IASbhai Daily Editorial Hunt | 9th Oct 2020
Fortune always favours the brave, and never helps a man who does not help himself.– P. T. Barnum
EDITORIAL HUNT #180 :“Indian Startups Vs Internet Global Giants | UPSC“
Thillai Rajan | Jayadevan P.K.
Indian Startups Vs Internet Global Giants | UPSC
Thillai Rajan is a Professor , Indian Institute of Technology Madras and Jayadevan P.K. is a startup founder and writes on technology.
Should Indian startups take on global Internet giants?
India should compete only when it makes sense, on a level playing field
SYLLABUS COVERED: GS 3 : Internet : Startups : Digital India
The sheer dominance of Global Internet players have flagged Indian entrepreneurs severely in startups and advertising field . How should India compete with Internet Giants . Discuss -(GS 3)
- Dominance of International Player
- Competition vs Co-operation
- Is Google reasonable ?
- GOOGLE SUSPENDS PAYTM : This move came days after PayTM was removed from Google’s Play Store over apparent violation of its policies.
- GOOGLE RULES THE MARKET : The Play Store is the key app store for Google’s Android operating system, which runs over 90% of smartphones in India.
- A LARGE CHUNK : Google also announced that it will start enforcing a 30% commission on all payments made for digital services in apps from its Play Store.
- HEARTBURN CIRCUMSTANCES : Though the implementation of this plan has since been postponed to next year, it has caused much heartburn in the Indian startup environment.
- ANTI-TRUST LAWSUIT : There is discontent brewing against tech giants in their home country as well, with a similar tussle going on between Apple and some game developers in the U.S.
- BUDDING STAGE : The Internet startups in India are in the initial stages of banding together to take on the likes of Google and Facebook.
- GROWING MARKET PLAYERS : And as the market has grown, naturally the service providers and the app developers have also grown.
- MASTERING EXPERTISE : But in some ways, we have also been able to develop expertise in infrastructure.
- CAPACITY BUILDING : If we’re really looking at competing effectively with the likes of Google and Facebook, then we need to be well prepared.
- EVOLVED MARKET : The U.S. has been playing this match over and over again. Even markets like China have evolved and raced past India.
- MISSING INFRASTRUCTURE PIECE : From a product point of view, we don’t have the infrastructure that is required to build and scale nimble startups.
- INVESTMENT LAG : India doesn’t have large infrastructure players that can help set up stuff.Everybody in the Indian startup ecosystem knows that we’re not there yet.
COMPETITION AND COOPERATION
AN INDIAN APP STORE
- MANUFACTURING STRENGTH : India practically has no real manufacturing or chipmaking.
- LOCAL MANUFACTURERS : We still have companies like Indus OS which have built app stores, and have about 100 million users.
- LARGER ECOSYSTEM : That’s a sizeable population, but it’s still not deep enough to be like a Google or Amazon which coexist in an ecosystem like India.
- SHEER DOMINANCE : Google has a near 100% dominance in the app marketplace in India.
- MARKET EXPANSION : It has also spent a lot of time expanding the market by localising its products. So, from that point of view, Google has been investing in the Indian market.
INDIAN ENTREPRENEUR’S POINT OF VIEW
- BROKERAGES : Are we paying too much to access our own users by giving a 30% cut to Google when we are selling a service or a product through an app on the Google App Store?
- ADVERTISEMENTS : In effect, a large chunk of all the money that these companies make goes to Google and Facebook.These companies also have to advertise via Google to reach their customer base.
- CHALLENGE : The challenge is that India as a market itself is poor, in the sense that it doesn’t have enough spending capacity.
GOLDEN THUMB RULE
- India is still at about $2,000 to $2,500.
- So, here potential to monetise this user is very low.
- If we end up spending a ton of money on distribution and on the commissions to Google and others, you end up with practically nothing.
- That’s the challenge that entrepreneurs have been flagging.
GOOGLE HAS BEEN REASONABLE
- Companies like Google or Amazon also do not operate like a foreign entity.
- It’s good to have these foreign competitors who are willing to abide by local laws.
POLICY FRAMEWORK NEEDED
- REACTIVE POLICYMAKING HURTS : We also cannot have too much of reactive policymaking against them as it doesn’t signal well for attracting foreign investors.
- INTERNET IS GLOBAL : Also, it is a slippery slope to be nationalistic about products that are built for the Internet, which is global.
- STRICT MEASURES : If we create a very strict policy environment which encourages only local Indian innovation and tries to stave off foreign competition.
- TRUTH OF DIGITAL INFRASTRUCTURE : Now, the truth is that a lot of these Indian companies are also funded by Chinese or U.S. investors.
SOURCES: THE HINDU EDITORIAL HUNT | Indian Startups Vs Internet Global Giants | UPSC