Is India’s Hike Using Unfair Means To Kill It’s Competition?

Srivatsan
Srivatsan is the Tech co-founder of Ridingo.com, a Forbes Hottest Global Startup. He loves coding and building customer centric products. He talks about technology and startups regularly at his blog.

For people who do not know the background of Hike, here’s a brief introduction.

Hike — is India’s most used Internet messenger (Whatsapp clone). Google Play alone says that it has 10Mil-50Mil downloads. It was launched in Dec 2012. (Wikipedia). Hike is the child of Bharti Softbank (BSB).

BSB — Bharti Softbank is a joint venture between Bharti Enterprises (The company that owns and operates Airtel Telecom) and Japan’s Softbank. BSB recently raised a USD 65Mil round of funding led by Tiger Global and Softbank. BSB lists Kavin Bharti Mittal (Son of Sunil Mittal) as it’s Head of Strategy/Product Development.

How did Hike Become India’s Number 1 Messenger?

Anybody who knows Indian market, would understand that India unlike China is a huge playground for Western companies. India doesn’t have it’s own Facebook or Google. Indians simply use the popular western products. Probably the biggest success stories from India are more service oriented such as e-commerce or Cab Booking.

In such an economy, one would expect Whatsapp, the most used messenger in the west. But the recent rise of Hike has pushed Whatsapp down from it’s throne. Hike followed the following amazing marketing/user acquisition strategies.

• Hike to SMS — A couple of years ago India wasn’t big on smartphone penetration. Most smartphones were expensive for the hardware spec they had. So even if you had a smartphone and internet, it’s highly likely that many of your friends may still have a feature phone. In order to break the barrier, Hike (with the help of Airtel Telecom) enabled SMS from Hike messenger for free. Once your SMS credit runs out, you can earn more by referring more users. This strategy worked it’s magic in a market like India and a big portion of college students switched immediately to Hike.
• No Data Charges — Again, with the help of it’s parent company (Airtel) hike introduced a no data charges offer for Hike messenger. Another killer offer in a cost sensitive market like India.
• TV Ads — Though not recommended by startup pundits, TV ads work in India. Most Indian e-commerce companies have made their mark with TV Ads. The same worked for Hike too. Now, one may see regular ads for Hike on prime time TV.

Great! Hike is doing good. So What’s my Concern?

Hike has created an an awesome brand in India. A lot of Indians are desperate to use amazing products that are made in India and Hike is an perfect app for them. But the rate at which Hike and it’s parent (Airtel) are trying to kill the competition is severely alarming.

• Towards the end of December, Airtel proposed additional data fees for users who are using VOIP apps (such as SKYPE or VIBER), txhereby reducing the number of users for those apps. Luckily due to the numerous rants of Indian internet users, Airtel eventually dropped this plan. (Times of India Article)
• On 9th Jan BSB announced the acquisition of ZipPhone. An US Based startup that helps users (wait for it) make VOIP calls. And Kavin Mittal even is quoted saying — “Zip Phone’s technology will allow us to bringFREE Voice Calling to the market”. No doubt they would have discussed and almost finalized the deal at least a few months prior to this announcement. (Economic Times Article).

These two announcements (though the first one was reverted) give out the grim state of a product company owned by a telecom behemoth. One would easily understand that modern internet companies are built on the backbone of telecom giants. So, a telecom company trying to build it’s own app and kill the competition can definitely lead to monopoly.

This particular act doesn’t affect anyone in India as a normal Indian would say — “Hey, Hike is Indian made, and the other apps are Foreign. I would not mind”. But imagine BSB introducing products that compete with startups that are built in India. It does make perfect business sense for Airtel to foray into the apps market, as the conventional VAS is almost dead.

Can TRAI help?

A regulatory body such as TRAI should definitely be able to oversee such developments and prevent them to stop monopoly. But we all do know the lobbying power of the telecom giant, so TRAI may very well decide to turn to the other side and let these go by.

Only time will tell us if this is an isolated event or we will see many more actions taken by our Industrial giants to kill their competitors.

Note: These are author’s personal views based on facts available on public domain.

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