India’s digital future means a Google search
For a long time, US-based internet giants entertained the idea of finally accessing the world’s biggest market and tapping into a base of more than 1.3 billion potential consumers. Now, just as the door to China appears firmly shut, the next giant market is opening up.
Alphabet Inc CEO Sundar Pichai is ready to realise India’s potential with the one way executives know best: a big fat cheque. The parent company of Google announced plans to spend US$10 billion over the next seven years on operations, infrastructure and investments as a “reflection of our confidence in the future of India and its digital economy”.
American corporate leaders from Tim Cook of Apple to Jeff Bezos of Amazon and Mark Zuckerberg of Facebook have all known that India could be the next big thing. Pichai, himself Indian-born, hasn’t been sitting by idly, either.
Their entry has been slowed by lack of broad-based demand for services offered only in English, a national market fragmented by whimsical local taxation, and an inadequate road and warehousing network that would facilitate quick e-commerce logistics.
In China, favourable state treatment — and protectionism — allowed Alibaba and Tencent to develop super-apps that deliver a smorgasbord of offerings from instant messaging to news and deliveries to financial services. No US giant offers anywhere near the breadth and depth of services as their Chinese counterparts.
In India, meanwhile, the oil billionaire Mukesh Ambani has designs on doing in his home country what the Americans couldn’t do in theirs.
Four years ago, he upended the telecommunications sector with Jio, a new entrant that offered free voice calls and really cheap data. Suddenly, hundreds of millions more Indian consumers had a mobile phone in their hands and a reliable, affordable internet connection. Ambani followed that up by getting Facebook to buy a 10% stake in Jio Platforms Ltd — Ambani’s holding company for telecoms, media and other digital assets — for $5.7 billion.
With Facebook now owning a stake in Jio, it makes sense for Google to look for its own telecom dance partner, be it Bharti Airtel or Vodafone Idea — the only two meaningful competitors to Jio’s wireless service that are still left in the fray.
Google’s big move is well-timed. India’s largely state-owned banking system was in bad shape even before Covid-19. After the inevitable pandemic-linked losses, institutions will be grateful to limp again and digital commerce will present a new growth avenue.
When Indian consumers need loans, they’ll be giving consent to lenders to digitally piece together their credit history by pulling scraps from everywhere. Suppliers of goods and services will also want to tap cheaper working capital by sharing a real-time snapshot of their cash flows.
Indian banks are at a disadvantage in the coming shakeup. Information collection, analysis and distribution is exactly what the US internet companies do best. Jio with Facebook, Google (with or without a partner), and even Amazon could have deeper insights into consumer and supplier habits than the traditional financiers.
A Jio or Google-backed finance app could dish out a loan faster than a banker could pull out a ballpoint pen. That would leave the state-owned lenders offering little more than their vast balance sheets for credit creation.
Not only is India finally getting the fast mobile coverage it sorely needs, its payments infrastructure is also ready. Google has built a payments service specifically for India, using the local platform that allows any two parties, holding accounts at different banks, to send and receive money instantly without knowing anything more than each others’ virtual IDs. The revamped network is so modern and innovation-friendly that Google has asked the US to consider emulating it.
Jio has garnered much of the recent attention, helped by a splashy fundraising spectacle that adds up to half of the investment in global telecom deals this year. But Google’s payment app as well as PhonePe by Walmart have been quietly scaling up. Now, when Indian consumers want deliveries, entertainment or a loan, there’s a good chance they’ll be searching Google.
A Jio or Google-backed finance app could dish out a loan faster than a banker could pull out a ballpoint pen
Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.