Tech giants play Monopoly

A few weeks ago, in the last quarter of 2017, China blocked WhatsApp, the instant messaging service that has become the default communication option for over 1.5 billion users across the world. Over 100 million voice and over 60 million video calls are made everyday on the messaging service. China remains unimpressed with these numbers and just went ahead and blocked the service.

It’s the same for Twitter, Facebook and Google in China. They are virtually inaccessible for the hundreds of millions of users in China. These and other tech companies from US and EU are struggling to make an impact in the Chinese market. China promotes its own Baidu, Weibo and Wechat while keeping US companies out.

India, on the other hand, has been a relatively smooth ride. With over a billion mobile phone connections, India will have more than 500 million smartphone users by the end of this year, according to an estimate. China will have double the number of smart phone users.

India though is a more attractive place for the big five tech giants with no State-mandated restrictions and a free market approach to competition. Google, Microsoft, Amazon, Facebook and Apple are doing fabulously in the largest free market democracy of the world. Twitter is now the mainstream platform for news, views and rants for Indian users.

These tech giants should be celebrating the open market approach of India. They should be respecting the freedom they have to make the most of millions of users who join the digital mainstream every year. The situation on the ground though suggests that they are also trying to undermine the freedom and do what they like best. Create monopolies, unfairly curb competition and undermine policies that seek fair play for everyone.

Indian start-ups and user companies are fighting against the dominance of global players in India. As this tussle plays out, it is important for policymakers and tech companies to remember the immense freedom of operations available in Indian markets. India should not get the impression that tech giants are bent on exploiting this freedom. India is not China and should not be either. However, the constant attempts by tech companies to create and intensify their monopolistic presence should be met by a fierce response by policymakers and regulators.

Google was fined $2.7 billion by the European Commission in 2017 for breaching anti-trust rules. Commissioner Margrethe Vestager, in charge of competition policy, said in a statement: “Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing. But Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors. What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.”

The Competition Commission of India (CCI) made a similar ruling with a fine for Google earlier this month. “Google was found to be indulging in practices of search bias and by doing so, it causes harm to its competitors as well as to users,” the order said. “Google was leveraging its dominance in the market for online general web search, to strengthen its position in the market for online syndicate search services,” CCI said.

This is not the first instance of a tech giant trying to undermine the free market of India. Facebook had to beat a hasty retreat with its gated approach to internet access with Free Basics in 2016. The telecom regulator was wise enough to rule against an attempt to curb free access even though the debate around net neutrality continues in many countries, including the US.

Once again Facebook is facing questions with the launch of digital payment through WhatsApp messaging service that it bought over in 2014. Along with Google Tez and PayTM, WhatsApp wants to get a big slice of the digital payments market. Google Tez already has 12 million users and has processed over 140 million transactions. PayTM dominates with over 200 million users and 60 million transactions per month.

WhatsApp has launched the payment service initially for a limited few among its 230 million users in India. PayTM and some others are criticising WhatsApp for creating another gated community. PayTM is backed mostly by Chinese investors.

Neither Chinese nor US based companies should see Indian regulatory regime as soft and pliable. India should take the tough line taken by European Commission to ensure that technology platforms are free and accessible to all. Market dominance that places huge costs on new, innovative start-ups can’t be allowed to flourish in India. China blocks platforms like WhatsApp and Twitter. India shouldn’t block them, but must block their monopolies.

The writer is an economic analyst and author of Kranti Nation: India and The Fourth Industrial Revolution