[The Outline By Inc42 Plus] India Inc Fights Bigtech

Spartans!

The world will know that free men stood against a tyrant, that few stood against many, and before this battle was over, even a god-king can bleed…

India’s antipathy towards the latest changes in WhatsApp’s privacy policy and the clout of the Bigtech, including Facebook, Google and the likes, is a throwback of sorts to the fierceness of King Leonidas in his battle against the Persian King Xerxes, famously portrayed in the epic movie 300.

Whether an en masse boycott of WhatsApp will be achievable or the disapproval and the debate will be limited to the Twitterati is yet to be seen. But data privacy has undoubtedly made its way to dinner conversations at Indian homes. The Indian startup ecosystem can also pat itself on the back for countering Bigtech’s data dominance.

“It’s time to take the fangs out of tech monopolies like Facebook and create credible alternatives,” noted Hari T.N., an angel investor and head of human resources at Bigbasket. According to him, Facebook and WhatsApp will no doubt spend boatloads of money to show us that our data is secure with them.

In a way, the strong voice of India’s startup ecosystem stems from the fact that the country happens to be the largest market for these internet giants, and no company can ignore it. A look at the current numbers also confirms this assumption. For example, India accounts for 98.79% of Google’s search engine market share. WhatsApp has more than 400 Mn users in India while Facebook had about 250 Mn users in India in 2017). And the number of internet users in India has already reached 700 Mn+.

“They say the market has power. We are the largest market. Here in India, WhatsApp and Facebook are abusing their monopoly and taking millions of users’ privacy for granted. We should move on to Signal App NOW. It is up to us to become victims or reject such moves,” tweeted Vijay Shekhar Sharma, founder and CEO of Paytm.

Meanwhile, WhatsApp says that the policy update will not affect users’ private messages with friends or family in any way. The update is all about the changes related to user-to-business messaging on WhatsApp. It also provides better transparency about how the company collects and uses data.

However, the defiance goes above and beyond the technicalities of WhatsApp’s privacy update and questions the display of supremacy. Sairee Chahal, founder and CEO of SHEROES, a community platform for women, says, it is about the company and its attitude towards its users, especially in a non-native country.

Chahal and 10 or more startup founders such as Snehil Khanor (cofounder and CEO of TrulyMadly) and Ritesh Mallik (founder and CEO of Innov8 Coworking) have come together to form a startup lobby called Atmanirbhar Digital India Foundation (ADIF) to create a level-playing field for Indian tech startups and advise the government and sector regulators on legal and policy frameworks.

“If Europe and the US have strong data protection and anti-competitive regulations for Bigtech companies such as Amazon, Google and Facebook, then we, as the world’s next-largest internet market, will also have to step up our efforts and explicitly address data protection and regulations concerning Bigtech companies,” Khanor told Inc42. More members are expected to join the ADIF initiative, and elections will be held to appoint the office bearers in a couple of weeks.

Apart from the larger debate on how to end Bigtech’s monopoly, the ongoing protests against WhatsApp have also brought to the fore several significant occurrences. Business leaders are exploring options away from WhatsApp. Or while on it, they are exercising caution while communicating with their teams. Finally, the market for alternative messaging platforms is opening up and homegrown companies are likely to benefit from it.

To substantiate Bigtech’s never-ending monopoly, Hari T.N. recalls how in 2014, Mark Zuckerberg sold the idea of free internet to India. But the fine print revealed that the social media giant’s proposal actually covered Facebook and a handful of other sites. “Facebook would allow specific commercial sites to be available for free, but would not permit others (including those which were competing with the ‘free’ sites). This violated the idea of net neutrality,” he says.

Battling It Together

Unlike the past, when the startups’ battle against the deeply entrenched Bigtech was a somewhat lonely affair in India – not too many people were vocal against Google-Apple charging 30% commission – users are now fighting it together. It is not surprising, though, as WhatsApp is a household name across demographics. The recent spike in the number of Signal and Telegram app instals is also proof that it is no longer a lonely battle.

Whether the privacy debate will retain its momentum among the masses is not clear yet. But startup founders have put the ‘signal’ out there (pun intended) that the dominant position of Bigtech cannot be misused.

A key reason why most privacy discussions in India are still a kind of hashtag affair is that the country does not have any regulation that specifies how individuals’ online data should be stored or processed. Incidentally, the Personal Data Protection Bill, 2019, has witnessed multiple delays and is not finalised yet. The committee, which was set up in 2017 to address data privacy concerns, submitted the draft Personal Data Protection Bill in July 2018, but things did not move as fast as expected. The government is likely to table the bill in the upcoming Budget Session of Parliament.

“The fine prints for intermediary regulations are not out yet. So, WhatsApp can currently do whatever it wants in terms of data processing. As of now, business conversations with customers, or at least the metadata, can be used for retargeting of ads,” a lawyer who advises tech startups has told Inc42 on condition of anonymity. For the uninitiated, metadata includes data points of a message such as time, location, names of sender and receiver, communication frequency, IP address, the nature of business and so on.

The law firm moved out of WhatsApp a year and a half ago and currently uses Slack as some of the information it has is highly sensitive.

The brouhaha over WhatsApp is understandable. In recent years, the messaging platform has become a formal communication channel for many tech companies, both for internal and business-related external communications. “Especially in the ticket booking, doctor consultation and logistics segments, WhatsApp is used as a medium to share constant updates with users,” says Rameesh Kailasam, CEO of IndiaTech.org, a think-tank for startups. It means any upcoming regulation on online privacy will have to address the human-to-business and human-to-human interactions explicitly, he adds.

Given the complexity of the scenario, some business leaders are not only moving to other platforms like Telegram for personal chats but also taking their employees along. “Moved 1,000+ @PhonePe-rs to Signal. Recreated all my work groups. Moved my family groups. Seamlessly,” tweeted Sameer Nigam, founder and CEO, PhonePe.

Many companies on WhatsApp would like to err on the side of caution. Logistics tech startup Shiprocket has told Inc42 it will be wary of sending business information to users until the company clearly understands how WhatsApp intends to process messages between businesses and users.

“Until now, we have assumed our conversation with our merchants to be private. But with this change, things will be different. If we send a receipt or a daily summary of a merchant’s business on WhatsApp, someone (potential competition) may use that to target our users, and we feel really concerned,” says Saahil Goel, CEO and cofounder of Shiprocket.

Goel was already using Slack, a business communication platform, when the controversy kicked off. Had it not been the case, he would have surely done it now to steer clear of contentious issues.

Consequently, several startups may soon move away from WhatsApp to protect their business communications. At least two law firms, which advise startups, have told Inc42 they have sent out caution notes to their employees, asking them to cease using WhatsApp for business or internal communications.

The Times They Are A-Changin’: Opportunity For ‘Make In India’

Interestingly, every crisis brings with it never-before opportunities, and this one is no exception. Now that people are searching for WhatsApp alternatives, SaaS giant Zoho beta-launched its messaging app called Arattai. Within a few days, its download numbers breached the 20K mark on iOS and Android.

As author, Hari T.N tells us, “Under normal circumstances, it is difficult to create an alternative to a tech company that has used the network effect to entrench itself deeply. But this action by WhatsApp has provided that thin wedge in the door, and we must use this to break the monopoly.”

A similar trend was observed after the Indian government banned around 220 Chinese apps (including the hugely popular PUBG game and the short-video app TikTok) last year after a geopolitical conflict. The outcome: A host of made-in-India short-video apps like Chingari, Roposo, Mitron, and Trell immediately jumped in to fill the gap.

Within a day, Chingari’s viewership almost doubled to 370K users per minute from 187K. Regional social media platform Sharechat’s Moj app, which was launched right after the ban, saw more than 10 Mn downloads in less than a week. Also, Indus App Bazaar, an indigenous app store, said it saw a huge rise in the number of homegrown app instals after the ban and crossed the 100 Mn user mark in September 2020.

The Right Move

The pushback against Bigtech’s dominance in India has only started to gain momentum in the past year even though governments worldwide are already scrambling to keep abuse in check.

In the US (home to some of the most prominent Bigtech firms), lawmakers have already launched a comprehensive study and investigation into the network effects of companies, including Amazon, Google, Facebook and Apple.

In Oct 2020, a 400-page report, released by a committee formed under the US House of Representatives, issued stern warnings to the public on how the four companies can act as unregulated gatekeepers who get to control “key channel of distribution (in their segments)”. The four companies make up a market capitalisation of around $5 Tn, which easily surpasses the value of the S&P Index, the report noted. As their services (ecommerce, smartphones and social media) become a central part of Western society, the US government seems to be waking up to new challenges in regulating these tech firms.

India, too, had acted against Bigtech’s predatory tactics in the past although it was a low-key affair compared to what is happening now. Between 2015 and 2017, Facebook’s controversial free-Internet product Interent.org (aka Free Basics) saw a massive pushback from internet activists and users alike. At the time, Facebook brought out front-page ads in newspapers to convince Indians that its free-Internet service was centred around net neutrality principles. But the Telecom Regulatory Authority of India (TRAI), one of the country’s top regulators, did not buy it.

In Nov 2017, TRAI passed an order banning ‘discriminatory pricing’, which essentially banned telcos, ISPs or any other internet firm from introducing differential tariffs based on the type of content. In brief, the TRAI regulation upheld net neutrality in India and deemed Facebook’s Internet.org as discriminatory.

Today, a similar ad campaign is being pushed by Facebook to counter the WhatsApp backlash. But the times have changed, and the battle royal against Bigtech has begun in earnest. Last year, 40 entrepreneurs approached the antitrust watchdog, Competition Commission of India (CCI), regarding the 30% commission Google wanted to charge for selling digital goods and services on its Play Store. But following the hue and cry, the company had to postpone its new billing policy in India from January 2021 to April 2022. The same group of entrepreneurs is now leading ADIF to fight how Bigtech is trying to monopolise the ecosystem.

The earlier measures taken by TRAI cement the fact that Indian regulators and lawmakers are perfectly capable of regulating Bigtech. But when it comes to upholding data privacy, there have been setbacks. As of now, India does not have a comprehensive data protection system in place that allows regulators to act against potential violation of data privacy. Hence, the country’s tech startups and entrepreneurs are working proactively to help build an ecosystem that will keep Bigtech’s dominance in check and also ensure that a timely policy and regulation framework becomes operational in India. Building a data privacy ecosystem is just one part of it. And the fight against WhatsApp or Google’s policy is just the beginning.

As the dialogue of King Leonidas in 300 goes: “No retreat, no surrender. That is Spartan law”. Or rather, startup law!

Prepare for glory!

Until next time,
Shanthi, Salman