Made in India” app store.
Google’s Response and Market Insights
In response to the push for an alternative app store, Google reduced its commission from 30% to 15% for the first $1 million earned by developers from the Play Store annually. Additionally, Google initiated a user choice billing program and, following a ruling by India’s anti-trust authority, allowed all apps to use alternative payment processors.
India, despite being a top market in terms of downloads, does not rank in the top 10 countries by spend. Sensor Tower estimates that users in India spent $520 million on in-app purchases on Play Store apps in 2023, with gaming apps accounting for over half of the total spend.
Opportunities and Challenges for PhonePe
With over 750 million smartphone users in India, there is a significant opportunity for app makers to reach a large user base. PhonePe’s promise of no commission for developers at the outset, along with no listing fee for the first year, presents an attractive proposition. However, building and sustaining an alternative app store presents its own set of challenges, as evidenced by the experience of Aptoide, which operates in a “nearly breakeven” manner despite catering to a substantial number of downloads.
Security and User Trust
PhonePe will need to prioritize robust security measures to counter malicious apps and address concerns related to predatory loan apps. Convincing users of the value provided by the new store compared to the default Play Store will be crucial in driving app downloads from the platform.
