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Securing the Future of India's Internet Economy

July 23, 2020 11:13 IST

'Google and Facebook need to be tamed, their garb of 'Investing in India's future' need to be pulled off,' observes Vibhu Arya.

Part 1: The Sale and Leaseback of India's Digital Future

Illustration: Dominic Xavier/Rediff.com

2007: The Digital 'Battle of Plassey' (external link) which Google Won.

This is Guruji.com! (external link) India's search engine started by 2 engineers in 2006.

Before Google and Facebook began yielding insane nuclear, monopolist market (external link) power, there was a generation of startups (Sequia funded (external link) Guruji, Sabeer (Hotmail) Bhatia funded ApnaCircle (external link) and a dozen others) that tried to build search engines, maps, and social media for India.

Those days, risk capital was scarce, India's venture capital partnerships were itself 'starting-up'.

Guruji (external link), was a search engine built on a proprietary technology 'that crawled the Web identifying Indian content using sophisticated algorithms'.

David vs Goliath (external link) style, Guruji fought a valiant battle with the infinitely more resourceful Goliath, Google.

Guruji lost and Google won India.

IMAGE: Robert Clive and Mir Jafar after the Battle of Plassey, 1757, by Francis Hayman. Photograph: Kind courtesy National Portrait Gallery/Wikimedia Commons

The Prophecies of Marc and Mark!

During the ensuing commotion of the global financial crisis and resultant parched venture capital funding, Google-Facebook firmly planted their pirate flags atop their 'search and social' empires in India and other emerging markets.

In the past decade, all Silicon Valley consumer technology giants have landed in India, built massive digital monopolies across vertical social media, mobile operating systems, and instant messaging and most recently invading, nation's economy critical, real-time-fast payment methods like 'our' UPI.

In 2016, coinciding with a decade of Facebook in India, this is what Marc Andressen, board member, Facebook (external link) said:

'Anti-colonialism has been economically catastrophic for the Indian people, Why stop now.' -- Marc Andressen

Mark responded to Marc's tweet with, 'India is personally important to me and Facebook..'

Relax, take a few minutes to think what then and continuing Facebook's board member Marc Andressen's freudian slip-of-the-tongue means for India.

The present, here is what digital colonialism looks like"

Actually, Marc Andressen and Mark Zukerberg, both forecasted correctly since India is very important, they and their ilk, have digitally colonised India.

Indians use these everyday, monopoly digital products because they have to (monopoly effect, zero consumer choice) and not necessarily, because they want to (competition is 'always' better for consumers, more choice and resultant value).

These companies are the new age opium houses, deploying armies of product and design managers to embed dark manipulative psychological designs (colours, fonts, dark patterns) in their products to maximize usage, both in frequency and recency.
This leads to a higher return-on-ad-spend for advertisers and resultant more ads, ultimately more profits fot platforms which drive up their market capitalisations.
The profits get ploughed in their digital Internet colonies in emerging markets.

If the features don't work, the promotional cash backs will.

Google has burnt truckloads of cash, investing in its India future, in-its-Payments future via GooglePay, now commands an outrageous 50%+ market-share of UPI (external link), and WhatsAppPay desperately waiting for a regulatory green light to join the UPI race.

India's Bhim app now holds a less than 2% share (external link).

'Local' UPI, 'Local data & 'they' get to monetize it.

Mitron vs Facebook Reels

Facebook has now rolled out Reels, the TikTok feature clone on Instagram to fill the vacuum left by a banned TikTok.

Perfectly legitimate, but their enormous social media platform distribution leverage leaves the brilliantly designed, heavily localized homegrown social media video apps by young Indians, some still in college dorms, as Indian comic Kunal Kamra says, 'Inka (college students) ka canteen main udhari hai, yeh kya...' at a severe disadvantage.

Let Chingari, Mitron and others not meet Guruji.com's fate.

Remember, Facebook won't ever list in India.

When Reels was announced, it shares jumped on the NASDAQ. Apple will soon hit a $2 trillion market cap. Not a cent of value will be created in India.

The below retweet innocently confirms how India inadvertently gets swooned by foreign tech giants.

Securing IN Digital's Future

Guruji did not have adequate resources or an 'enabling ecosystem of laws, for instance, 'application of anti-trust law regulation to digital monopolies' which could have ensured a level playing field' to fight with Google.

Google and Facebook are not invincible. Google is a search company, it cannot do social media, video calling or instant messaging.
Likeways, Facebook is yet to prove its mettle beyond their core competence of social media.
However both yield enormous distribution, possess financial and engineering resources aiding them to build products adjacent to their core competency, which they artfully copy, quickly build and relentlessly scale.
They need to be tamed, their garb of 'Investing in India's future' need to be pulled off.

Indian consumer startups are building great products. Flipkart built the e-commerce core competencies -- technology, logistics, assortment, analytics, user experience at par with giant Amazon.

Likewise, we have category leaders like Swiggy, Zomato, Paytm, Ola, OYO, Dream11, and, my personal favourite, the insanely efficient, orgasmic product experience of Cleartrip. I am a Cleartripper.

India's enterprise tech companies like Zoho, MuSigma, BillDesk are gods and need no introduction.

Redesigning IN's digital future

Europe (external link), Russia (external link), and Latin American nations (external link) are working to secure their digital sovereignty, China (external link) already controls its digital sovereignty.

If India could design and secure it's digital tomorrow - how we would do it?

Here is a 5-point actionable plan for MEITY (external link).

1. Build laws for local-digital-economic-value capture & harvest:

Foreign Internet technology companies entering India, must:

Build their local India entity (RBI has a similar law (external link) for Foreign banks, should they wish to operate freely (external link) like local banks, else they can run stymied (external link) operations)
Book all local revenue, locally (no financial shenanigans, nor regulatory arbitrage)
List their India entity, locally within X years of operations

2. Build laws for data sovereignty

Foreign Internet technology companies must data localise,

Data Localise i.e. all Indian data, to be stored in India only (MEITY could replicate RBI's similar regulation for payments (external link))
No data mirroring (external link) or creative-data-architecture arbitrage to circumvent the law
Enable European style, class-action lawsuits (external link) for violating laws with multi $ Billion payouts (external link) to affected, individuals, and small businesses.

3. Build 'digital' anti-trust laws

4. Implement laws, & offer poetic justice

Foreign Internet technology companies violating any of the laws, whether data localisation or local economic value capture, must be penalised in a sequence:

Severe public warning (Russia style (external link))
Concomitant fine (European style & sized, €1.49 billion (external link))
& then section 69a (external link), recently leveraged to ban CN apps in IN's national interest.
Ensure no conflict of interest, no funding from these technology monopolists.

5. Encourage, robust independent public policy thinkptanks for 'action-oriented research and dialogue' to secure India's future.

Thankfully, India has decisive political leadership, which, once it understands the implications and extent of the digital colonisation, can immediately secure India's digital future.

Vibhu Arya works in Singapore for a Chinese fintech. He says he 'utilises the extra hours' on his calendar to 'think and write synthesised perspectives on India's Internet Economy, specifically e-commerce, fintech, the new, sharing, and platform economies, the future of work and the gig economy etc.'
'I have no greater purpose than to help build a brighter tomorrow for India,' says Vibhu.
Reproduced with kind permission from https://plus91.substack.com/people/695002-vibhu-arya

Production: Ashish Narsale/Rediff.com

VIBHU ARYA