Indian tech cos could gain from Paytm-Google spat

Indian tech cos could gain from Paytm-Google spat

Chaffing at the bit at what it considers abuse of its market dominance by Google, Vijay Shekhar Sharma has launched a mini app store and plans to take on board one million apps by 2022. This could open the floodgates for Indian apps to grow in size and reach global scale soon.

Even as a US House of Representatives panel came out with a scathing 449-page report that documented the alleged abuse of their dominant market positions by the Big 4 tech companies - Google, Apple, Amazon and Facebook - Google India found itself locked in battle with a host of domestic start-ups that accused it of doing much the same in India - abusing its market dominance to snuff out competition and charge exorbitant fees for access to its Play Store. The net result: India may get its own version of the Google app store that will challenge the monopoly of the US tech giant.

The fight began September 18 when Google to block Paytm, India's leading homegrown payments app, from its Play Store for a few hours for allegedly being in breach of its no-gambling rule.

How the spat began

The genesis of this fight can be traced to a September 18 decision by Google to block Paytm, India's leading homegrown payments app, from its Play Store for a few hours for allegedly being in breach of its no-gambling rule.

The facts of the case

Paytm is challenging Google's decision to take advantage of its market monopoly and by virtue of that fact the control that US Big Tech wields in the Indian market.
Paytm is challenging Google's decision to take advantage of its market monopoly and by virtue of that fact the control that US Big Tech wields in the Indian market.

Paytm launched a cashback and scratch cards campaign centred on a popular cricket tournament that allowed users to collect cricket stickers and scratch cards and earn cashbacks on recharges, utility payments and UPI money transfers, etc.

In a blog, Paytm said: "Contrary to accepted practise, we were not given any opportunity to respond to their (Google's) concerns or put forth our views. We maintain that our cashback campaign was within guidelines, as well as all laws of the land. We did not break any rules and there was no violation. It is not related to gambling in any manner whatsoever."

More to read:

Sharma fights back

Paytm's feisty founder Vijay Shekhar Sharma may have unwittingly a chain of events that, if taken to its logical conclusion, could challenge the near monopoly of US Big Tech in the Indian market and set off a virtuous cycle that could propel the Indian technology sector - screeching and screaming - into the top rungs of the global value chain.

New Indian tech giants could emerge from this fight

His announcement of the creation of a $1.3 million seed fund that will enable Indian app developers to list on a mini play store app could be the first sound of bugle in a long-drawn war that could finally see Indian companies emerge as rivals to the Big 4 US tech giants and their equally leviathan-like Chinese rivals.

What, me worry  Google CEO Sundar Pichai will be facing the strain knowing that Google could lose credibility in the Indian tech environment if the Paytm action gathers steam among smaller players. The concept of market dominance by big players has also been observed and criticised by the US authorities as well..
What, me worry Google CEO Sundar Pichai will be facing the strain knowing that Google could lose credibility in the Indian tech environment if the Paytm action gathers steam among smaller players. The concept of market dominance by big players has also been observed and criticised by the US authorities as well..Credit: Getty Images

If that happens it could open up a third pole in what is currently largely a bipolar battle between the US and China for global dominance of the technology market. Already, Mukesh Ambani's Jio Platforms has set the cat among the pigeons by announcing a domestically developed 5G platform that could rival Chinese and European offerings and offer a cheaper alternative to both in may markets around the world.

The mini app store could do the same in the app world and challenge the dominance of Google Play Store, first in India and then, possibly, in other countries as well.

US Congress, Paytm on same page

The sentiment against abuse of market dominance was clearly articulated by the US Congress report that said: “To put it simply, companies that once were scrappy, underdog start-ups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”

The two developments are unconnected but the Indian app developers and the authors of the US report could well have been reading from the same playbook.

Competition for Google

If Paytm's fledging app store succeeds in taking on a market leader like Google then it would have met the goals of Make in India and Atma Nirbhar Bharat thus providing smaller companies to present their credentials on a global stage.
If Paytm's fledging app store succeeds in taking on a market leader like Google then it would have met the goals of Make in India and Atma Nirbhar Bharat thus providing smaller companies to present their credentials on a global stage.

Addressing a developer conference, Sharma said: “We are going to do city wise campaign to get more and more app developers on the mini app store... We want to do good things for the developers in India.”

And unlike Google, which charges a 30 per cent fee - a levy it has deferred till April, 2022 possibly as a result of this backlash - Paytm will not charge any fee from developers who sign up on the mini-app store.

Can Paytm's fledgling app store take on the entrenched market leader and succeed It's difficult to say at this time. But it definitely meets the goals of Make in India and Atma Nirbhar Bharat (Self Reliant India).

Still more to read:

Smaller Indian tech entities can ascend the global ladder

"App developers are dependent on a giant monopoly, Google and Google has started to play like a toll collector instead of trying to enable the ecosystem only... We will bring one million app before Google opens its charging obligation on each Indian developer," Sharma said.

According to sources, more than 300 app-based Indian service providers such as Domino's Pizza, Ola, FreshMenu, Netmeds, NoBroker and Decathlon, among others have joined Paytm's mini app store or will do so shortly.

Can Sharma succeed in this David versus Goliath contest And can Indian tech companies, now Lilliputs by global standards piggyback on Paytm's defiance and climb up to the top rungs of the global tech food chain. It's a big ask but not impossible.

Chinese companies have done it in the not too distant past. So, there's no reason why Indian companies cannot repeat that feat.
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