How Swadeshi Startups Snatched The IAMAI Rein From Big Techs

Who would have anticipated that just a written submission against digital competition laws in April 2023 would trigger a month-long saga that would result in the ouster of big tech from the echelons of power held within the Internet and Mobile Association of India (IAMAI).

For the uninitiated, the IAMAI counts all major startups, including Paytm, Unacademy, Ola, and PhonePe, among others, as its members. Since its inception in 2004, IAMAI has emerged as the voice of Indian startups and pitches to the government on behalf of its more than 500 members across the country.

After weeks of brawl, the industry body on May 25 announced the results of governing council elections. As the result was announced, what became very clear was that the new regime of the IAMAI leaders would count a heavy presence of Indian startup founders in a mix of its executive and governing councils. 

Taking away the IAMAI reins from the control of big tech companies, the new council was built in response to the unheeded pleas of Indian startups. Now, the new leaders have been tasked with lending a proper ear to the grievances and concerns of local players. It is this change that the new council wants to reflect on and also eyes giving a larger platform to Indian new-age tech companies.

However, a lot appears to have happened behind the scenes. With that said, let’s understand what could have prompted a nearly two-decade industry body, catering to tech businesses of the country, to land in a soup. 

The genesis of the fracas started when an increasing number of Indian startups started showing discontentment towards the actions of big tech giants. However, matters only came to blows when the IAMAI in its submission to a government panel opposed the idea of digital competition laws and ex-ante regulations. 

Next was a public display of discord between big tech giants and Indian startups, even as both clamoured for their interests. The matters took a twist after Indian startup members of IAMAI (such as MapmyIndia, Paytm, Matrimony, Shaadi.com) mounted a public defiance against the industry body. What followed was a tug of war as the rope veered conspicuously from the side of Indian startups to the side of IAMAI and big techs. 

The fallout curiously coincided with the impending elections of the industry body. From weighing different options such as abandoning the IAMAI or forming a different front, a consensus quietly emerged among a clutch of Indian startup founders and leaders as they undertook a plan to thwart the dominance of big techs within the IAMAI.

A month later, the result was for everyone to see. The results of the IAMAI’s governing council were announced yesterday and Indian startups were elected overwhelmingly to lead the industry body. 

Dream Sports’ cofounder and chief executive officer (CEO) Harsh Jain won the mandate as the association’s chairman, replacing Google India country manager Sanjay Gupta. Alongside, MakeMyTrip cofounder and group CEO Rajesh Magow was elected as the vice-chairman of the body while Times Internet vice-chairman Satyan Gajwani was chosen as the treasurer of the industry body.

While Jain, Magow and Gajwani, along with ex-officio member IAMAI president Subho Ray, will form the organisation’s executive council, the trio, along with 21 other newly elected representatives, will also form a 24-member governing council. 

They will take over the charge from the outgoing executives at the upcoming annual general meeting of the body, which is expected to be held in June.

“Happy to play a role in supporting the Indian digital ecosystem. Times Internet has been an active member of IAMAI for a long time, and we will continue to support the organisation… It has been 24 hours, so nothing defined as of yet (with regard to the new order of business). I’m sure the executive council led by Harsh will define our goals soon enough,” said Times Internet’s Satyan Gajwani.

The Rise Of The Swadeshi Startup Movement

Around the time homegrown players publicly sparred with big techs and IAMAI over the opposition to ex-ante laws, an intense debate was underway among a clutch of founders. 

A small coterie of Indian new-age tech entrepreneurs was weighing their options as to what their next plan of action would be. 

Requesting anonymity, one of the founders told Inc42 that while some suggested mass resignation from the IAMAI, others were of the opinion that Indian startups should float a new organisation that would bat for the interests of local players. 

It was during these brainstorming sessions, one of them is said to have shot down both ideas and pitched to wrest control of the body’s governing council. 

Citing time, money and resources invested in the industry body for nearly two decades, the same startup executive urged 24 startup members to band together and contest the IAMAI polls. As it would happen, a good chunk of these leaders either contested themselves or fought through their proxies. 

“Elections happened, we contested and Indian startups won fair and square. All 400-plus members voted consciously for Indian founders and we now have the reins of the IAMAI, which had turned into the bankrolled entity of big techs,” said one of the newly elected members.

One of the founders that Inc42 spoke with also touted the win as the triumph of Indian startups over foreign players and called on the central government to intervene and devise a mechanism to protect the interests of Indian startups from big techs. 

Sparks That Gutted The Big Tech Influence

The roots of the trouble could be traced back to the Google antitrust ruling, which fined the tech major in excess of INR 2,200 Cr. Sensing an opportunity to put forward their case of high commissions by Google, Indian startups mounted a legal challenge and sought to be made a party to the case. 

As the legal tussle unravelled, another major incident that attracted the ire of Indian startups was IAMAI’s explicit bid to put its weight behind big techs. This triggered a full-scale discord, with Indian players accusing the industry body of harbouring an anti-India agenda and being callous to the concerns of the Indian startup ecosystem. 

Despite Indian startups comprising a major chunk of its members, the industry body publicly opposed a digital competition law, much to the chagrin of its Indian members. The association even submitted a draft to the Committee on Digital Competition Law (CDCL) saying that its members were against ex-ante norms, without specifying how many actually backed the proposal.

The union government had constituted the CDCL earlier this year to look into the aspects of the report submitted by a Parliamentary panel on the anti-competitive policies employed by big techs. The committee has been tasked with exploring the need for new competition law and possibly drafting the Digital Competition Act. 

Indian startups believed that the consensus of all members was not taken into account by the IAMAI before drafting the submissions and that the industry body was batting for foreign players. 

Another founder told Inc42 that they were shocked by the sudden overtures of the IAMAI towards big techs, adding that Indian players suddenly realised that they had no platform to voice their interests. 

“We were left aghast by the sudden shift in IAMAI’s tone but it was not surprising. Big tech companies were sponsoring IAMAI events and by the time we realised what was happening, we lost any and all favour within the governing council. We were shocked that this happened beneath our nose,” said an Indian startup founder. 

Expressing his displeasure, another startup founder said that IAMAI went radio silent during the Google user choice billing row, which impacted Indian startups but suddenly ‘reared’ its head during the digital competition law which put big tech companies at risk. 

After being cornered by the Competition Commission of India, Google disbanded its old in-app billing system and unveiled new payment mandates. These new policies made provisions for third-party payment processors and still charged developers in the range of 11-26% even without using Google’s payments system.

These high commissions invited the ire of Indian players with top executives and founders of startups such as MapmyIndia, Shaadi.com and Matrimony publicly slamming the new charges, with some calling Google the Digital East India company and a threat to the Indian startup ecosystem. They also mounted a legal case against the tech major, eventually obtaining an injunction against the implementation of the new policy. 

A newly elected member also called for emulating the US model when it came to dealing with big tech monopolies. He further quoted the example of the US, saying that the North American country cracked the whip on the sole Chinese player (TikTok), which dominated the short video market in their country. He also called on the government to adopt protectionist policies to save the interests of local players against the dominance of global big tech majors. 

Curiously, among the cofounders elected to the governing council included PhonePe’s Sameer Nigam who publicly flayed the need for ex-ante competition laws. 

On whether the difference of view could impact consensus among Indian startups, another newly elected member of the governing council told Inc42 that while differences of opinion are bound to happen, the new regime, for the first time, gives Indian startups a platform to represent their interests. 

The previous governing council comprised Google India country head Sanjay Gupta as chairman while WhatsApp India’s public policy director Shivnath Thukral served as the vice-chairman of the body. The only startup representative in the previous executive council was Razorpay cofounder and CEO Harshil Mathur, who served as the erstwhile treasurer. Curiously, Mathur is still part of the governing council team at the IAMAI. 

In the previous regime, just eight Indian startups were represented in the governing council despite making the bulk of the IAMAI membership. Curiously, 11 foreign companies were part of the erstwhile 24-member council.

“There will be more, as well as active, participation of Indian startups. This time it will not be about some vanity metrics but rather the new IAMAI governing council members will have to give time to the body and work harder. We have to ensure that policy-making is conducive and reaches greater heights,” a cofounder said. 

Others also pointed out that the move to take control of IAMAI is especially important at a time when the overall Indian startup ecosystem has been hammered by funding winter and volatile market conditions that have wiped off most of the value of new-age tech startups since their listing. 

According to Inc42, funding winter continues to weigh heavily on the Indian startup ecosystem as capital raised by homegrown players plunged 66% year-on-year (YoY) to $888.45 Mn in April 2023. Similarly, the number of deals declined 60% YoY to 61 last month. Further, funding raised by Indian startups in Q1 2023 plummeted by 75% YoY to $3 Bn, compared to $12 Bn in Q1 2022. 

Not just this, unicorns and decacorns also seem to be in the bad books of investors who are ruthlessly slashing their valuations. From BYJU’S to Ola and from Swiggy to PharmEasy, investors have even slashed the valuation of their key portfolio of Indian companies by as much as half in many cases.

Calling for rebuilding and reframing IAMAI’s strategy, a founder said that there was a need to follow in the footsteps of NASSCOM to build an industry body that would fight for the interests of Indian startups. 

But, will the IAMAI be any different now? Times Internet’s vice-chairman and new IAMAI treasurer Satyan Gajwani believes, “All of us are aligned to ensuring that companies large and small that are impactful in the digital ecosystem have a voice at the table. We should all seek to help shape, promote, and build an environment that can see many great successful digital companies flourish and contribute back to India’s prosperity.”