Twin short reads on India’s internet economy – the first on how India is selling itself short and the second on how to fix it. Vibhu Arya over-simplifies the subject somewhat but the simplicity makes it an interesting read and help build a perspective on what is clearly the most defining aspect of India’s economic future, perhaps social too. To capture the essence of the problem, Arya quotes Marc Andreessen someone who is at the forefront of the digital world with several marquee VC investments, “Anti-colonialism has been economically catastrophic for the Indian people, Why stop now”.
“Multiple free-for-user platforms owning, yet mono-product digital advertising giants, Facebook and Google have separately, but equally proudly announced a total of USD 16 Billion in investments tagging India’s elected leaders with emotive hashtags like #empoweringIndia, #digitalIndia, in their press and social media announcements.
If we add another USD 14 Billion of Uber, Twitter, LinkedIn, Amazon and other foreign technology company investments that may come in, this ballparks to an eloquent sum of USD 30 billion, the sum at which the internet economy of the world’s second-most populous country with the second-largest internet user base has been sold. Indian parents have ensured this investment-attracting-spree goes viral via India’s legendary good-morning-forwards WhatsApp engine since they clearly see a hopeful future for their kids being employed with these well-paying digital technology colonizers, not to mention the Instagram worthy swag merchandise for new joiners.
All Indian businesses, big or small, listed or unlisted, sole proprietorships to mega conglomerates have begun allocating budget to advertisements on Google and Facebook. Legend has it, that the largest benefactor of startup funding in India is, well you guessed it, these twin advertising giants. All startups, be it e-commerce, fintech, EdTech or travel invest a chunky portion of their total capital raised on advertisements in Google and Facebook. Each small business needs a Facebook and Google profile. Your reliable handyman, carpenter, painter, plumber increasingly have their Google profiles.
Nothing wrong, except it’s Indians paying foreign-owned, foreign-listed, digital platforms to make money off digital advertisements shown to Indians. Facebook and Google India operations are generating a constantly growing, mountain-sized high gross margin revenue, most of that revenue gets booked overseas with Indian tax authorities playing catchup.”
The proposed solution:
“If we had a choice to redesign and secure India’s digital tomorrow – how we would do it? Some thoughts,
1. Build laws for local economic value capture
- India entity
- Local revenue booking (no financial shenanigans & regulatory arbitrage)
- List India entity within X years of operations
2. Build laws for data sovereignty
- Data Localisation: All data, stored in India only.
- No data mirroring or creative data architecture to circumvent the law
3. Build laws for digital anti-trust
- Enable European style, class-action lawsuits for violating laws with multi $ Billion payouts to affected, individuals, and small businesses.
4. Implement laws, & offer poetic justice
- then 69, the recently used section to ban ?? origin apps in the national interest.
5. Encourage, robust independent public policy think tanks for ‘action-oriented research and dialogue’ to secure India’s future.
- Ensure no conflict of interest, no funding from these technology monopolists.”
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