August 5, 2021
The CBS Post

THE VOICE OF CBS

Standing up to Pseudo-Monopolies as Startups

Are Indian startups ready to go head to head with the global giants?

The term ‘startup’ has become synonymous with the exuberant population of young entrepreneurs, professionals and techies that usually are associated with the entity. This symbolism coupled with the fervor to ‘make India the cradle of the world civilization’ or to be more specific, ‘the global tech space’ has intrigued many people to contemplate the question, “Are the Indian startups ready to go head to head with the global giants?”

To begin with, it’s important to understand what a startup is. It is an umbrella term which includes a multiplicity of short term ventures, some designed to be quickly sold, others built to sustain in the market and make profits. This article would primarily focus on startups which are entirely internet-based. Their area of focus is usually artificial intelligence and automation – helping them build technology that helps us right from making digital payments to attending online classes using video communication platforms. 

Lately, the Indian startup environment has been experiencing turbulence owing to a stagnated economy and a raging pandemic. For instance, Google recently announced that it will start levying a 30 percent commission on all payments made for digital services on apps from Play Store. This decision is of significance considering the Play Store is the key app store for Google’s Android operating system which runs in over 90 percent of smartphones in India. This means that Indian entrepreneurs will have to pay 30 percent commission to google for accessing users in their home country while providing a service through the Google Play Store as the medium. In response to this, Paytm recently announced that it was building a ‘Mini App Store’ which aimed to empower Indian developers. 

Global giants hold a tight grip over the Indian market, a near 100 percent control over the app market in India. The monopoly is a result of various practices taken up by these big techs to stay in power. This includes creating barriers for startups that are difficult to pivot – like levying commission. Apart from that, they also lobby with policymakers to mould legislation to suit their aggressive profit-making strategy and offset the effects of those which are not in their favour.

Indian startups are facing friction from numerous fronts. Recent statistics released by a government think-tank revealed that almost 15 percent of domestic startups and entrepreneurial ventures, which absorb a significant portion of skilled and semi-skilled labour in the country have stopped operations and the funding from investors have also dried up. A major cause of this dipping trend in funding is attributed to low investor confidence in the profitability of these micro tech entities and their ability to survive the pandemic and maintain breakeven in the current times of looming uncertainty. Due to this psychological block, Indian venture capital markets aren’t funding risky, path-breaking ventures.

But can this be entirely blamed on the pandemic? Not really. The Indian tech space is riddled with structural issues that act as an impediment in its ability to view itself as a competing force to these technology monoliths. It lacks an identity, distinctive from that of the western tech market since most of the available products are outsourced from the west and very less novelty exists in the domestic market. Adding to this, there exists a concentrated entrepreneurial culture that has still neither completely assimilated with the mainstream nor been successful at absorbing the available skilled labour successfully. This situation demands immediate action like pushing for legislations that ensure fair footing to the domestic tech space. This includes regulation of the market, minimizing the influence of existing monopoly of these giants, formulation of ad hoc bodies that look into cases of breach of privacy, commercialization of customer data, manipulating political and social equilibrium of host countries and creating economic and financial impediments for smaller players in the market through targeted policies to maintain hegemony.

Effective implementation of these reforms has become the necessary tool to mitigate foreign influence when there is enough context to understand what makes it so hard for our Indian tech startups to occupy prominent spaces in a market that runs at the beck and call of the global tech giants.

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