Google wants its share of SHAREit’s sideloading pie

In the bylanes of Hazaratganj, in Uttar Pradesh’s capital of Lucknow, mobile phone retailer Ganpati Mobile is doing brisk business. Each day, around 300-400 customers walk into its 2,200 square foot shop. But they aren’t all there to purchase cell phones. The store is also where content—from movies to songs and even apps—is exchanged. And the shop owners are the digital gatekeepers.

Once a purchase is made, store manager Sunil Yadav first installs Chinese peer-to-peer (P2P) file sharing app SHAREit on users’ phones. Using this app, Yadav ships essential apps onto users’ phones. “In three minutes flat I can send WhatsApp, Facebook, Flipkart, Truecaller, Paytm, Google Tez,” says Yadav. Internet isn’t required for this, a type of WiFi hotspot is all it takes.

Yadav says that 80% of the people who walk into his store are aware of the app already, and for the 20% who are not, Yadav tells them about it since it makes his life easier.

This begins to explain SHAREit’s popularity in the country. The app claims to have 400 million Indian users, with about 200 million monthly active users (MAUs)—nearly as many as the ubiquitous messaging app, WhatsApp. According to app analytics firm App Annie, SHAREit was the sixth most-downloaded app in India in 2017.

Despite this, it has largely stayed out of the urban consciousness.

A file transfer app owned by the Lenovo Group, SHAREit broke out of the hardware Chinese multinational in 2015. This was when it reached Indian shores, a time when data was costly and the idea of sideloading was a panacea for India’s content-hungry and data-starved masses. Back then, shops like Yadav’s plied people with content through the medium of memory cards. Google’s mobile operating system Android allowed this kind of sideloading, unlike Apple’s iOS.

Memory cards, though, were cumbersome. Soon, Beijing-based SHAREit took over, spreading like wildfire. Its adopters were mostly Android users (though it’s also available on iOS and Windows) who owned cheap smartphones and wanted content. Three factors—costly data, no access to the Google Play Store, and poor network connectivity—ensured that people were soon hooked to the app.

But the undiminishing popularity of SHAREit came at a cost for Google. It chipped away at the idea of the Google Play Store as the sole destination for Android app downloads and created a blind spot in Android’s app ecosystem. Now, the search giant, which has thus far remained on the sidelines of sideloading, wants a piece of the action.

Sideloading and sidestepping

It began with the announcement of an engineering tweak. In June, Google said that all apps on the Play Store will carry a file signature—a marker of sorts for Google to identify Play Store apps. As a result, Google will be able to track apps circulated through sideloading. Then, in the last week of October, Google said it would partner with SHAREit to verify the authenticity of all apps that pass through SHAREit. This global partnership will give Google access to all the apps shared amongst SHAREit’s 1.5 billion-strong global user base, spread across 200 countries.

No home comforts

After India, Indonesia is SHAREit’s largest market. Ironically for a Chinese app, China is not a big market for the company on account of the country’s bustling third-party app stores

Google is taking this step to eliminate the security risks associated with sideloading. But it is also Google’s way of becoming an inextricable part of the sideloading channel. “It makes sense for Google to insert itself into this value chain to regain control, reach its users, and to promote its services. If they lose visibility on what users are doing, it can’t monetise those users,” says Ritesh Banglani, partner, Stellaris Venture Partners. Stellaris has researched the internet habits of users in tier two towns to find trends that will help them invest.

The value chain’s importance is reflected in the way apps adopt SHAREit as an alternate distribution channel. Take Udupi-based 99Games, for example. The company makes games like StarChef, which has 2 million downloads in India in three and a half years. About 35% of these installs comes from sideloading. 99Games founder Rohith Bhat says as much. “We look at sideloading as an opportunity. We are always looking for different ways to distribute our apps and get additional installs,” he says.

A popular regional social networking app even decided to make itself SHAREit-friendly with a feature that allowed users to share its apk (Android PacKage, a format in which apps are distributed) via SHAREit. A senior executive said this feature only made sense since people were sideloading the app through SHAREit anyway. Rather than fight this, the company decided to go with the flow. He didn’t want the name of the company disclosed as he is not authorised to share numbers. Earlier, when the app had just around 20,000 installs a day, SHAREit contributed to 30% of all installs. Today, while the social networking app sees 200,000 installs a day, SHAREit accounts for 10% of them. In March, Google asked the social networking app to disable their apk-sharing feature, saying it violated Google Play Store guidelines.

The immediate reason for Google’s unhappiness with sideloading is simple. If the Play Store is no longer the go-to destination for apps, Google misses out on revenue. As it is, it lets anyone build an app store on top of Android. Samsung and OnePlus have their own app stores on Android. After Apple and Google’s first quarter 2018 results, investment bank Morgan Stanley’s research arm said that Google earns an average of $0.10 for every app download. This is because companies pay Google a 30% cut of any purchases a user makes through the app. And when apps are sideloaded, while the companies still earn, they don’t have to pay Google.

In China, where the Google Play Store is banned, $35 billion was spent on apps in 2017. Not a single cent went to Google. In all fairness, Indians don’t spend nearly as much on in-app purchases. According to AppsFlyer, a global mobile marketing analytics company, Indians made $400 million worth in-app purchases in 2017. Even so, sideloading is a trend that Google would like to nip in the bud given that India has the most Play Store app downloads over the last seven years—36.9 billion, according to App Annie. This is the most by any country.  Given that around a third of all app installs in the country are sideloaded, curbing this could provide Google with valuable revenue.

But it’s more than just the money. SHAREit is also taking Google further away from users it’s desperately trying to get to.

The trail to next billion users

Back in Hazratganj, Yadav says some of the most loyal users of SHAREit are those in tier 3 or 4 cities. These users are not accustomed to the idea of Play Store. “People in these towns rely on their friends and storekeepers for apps and app updates. They pay Rs 10-50 ($0.14-$0.71) for getting apps,” he adds.

These users are crucial, as they form the target demographic of Google’s Next Billion Users initiative—the search giant’s plan to take its products to the mobile-first internet users in tier 2 cities and beyond. Given these users’ preference for SHAREit over the Play Store, Google runs the risk of losing visibility of these users. “Offline sharing is a distinct behaviour of the tier 2 markets and beyond. And to get to the next billion users, Google needs to understand what is shared offline,” says Aprameya Radhakrishna*, founder of Vokal. Vokal is an Indian language knowledge sharing platform targeted at the non-English internet users.

The more Google doesn’t have visibility of sideloaded apps, the less it understands what the users want to see. The less it understands the users, the less relevant Play Store becomes, further driving people to adopt sideloading. This perpetuates a cycle where Google is increasingly excluded. With the partnership with SHAREit, Google could put an end to this cycle.

One may argue that apps are not the only way with which Google can keep track of the next billion users. But all its marquee services are under attack. If YouTube is the most popular content platform with 225 million MAUs, Hotstar is hot on its trail with 150 million MAUs. If Chrome controls 52% of the mobile browser market, there is a UC browser, which has 27% of the market. In light of this, the rise of SHAREit as an alternative to the Play Store can be unsettling for Google.

Surviving Jio

The P2P sharing frenzy should have died in India two years ago after Jio slashed data costs when it launched in October 2016. Luckily for SHAREit, it didn’t kill sideloading. Telcos’ persisting areas of weaknesses—things like connectivity and speeds—ensured the Chinese app lived on.

Jason Wang, the MD of SHAREit India, says that while Delhi, Mumbai, and Bengaluru are oversupplied in terms of network strength, tier 2 and 3 towns are still plagued with unstable connection or very low speeds even when there is full signal. Google, too, has been aware of India’s unique consumption patterns, which is why it made YouTube videos downloadable in 2017 for offline consumption. India is the only country where Google has made this allowance.

Same with internet speeds. SHAREit can transfer files at speeds of 20-30 MBPS, while sharing on telco networks is considerably slower, often taking minutes to do what SHAREit takes mere seconds for. As a result, large games and movies are shared widely through P2P sharing apps. Google’s insistence on Gmail accounts for Play Store access has also been a deterrent for users in tier 2 and 3 towns, says Wang. “More than 30-40% of the Indian internet population is not equipped with a Google Play account,” he says.

It is not just users in tier 2 towns with patchy internet who are looking for the comfort of sideloading. It is also data thirsty millennials who want all the free data they can get. 18-year-old Kaushik Burad, an undergraduate student at Loyola College, Chennai, isn’t data-starved by any means. He uses a Jio connection and buys the three-month pack for Rs 350 ($4.9), which affords him a cool 1.5GB of data every day. But he wants more. “I use Play Store only to download apps that no one else has. But for apps that everyone has like Instagram, Flipkart, I get it through SHAREit,” he says.

But even though SHAREit has survived so far, how does it survive Google?

Imminent danger

For users, the SHAREit-Google partnership is great. Installing an app shared via SHAREit now becomes a one-step process and is verified by Play Store. For SHAREit though, there are threats. Its future as a P2P sharing app is not competition-proof as Google , earlier this month, relaunched its own P2P sharing product, Files. The earlier avatar of the app was launched in 2017 and was called Files Go. However, with just 30 million global users, it didn’t catch on the way its Chinese rival did. “The success rate of files transferred through Files Go was nowhere close to SHAREit,” says the senior executive of the regional language social networking app.

This time though, Google may be taking notes from its partner. And while Wang says he does not view Google as a threat, SHAREit will undoubtedly be looking over its shoulder.

Meanwhile, SHAREit—both in India and abroad—is looking to focus on a content play. Wang says its focus over the next two years is to bring mobile entertainment and content to its users. “We’ve seen that the Indian market has mixed demand for various types of videos. As a content platform, what SHAREit does is to match accurate content to right users based on AI and big data,” says Wang. For this, it has partnered with Hungama, Times Music, Speed Records, Comedy One and books publisher Juggernaut. It also acquired South Indian film streaming app FastFilmz in 2018 at a $13 million valuation.

SHAREit did not share its revenue and investment plans for India. But while it has thus far been earning through ads on its platform, content seems to now be the way forward for SHAREit to leverage its 400 million Indian users. So, while Google tries to emulate the SHAREit of today, the company is looking to stay a step (or two) ahead of its larger, less agile rival. This, it hopes, will ensure its survival in the company’s largest market.

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