Why Indian Startups Are Hatching No Confidence Motion Against IAMAI

“Big tech companies are financing (bankrolling) IAMAI to oppose the new digital competition law, which is under consideration, and push their agenda and influence anything that could go against them in the future,” an Indian startup cofounder recently told Inc42.

The shocking statement comes a few days after infighting ensued within the industry body over a draft note that criticised the December 2022 report of the Parliamentary Standing Committee on Finance on anti-competitive practices employed by the foreign tech giants in the country.

At the core of the ire, triggering the infighting, is a digital competition law sought by the panel that seeks to curb the alleged dominance of these foreign players to bring forth healthy competition, innovation, and future-proof consumer protection provisions and privacy in India’s rapidly evolving digital economy.

With IAMAI sticking to its guns to oppose any new anti-competitive law, several startup founders have drawn daggers, accusing the industry body of reeking of ‘anti-India and pro-foreign’ propaganda.

Some of these startup founders even seek to formulate a parallel industry body that could work to protect the operations of the world’s third-largest startup ecosystem, barring it from becoming the slave to the whims and fancies of the foreign tech behemoths.

Amid this tug-of-war between Indian startup founders and big techs, let’s understand IAMAI’s role as a referee and why homegrown players are accusing it of being skewed towards deeper pockets.

Founded in 2004, the Internet and Mobile Association of India empanels some of the biggest names in the Indian digital ecosystem such as Paytm, Ola, PhonePe, and Unacademy, among others, and tech giants like Google, Meta and Microsoft, just to count a few.

The industry body is the voice of 500-plus new-age tech companies in the country. Being one of the oldest bodies in the ecosystem, its submissions hold heft and are considered by the government. 

Notably, it is this influence that the Indian cofounders see as being abused by big tech platforms to allegedly ‘further the interests’ of foreign players.

Meanwhile, according to MapmyIndia CEO Rohan Verma, another bone of contention is the industry body’s leadership, which is dominated by foreign-based big tech companies, despite Indian startups forming the bulk of its panel. 

It is pertinent to note that top executives of Google India and WhatsApp India serve as the chairman and vice-chairman of the body, respectively. 

It is at this platform that the Indian startups want their voices to be heard, given that the industry body and the people at its helm give recommendations on their behalf, which, ironically, startups have a bone to pick with.

To better understand how the industry body’s recommendations are skewed towards the interest of the tech juggernauts, here are the key points of the draft note circulated by the IAMAI, which slammed the Parliamentary Panel’s report seeking a new digital competitive law:

• IAMAI has raised concerns over the lack of clarity, underlying assumptions, and the absence of an evidence-based approach in the big tech report
•  Regulating any anticipated issues (ex-ante approach) runs the risk of chilling innovation via over-regulation, it said.
• The draft added that an inflexible and disproportionate regulation could impact the investment inflow, innovation, market diversity and consumer welfare.
• The current regulatory framework provides ample room for CCI to intervene swiftly while another competition regime is unnecessary and could lead to significant harm, the IAMAI noted in its draft.

IAMAI: A Spinner Of Yarns?

Interestingly, after facing brickbats from startups, IAMAI went into an offensive mode and told its members, in a letter, that the draft note was prepared based on the views of the majority of its members. 

In a written submission, it also claimed that ‘an overwhelming majority’ had opposed the idea of a separate digital competition law and ex-ante regulations.

“This is an absolute eyewash. A majority of us (Indian startups) strongly believe that it is important to have a separate law to control the foreign big techs in the country and this is happening not just in India, but globally too,” a startup founder said, requesting anonymity.

The IAMAI founding member and Shaadi.com’s CEO Anupam Mittal told Inc42 that the industry body was misrepresenting facts in the draft submission to get the agenda through, which it has been fed.  

Their statements could hold heft, especially when industry body IAMAI is questionably silent on Google’s billing mandates, which have lately received a lot of backlash from the industry players and the Indian judiciary.

Speaking with Inc42, Matrimony cofounder and CEO Murugavel Janakiraman said, “Despite Indian startups outnumbering foreign big techs in the membership count, IAMAI has pretty much stayed silent on Google’s new payment system, which is going to have a huge impact on the Indian digital ecosystem. Yet, when it came to the proposed competition laws, which could impact big techs, it got proactive and vocal in raising concerns,” said Janakiraman, who was the founding member of IAMAI.

Claiming that the industry body was run by big tech companies, Mittal called for holding more debates and discussions on having a strong law that could curtail the unabated strides of the big techs. He added that the absence of such a move would not be ‘kosher’, and could prove ‘unhealthy’ for the ecosystem.  

On a previous occasion, too, Mittal termed IAMAI a ‘mouthpiece of big techs’ and called the industry body a ‘failing lobby for big tech propaganda and misinformation’.

Speaking to Inc42, fintech startup Indifi’s CEO and cofounder Alok Mittal said that while there was merit to the issues flagged by Indian startups, avenues were open for local players to voice their issues in front of the government and other industry bodies. 

“All of us should understand that we are operating in India, which is the mother of all democracies, and everybody’s rights are preserved by law,” added Alok.

While we were busy collating responses from startup founders on the matter, MapmyIndia’s Verma took to Twitter and lashed out at IAMAI, saying the industry body was ‘parroting and promoting views’ that were ‘anti-India and pro-foreign big tech.’

“Sad to see various Indian trade bodies (being) lured by and acting on behalf of the interest of foreign companies. Foreign companies are certainly welcomed in India and appreciated – but know that it is your privilege to have access to the Indian market and that you don’t have a right to plunder India,” Verma said on the microblogging platform.

The Implosion Within IAMAI

Further, sources told Inc42 that a majority of Indian startups under the IAMAI umbrella are against the draft recommendations and have made their displeasure apparent to the industry body. 

Mincing a few words, a cofounder alleged that the big techs were ‘bankrolling’ (financing) IAMAI to oppose the digital competition law that is under consideration. The cofounder added that he was not very optimistic about IAMAI doing anything for startups in the country. 

Requesting anonymity, another startup cofounder alleged that many big tech companies were using ‘money power to push their agenda’. 

To him, it feels that the voice of many Indian startup cofounders is falling on IAMAI’s deaf ears. He also highlighted the industry body’s radio silence on Google’s new billing mandates. 

Interestingly, a few cofounders Inc42 spoke with, said that they were mulling plans to form a new association, comprising solely Indian startups, to better put forward the concerns of the homegrown ecosystem, in their quest to outdate IAMAI. 

Indian startups are also looking at backing existing digital advocacy groups like ADIF to bolster their case against tech giants.

Companies such as MapmyIndia and other startups Inc42 spoke with have also sought changes to the industry body’s board structure. 

A founder said that Indian startups should take the lead in overhauling the industry body (IAMAI) so that they can have a say at the table.

While Indian startups amp up the pressure, big techs seem to be caught between regulatory compliances and an array of other legal troubles. 

However, the confrontation with homegrown startups presents a unique set of challenges that could directly affect their revenues and profits.