Big Tech, Big Problems In 2022


Even the heavyweights of the tech industry are struggling to cope with the slowdown in 2022. And we are not just talking about stock prices. 

While it’s generally been a year where startups have had to come of age — and some even without wanting to — even the heavyweights of the tech industry are struggling to cope with the slowdown. And we are not just talking about stock prices.

For Google, Meta, Twitter and Amazon, this year has been one of their toughest yet in the Indian context with large fines, court cases, questions to ponder and big hurdles in the form of regulations. And as we wrap up 2022, here’s a handy recap of what exactly went wrong.

But before we do that, here’s a look at the top stories and features from the week gone by:

Big Tech Review Of 2022

From multi-million dollar fines, high profile court cases, shutdowns and layoffs — even big tech companies could not stay immune to the symptoms of the funding winter.

While for startups, the year has raised questions around chances of survival and runway, for the likes of Google, Amazon India, Twitter and Meta (Facebook), it was about mitigating the negative impact of their dominance on the internet ecosystem and tech as a whole.

While the CCI has dished out major fines to Google, the likes of Facebook (Meta) and Twitter have been questioned over various issues including moderation of content, compliance with IT rules, privacy policies and more. Amazon India’s deep discounting behaviour and preference for specific sellers has also come on the CCI radar.

Google’s Dominance Under Spotlight

As the Competition Commission of India slapped a INR 2274 Cr fine on Google over two separate instances of anticompetitive practices, the search and tech giant finds itself on the backfoot in one of its largest markets — from the POV of Android, YouTube and Google Search.

While these two fines will come as a relief to many Indian app developers and startups that have long wanted Google to loosen its policies, there could be more bad news to follow for Google.

Besides this though, Google is facing antitrust investigations for alleged abuse of its dominant position in the news aggregation space through Google News, the digital payments market through Google Pay, and there have been a number of complaints against Google Search also preferring to show its own services above rivals in results.

Being Google’s largest market in terms of the number of users, India continues to be an area of focus for the tech major.

Amazon Misses Out To Rivals 

As we saw recently, 2022 has been a tepid year for the ecommerce and tech giant. Having suffered multiple blows including losing out to Reliance on Future Retail and Metro Cash & Carry, Amazon curtailed its business in India towards end of the year.

It ended experiments in food delivery and edtech, and also pulled out of the B2B wholesale distribution space in November, giving up that space with Flipkart Wholesale and Reliance’s JioMart.

Besides this, regulatory pressure has come in the context of allegations that Amazon was biassed against certain sellers on its platforms, which have been investigated by the CCI and other agencies over the past two years. Earlier this year, the antitrust watchdog raided top sellers on Amazon and Flipkart, alleging unfair practices related to promoting preferred sellers

While regulatory hurdles are definitely not going to go away any time soon, Amazon has been dogged by stiff competition as well, so it’s definitely been anything but smooth sailing for the tech giant.

What remains to be seen is whether its core ecommerce business and AWS will prove to be enough of bulwarks against these headwinds and that could very well define 2023 for Amazon in India.

Twitter In Mess

Legal drama, a multibillion takeover, public spats and loads of uncertainty. For Twitter, 2022 has been a defining year.

Elon Musk took over the reins in October after a $44 Bn acquisition, and his first order of business was firing CEO Parag Agrawal and starting mass layoffs. In India, the new management laid off 80-90% of the team in a matter of days.

According to Inc42 sources, the social media giant is also looking to wind up its offices in Delhi, Mumbai and Bengaluru as it looks to curb spending.

India has not contributed significantly to Twitter’s bottomline despite being one of the largest markets despite the 24.45 Mn active users. For the first time in five years, Twitter Communications India reported a loss of INR 31.84 Cr in FY22 (ending March this year), compared to profit of INR 7.76 Cr. This rendering support services for Twitter’s group entities.

Of course, while the Musk takeover has grabbed the headlines unsurprisingly, the bigger problems in India for Twitter are around its lawsuit against the Indian government. Twitter India has dragged the government to court over orders to block accounts entirely instead of taking action against particular tweets for minor offences.

Meta’s Exits & Tussles

Amid plenty of regulatory concerns and legal battles, Facebook parent Meta continued to make waves in India, but not necessarily for the right reasons.

The primary concern for Meta would be the leadership exodus with WhatsApp India head Abhijit Bose and Meta India public policy director Rajiv Aggarwal resigning in November.

This was followed by Meta India head Ajit Mohan’s resignation, which came amid the company’s global restructuring effort. Before that, in September, Manesh Mahatme quit as the chief of WhatsApp Pay in India to join Amazon.

These exits have come at a time when there’s plenty of pressure on Facebook to be answerable for the data collection, content moderation and more. The Indian government has looked to revamp and tighten regulations around data protection while ongoing questions around the misuse of user data have kept the tensions between Meta and India high.

For instance, the CCI’s probe into Meta-owned WhatsApp’s privacy policy, introduced in 2021, did not find a resolution all through 2022, but the case is set to be heard in January 2023. Will the tech giant be able to make its case about the privacy policy not violating India’s concerns around data sharing from WhatsApp to Meta companies?

Big Tech In 2023

Tech market observers believe that Meta’s regulatory troubles will not vanish in 2023 as the company is too big to ignore. Already questions about its influence on politics and elections have made life difficult for the Mark Zuckerberg-led giant. With similar questions being raised in the US too, Meta’s troubles may not be restricted to India alone.

If 2022 is any indication, the general public perception of large tech companies and social media platforms has taken a beating. And this has had a wide repercussion on all big tech companies worldwide.

With the Indian market also maturing fast and local competition such as Reliance Jio and Tata Digital rising, tech giants will not have as easy a time in India as they have been used to.

Sunday Roundup: Startup Funding, Top Stories, Stock Markets & More

  • ? Funding Slow In December: Indian startup fundraising this week slowed down considerably with just $173 Mn raised across 17 deals. This is an almost 39% dip from the previous week
  • ✈️ DroneAcharya IPO: Pune-based DroneAcharya’s IPO was oversubscribed 262 times on the last day with bids worth INR 6,016.78 Cr received for 109.61 Cr shares
  • ? IPO Parade Halted: Spooked by market forces, the Indian startup IPO dash came to a halt in 2022 with only Delhivery, Tracxn and DroneAcharya going public. Here’s a recap of the year gone by from the stock market POV

We’ll be back next Sunday with more insights and another roundup from the Indian startup world.

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