Connect with us

Headlines of the Day

With Big Tech and telcos both hardening their positions, battle getting fiercer

Global Big Tech in India is being subjected to increasing scrutiny — from the government, the Competition Commission of India (CCI), parliamentary committees and business lobbies, especially the telecom companies (telcos). And just like in Europe, the focus in India is similar — to rein in their growing domination in the country’s digital sweepstakes.

Last month, the Parliamentary Standing Committee on Finance recommended a new digital competition law to scrutinise “systematically important digital intermediaries” that will be identified on the basis of their revenues, market cap, businesses and the number of end users, putting Google, Meta, Apple Inc and even Amazon clearly in the crosshairs.

This bombshell closely follows a CCI order imposing a fine on Google for allegedly violating competition law through its Google play store policy, which gives app developers no option but to sign up through them to be present on Android devices. Apple Inc is under scrutiny by CCI on similar grounds.

The government has also upped the ante by bringing in three Bills to regulate the digital economy. The proposed telecom Bill plans to bring in OTT communications platforms such as WhatsApp, owned by Meta, under the licensing regime to ensure a “level playing field”, which telcos have been demanding. The other Bills are on data privacy and a revamp of the IT Act.

Meanwhile, telcos also want Big Tech players to pay a fee and share the financial burden of running their networks on the grounds that they use most of the telcos’ bandwidth to provide content to customers.

Big Tech players are not sitting quiet. Google has challenged the CCI decision in both the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court. “The concentrated attack on Big Tech is worrisome. Don’t misunderstand, we are not against regulation, but are concerned about its implementation. It could impact both future investments and strategic goals for Big Tech in India,” said a top executive of a Big Tech firm. Google Inc CEO Sundar Pichai has publicly shared his concerns during a recent visit to India.

Tech companies contend that by forcing Google to change its business model, the CCI order is likely to make mobile phones more expensive for users.

Google signs agreements with mobile phone brands to offer its Android operating platform. In return, mobile device brands agree to include some Google apps as default options on the phone. The model is a win-win because customers don’t have to pay for the operating system, which otherwise would increase the price of the phone. Instead, Google makes money from advertising its apps and telcos make money from the sale of data.

App developers’ grouse is that they have no choice but to pay a steep 30 per cent commission to access the Google Play store. But in their submission to the parliamentary committee the Big Two said 97 per cent of the app developers on Google Play and 87 per cent on the Apple store do not pay anything. Those who do pay are limited to apps that make money through the platform, such as gaming or music streaming companies. “Most of them are among the world the biggest gaming and music companies.

Small developers are not impacted at all,” said an expert in the business.

The CCI order will force Google to charge for its operating system, so device prices will go up substantially. Two, with side-loading of apps permitted – meaning app developers need not route their products through the Play store — Google would not be able to verify the apps on the platform, which could create serious security issues. The question of who will scrutinise side-loaded apps is yet to be addressed.

In Europe, which has passed a law allowing side-loading, there are proposals that such apps will need to be scrutinised by the owners of the operating system. “The CCI has the right to explore market abuse by all players, including telecom companies, Big Tech and mobile device brands. It also has to see the overall context of what is good for consumers,” telecom analyst Mahesh Uppal said.

But regulatory experts say replicating the European model in India makes no sense because Europeans, with a per capita income five times that of India, can afford to pay higher prices for phone operating systems unlike the average Indian.

Also, internet penetration in Europe has peaked at 90 per cent, while in India it is nearly half, at 47 per cent in 2021, so there is huge catching up for the country to do. This can only happen if services are available at low prices.

There is another financial reality – market size and revenues. For Google, India accounts for around 2 per cent of its total revenues, while for Apple Inc it is around 1 per cent, and for Meta, 1.5 per cent. Europe, by contrast, accounts for 25 per cent each of Apple and Meta’s revenues. Understandably, European regulators yield far more clout on Big Tech. And that is reflected in the fact that these companies are ready to pay fines and engage with regulators to implement some of the new laws such as side-loading.

Big Tech is also peeved about the Indian government’s proposed laws that address telcos’ demand for a level playing field. That is the only reason they say the proposed telecom Bill wants OTT communications to be licensed. Uppal pointed out that “the regulatory burden on telcos is very high. But a short cut way to equalise it by increasing the burden on OTT communications platforms makes little sense.” The government says it is merely bringing OTT into a soft touch licensing ambit to protect users.

The other contentious issue is the telcos’ demand that Big Tech players who use their network and data should pay a fee or support the large investments put in the infrastructure.

But Big Tech companies say that their business has expanded because of the content they offer. Uppal sums up the argument and says that telcos always have the option to increase the price of data if they feel the cost of infrastructure is rising since there is nothing to restrict them from doing so. “It is illogical to ask Big Tech to pay a fee when you are free to price your service,” he said. With both sides showing signs of hardening their positions, this battle is likely to become fiercer. Business Standard

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2022 Communications Today

error: Content is protected !!