A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research

 
A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research
TA N D E M R E S E A R C H | J U LY 2 0 2 0

A Balancing Act
The Promise and Peril of Big Tech in India
A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research
#

    Authors                                   Acknowledgements
    Urvashi Aneja & Angelina Chamuah          We would like to thank Omidyar Network India
                                              for their support. Akshat Jain and Subhashish
    With inputs from                          Bhadra, in particular, provided invaluable support
    Harsh Ghildiyal & Joanne D’Cunha          and guidance. We would also like to thank all our
                                              interviewees and workshop attendees for their
    Design                                    time and insights. A big thanks to the Tandem
    LMNO Design (www.lmno.in)                 team, particularly Harsh Ghildiyal and Joanne
                                              D’Cunha, as well as Abishek Reddy and Anushree
    Aneja.U, & Chamuah, A (2020).             Gupta. Any errors or omissions are our own.
    A Balancing Act: The Promise & Peril of
    Big Tech in India. Tandem Research.

    Copyright ©Tandem Research 2020
A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research
#
                       Abbreviations                                       04   4 How is Big Tech
                                                                                  transforming India?                                  42
                       Prologue: Why we
                                                                                   4.1   Market Power
                       wrote this report                                   05      4.2   Informational Gateway
                                                                                   4.3   Privacy
TABLE OF CONTENTS

                                                                                   4.4   Sovereign Interests
                       Executive Summary                                   06      •••   Is there an Indian Big Tech?

                    1 Varied and Evolving Contexts                         18
                                                                                5 Policy Pathways for India                            58

                                                                                   5.1   Market Power
                                                                                   5.2   Informational Gateway
                                                                                   5.3   Privacy
                    2 What is Big Tech?                                            5.4
                                                                                   5.5
                                                                                         Sovereign Interests
                                                                                         A Graded Approach to Regulation
                      Four Conceptual Markers                              20
                                                                                   5.6   Conclusion: Principles for Competing Values

                       2.1   Data-centric Models
                       2.2   Network Effects
                       2.3   Infrastructural Role
                       2.4   Civic Function                                     6 Epilogue: The Covid-19
                       2.5   Cyclical Relationship of Conceptual Markers
                                                                                  moment for Big Tech                                  78

                    3 Who are the key Big Tech                                     Glossary                                            82
                      players in India?                                    32

                       3.1 Big Tech market presence
                                                                                   Endnotes                                            82
                       3.2 How Big Tech companies are adapting to India
A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research
#                                                   A Balancing Act: The Promise and Peril of Big Tech in India |   Abbreviations |

                AIOVA                                                   GDP
                All India Online Vendors Association                    Gross domestic product

                API                                                     GDPR
                Application Programming Interface                       General Data Protection Regulation

                AWS                                                     IT
ABBREVIATIONS

                Amazon Web Services                                     Information Technology

                B2B                                                     OECD
                Business to Business
                                                                        Organization for Economic Co-operation and
                                                                        Development
                B2C
                Business to Customer
                                                                        R&D
                                                                        Research and Development
                CAIT
                Confederation of All India Traders                      RBI
                                                                        Reserve Bank of India
                CCI
                Competition Commission of India                         SEO
                                                                        Search Engine Optimisation
                CCPA
                California Consumer Privacy Act                         UPI
                                                                        United Payments Interface
                CEO
                Chief Executive Officer                                 US
                                                                        United States
                FDI
                Foreign Direct Investment

                                                                                                                                  4
A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research
#                                                                      A Balancing Act: The Promise and Peril of Big Tech in India |   Introduction |

      Why we wrote
      this report
                 Debates on the power and influence of global technology                  Big Tech companies are transforming
                 giants such as Google, Facebook, and Amazon, often referred              India’s digital economy and society in a
                 to as 'Big Tech', are increasingly polarized. These companies            multitude of ways. Not all of these changes
                 are celebrated for their innovative products and services, and           are covered in this report and many
                 the new possibilities they create for citizens, businesses and           require further exploration. The aim of
                 governments. However, these companies are also criticized for            this report is to provide a framework for
                 anti-competitive behavior and for undermining democratic                 disaggregating the ways in which Big
                 processes. While both arguments hold merit, such polarized               Tech companies are transforming India
                 views can foreclose the possibility of a balanced and nuanced            and the policies needed to harness the
                 policy debate.                                                           promise of Big Tech and minimize its
                                                                                          perils. Frameworks risk over-simplifying
PROLOGUE

                 With this report, we seek to find a middle ground—to take a              a complex and messy reality, but are
                 dispassionate view of the impact of Big Tech companies in                nonetheless important to make sense of
                 India and identify policy pathways that can align innovation             the rapidly evolving landscape of Big Tech
                 trajectories with healthy markets, individual freedoms, and              in India.
                 societal wellbeing.
                                                                                          We hope this report can contribute to a
                 Finding this middle ground is particularly important for                 more nuanced discussion on Big Tech
                 developing countries like India. Big Tech companies are a part           in India and help inform better policies
                 of India’s development story—filling critical gaps in state, market      from both Big Tech companies and
                 and research and development (R&D) capacity. The role Big Tech           government.
                 companies play in India’s development story may also imply
                 that the trade-offs for public policy are different from those in
                 industrialized economies.

                                                                                                                                                    5
A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research
#                                                                                                                        A Balancing Act: The Promise and Peril of Big Tech in India |   Executive Summary |

Executive
Summary
Almost a decade ago, in the wake of        To answer these questions, we spoke to          While each company is
the Arab Spring, technology and social     40+ thought-leaders in India, including         different, they share four
media companies were celebrated
across the globe as harbingers of new
                                           representatives from civil society, Big
                                           Tech firms, Indian start-ups, academia,
                                                                                           common characteristics:
modes of democratic participation and      government, regulators, and the
individual freedoms. Cut to the present,   media. We supplemented this with a
and there is growing tech-lash against     comprehensive review of 400+ academic           Data-centric models
                                                                                           The collection, analysis and monetization of data
Big Tech companies, with concerns          and literary pieces and several structured      is central to their business models.
ranging from market monopolization to      discussions on the topic. This work is a
interference in democratic processes.      culmination of eight months of enquiry.         Network effects
                                                                                           They have achieved immense scale quickly
                                                                                           through network effects. This insulates them from
This report unpacks Big Tech in the        Commentators have used the label of Big         competition, contributes to their size and often
Indian context. What exactly is Big        Tech to refer to a handful of large, globally   results in market dominance.
Tech? Who are the key players? What is     significant technology companies, such
their role in India? What are the policy   as Google, Facebook, Amazon, Apple,             Infrastructural role                                   Together, these four conceptual markers
                                                                                           They provide essential market and informational        characterize Big Tech as data-driven,
priorities for India?                      TenCent, AliBaba and Baidu; as well as          infrastructure for a digital economy and society.
                                                                                                                                                  large-scale, consumer-facing technology
                                           IBM and Microsoft in some cases.1               This also creates value and dependencies for
                                                                                           other players in the market.                           platforms that provide market and
                                                                                                                                                  informational infrastructures for a
                                                                                           Civic Function                                         digital society, and perform critical civic
                                                                                           Through their consumer facing products that
                                                                                                                                                  functions. The combination of these
                                                                                           enable essential services like news, commerce
                                                                                           and societal interactions, they increasingly           features allows Big Tech firms to exert
                                                                                           perform civic functions.                               both market and civic power.

                                                                                                                                                                                                          6
A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research
A Balancing Act: The Promise and Peril of Big Tech in India |   Executive Summary |

                                                                                                  Big Tech companies
Big Tech, in other        Many of the global technology giants                                    influence our markets and
                                                                                                  society in four key areas:
words, is a concept
                                                                                      1
                          associated with this term—such as Google,
                          Amazon and Facebook have a widespread
                                                                                                  Market Power
                          presence in India. Reliance Jio also
rather than a fixed set
                                                                                                  Market operations of global Big Tech companies
                          displays some of the conceptual markers                                 in India create benefits for consumers and
                          associated with Big Tech. Thinking of Big                               businesses. Many start-ups and tech companies

of companies.             Tech as a concept, rather than a static                                 rely on Big Tech companies for digital
                                                                                                  infrastructure, research, and innovation. However,
                          set of companies, also draws attention to                               Big Tech companies are prone to monopolistic

                                                                                       2
                          the role of the Indian state, since it seeks                            and anti-competitive behaviour.
                          to leverage data analytics and digital
                          platforms for governance.                                               Informational Gateway
                                                                                                  Social media platforms and search engine
                                                                                                  operations of Big Tech companies increasingly
                                                                                                  serve as the primary source of information, news
                                                                                                  and means of communication for many users in
                                                                                                  India. Yet, this also gives Big Tech companies
                                                                                                  inordinate influence in shaping how people
                                                                                                  access information and communicate with one
                                                                                                  another, making them arbiters of free speech. Big
                                                                                                  Tech platforms also contribute to the spread of
                                                                                                  misinformation and hate speech, while becoming
                                                                                                  increasingly politicized.

                                                                                      3           Privacy
                                                                                                  Big Tech platforms allow for data-based
                                                                                                  personalization of the internet experience and
                                                                                                  access to new services. Such benefits however,
                                                                                                  come at a significant cost to individual and group
                                                                                                  privacy. Such personalisation also influences
                                                                                                  individual and group capacities for self-

                                                                                      4
                                                                                                  determination.

                                                                                                  Sovereign Interests
                                                                                                  While the Indian State benefits from Big Tech
                                                                                                  companies’ infrastructure and innovation to
                                                                                                  fill gaps in its own capacity and reach, this
                                                                                                  also raises concerns around democratic
                                                                                                  accountability, data sovereignty, the impact on
                                                                                                  domestic businesses and the distribution of
                                                                                                  technology gains.

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A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research
A Balancing Act: The Promise and Peril of Big Tech in India |   Executive Summary |

Multiple policy pathways are needed to align
Big Tech trajectories with healthy markets,
individual freedoms, and societal wellbeing.

  Market                   Informational                                    Sovereign
  Power                    Gateway                  Privacy                 Interests
                                                                                                                             While not unique to India, these factors
                                                                                                                             manifest themselves differently in the
  Updated                  Publisher ethics         Individual and          State and                                        country. Big Tech companies provide
  competition              for social media         collective rights       market capacity
  policy to include        companies to act         for citizens to take    by investing in
                                                                                                                             critical digital infrastructure that
  data and network         more responsibly for     decisions about         education, research,                             enables new forms of democratic and
  effects when             content posted on        how their data          entrepreneurship                                 economic participation for people and
  assessing market         their platforms, while   is collected and        and other kinds                                  businesses alike. This infrastructure
  competitiveness          avoiding excessive       processed by large      of social capital
  and mergers and          censorship.              tech companies.         that can help
                                                                                                                             partially compensates for pre-existing
  acquisitions.                                                             India manage the                                 gaps in State, market and R&D capacity
                           Algorithmic audit to     Data stewardship        downside of Big                                  in India. At the same time, potential
  Platform neutrality      enable independent       to create new           Tech.                                            harms are amplified precisely because
  to ensure that a Big     agencies and civil       technologies for
  Tech firm that has       society to evaluate      individuals to safely   Equitable taxation
                                                                                                                             of these existing capacity gaps. Many
  created a platform       algorithms used by       share their data        to ensure that                                   of the capacities and systems that could
  infrastructure           Big Tech companies.      with businesses,        developing countries                             help manage, or soften, the harmful
  competes fairly with                              with adequate           can gain fair and                                effects of some Big Tech practices are
  third-parties making     Media literacy to        governance and          reasonable tax
  use of the platform.     enable citizens to       oversight.              revenue from Big
                                                                                                                             still under development.
                           take more conscious                              Tech firms rather
  Platform                 decisions based on       Privacy-respecting      than lose it to tax                              Big Tech, as a concept, poses a wicked
  interoperability         information they         business models         havens.                                          problem for public policy in India,
  to enable users on       receive on social        that reduce tech
  social media, gig        media.                   firms’ commercial       Better cross-border
                                                                                                                             involving complex trade-offs between
  economy or similar                                dependence on           data flows to ensure                             competing priorities, interests, and
  platforms to interact                             processing of           that transfer of data                            values. Therefore, we need to pursue
  with their friends and                            personal data.          outside India does                               multiple policy pathways to maximize
  network on other                                                          not impede law
  platforms.                                                                enforcement and
                                                                                                                             the benefits and minimize the harms of
                                                                            other needs.                                     Big Tech companies.

                                                                                                                                                                                     8
A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research
A Balancing Act: The Promise and Peril of Big Tech in India |   Executive Summary |

Finding the right balance
is ultimately a question of
competing public values. It
is not a question of right or
wrong, nor one that can be
fully resolved with more or
better evidence.                                                                          We propose the
                                                                                          following sets of
                                                                                          principles:

                                                                                          People-first
                                                                                          Innovation should prioritize individuals’ agency,
                                                                                          material well-being, autonomy, and democracy.
However, these pathways involve different    Policy pathways like data stewardship        Regulation for innovation
levels of complexity and subjectivity.       or platform interoperability will need       Regulation will be required to ensure that
Some changes could be driven by a            policy experimentation and a longer term,    innovation is aligned with societal goals.
single entity, acting in coordination with   iterative approach.
others. For example, the Competition                                                      Accountability and transparency
                                                                                          A vibrant public discussion on the role of
Commission of India (CCI) is already         Finding the right balance is ultimately a    technology will help navigate the uncertainty that
considering ways to update competition       question of competing public values. It is   may result from technological innovation.
policy for the digital economy.2 Other       not a question of right or wrong, nor one
pathways may require concerted action        that can be fully resolved with more or      Protect by default
                                                                                          Technology should protect its users by default
by many public and private stakeholders.     better evidence. A normative framework       to ensure the well-being of each individual,
For example, regulating speech on social     of values to guide India’s digital economy   especially vulnerable groups.
media platforms is a subjective issue that   and society, as well as to help navigate
will have far-reaching societal impacts      between competing interests, can help        Build collective resilience
                                                                                          Society and communities need to be
on free speech. Some, like taxation, may     provide an outline for action and policy.    strengthened to collectively maximize the
even require international coordination.                                                  benefits and minimize the harms of technology.

                                                                                                                                                                                            9
A Balancing Act The Promise and Peril of Big Tech in India - TANDEMRESEARCH | JULY2020 - Tandem Research
A Balancing Act: The Promise and Peril of Big Tech in India |   Executive Summary |

              What is Big Tech?                                                                          Data-Centric
                                                                                                         Models
                                                                                                                            +       Network
                                                                                                                                    Effects
                                                                                                                                                         +      Infrastructural
                                                                                                                                                                Role
                                                                                                                                                                                      +          Civic
                                                                                                                                                                                                 Functions

              Why should we care?
                                     Informational                               Sovereign
              Market Power           Gateway               Privacy               Interests
                                                                                                         What can we do?
              Digital                Access to             Personalisation of    Digital
              infrustructure for     information           services              infrastructure for
              other businesses                                                   public functions
                                     Means to              Wider range of
              R&D and innovation     communicate and       services              Data for social
The Promise

                                     mobilise                                    good
              Funding or
              acquiring start-ups    Inclusion through                           Connect state to
                                     access and                                  citizens
              Representing tech      language
              in policy disclosure                                                                                              Informational                                             Sovereign
                                                                                                      Market Power              Gateway                      Privacy                      Interests
              Anti-competitive       Algorithmic           Extensive, granular   Limited access
              behaviour              influence over        data collection       to data for global
                                     people’s choices                            south                Updated                   Publisher Ethics             Individual and               State and Market
              ‘Kill Zone’ for                              Loss of individual                         Competition Policy                                     Collective Rights            Capacity
              competitors            Ability to moderate   agency                Impediments to                                 Algorithmic Audit
                                     content                                     law enforcement      Platform Neutrality                                    Data Stewardship             Equitable Taxation
              Over-representation                          Honey pot for bad                                                    Media Literacy
The Peril

              in policy discourse    Misinformation        actors                Tax avoidance        Platform                                               Privacy Respecting           Better Cross-
                                                                                                      Interoperability                                       Business Model               Border Data Flows
                                     Politicisation and
                                     identity politics

                                                                                                                                                                                                                  10
1                                                          A Balancing Act: The Promise and Peril of Big Tech in India |   Varied & Evolving Context |

     Varied &
                Almost a decade ago, during the Arab Spring, social media                  In India, the conversation has been
                platforms were celebrated for enabling new forms of democratic             somewhat different. Here, technological
                participation. One protester even named their newborn child                advancement is deeply tied with ideas of
                Facebook.3 Technology companies such as Google and Apple                   nationhood and national advancement.11

     Evolving
                were seen to represent a new era of individual freedom and                 As University of Oregon professor
                expression, challenging established institutions of state and              Biswarup Sen argues, the Indian state,
                corporate power.                                                           after independence, has embraced a
                                                                                           philosophy that ‘placed technology

     Context
                Cut to the present, there is a growing backlash against Big Tech           and scientific research at the forefront
                companies. Many commentators have expressed concerns                       of the nation building project.'12 The
                ranging from market monopolization to interference in                      relationship between the Indian state
                democratic processes.4 In the United States5 and Europe,6                  and big businesses has also been one
                politicians have called for the break up of Big Tech, searching            of closeness.13 State support, including
                for ways to regulate their power and influence. Donald Trump,              protectionist trade politics, has enabled
                President of the United States (US) issued an executive order              the emergence and sustenance of large
                in May 2020, directing a US regulatory body to revisit the                 businesses.14
                protection that social media companies have from lawsuits
                against user content on their platforms.7 This shift demonstrates          The tech narrative in India is also shaped
                the evolving narrative around Big Tech.                                    by socio-cultural factors: a large and
                                                                                           growing youth population,15 a rapid
                Technology and society trajectories will differ across contexts,           increase in the number of internet users,16
                intersecting with local political, economic and cultural systems.          many of whom continue to lack access to
                The narrative around Big Tech and its impact are similarly                 other essential services, all in the context
CHAPTER

                likely to vary across geographies, with opportunities and harms            of a young democracy with varying levels
                manifesting in different ways.                                             of institutional capacities and readiness.
                                                                                           India is also a growing and vibrant hub for
                In the West, the birth of a number of tech companies in Silicon            entrepreneurship and innovation, with an
                Valley was born out of the anti-establishment ideals of the                active and engaged civil society.
                sixties counterculture in the US.8 The personal computer, as
                the Pulitzer Prize winning journalist, John Markoff has argued,            These economic, social, demographic,
                was underpinned by a revolution for individual rights and                  political and technological forces
                expression.9 Thus, the recent negative discourse around Big                intersect and lead to a complex narrative
                Tech in the West has focused on the threat of large technology             about large tech companies and Indian
                companies on individual rights and civil liberties.10                      society. It is a unique story worth
                                                                                           further investigation.

                                                                                                                                                     11
2                           A Balancing Act: The Promise and Peril of Big Tech in India |   What is Big Tech? Four Conceptual Markers |

                                                                             The term ‘Big Tech’ is often used to

          What Is Big Tech? Four
                                                                             refer to a handful of large technology
                                                                             companies, clubbed together as the Big
                                                                             Four—Google, Amazon, Facebook, and

          Conceptual Markers
                                                                             Apple.17 Sometimes, this terminology
                                                                             includes companies like Microsoft,
                                                                             IBM, Baidu, Tencent, and Alibaba.18
                                                                             The ‘bigness’ of these large technology
                                                                             companies is reflected in their market
                                                                             valuations, user base, and range of
                                                                             product offerings.
                                                                             Infographic (i) & (ii)

                                                                             Their revenues are higher than the GDP
                                                                             of some countries.19 However, the term
                                                                             ‘Big Tech’ has come to indicate more than
                                                                             just scale and financial strength. It also
                                                                             draws attention to their growing political,
                                                                             social, and cultural influence–aspects that
                                                                             are often not shared by other kinds of ‘big’
                                                                             businesses.
CHAPTER

                                                                             To help bring structure to this important
                                                                             discussion, we identify four conceptual
                                                                             markers that are shared by Big Tech
                                                                             companies. Big Tech is not a static
                                                                             category—new companies may enter this
                                                                             category just as existing ones may drop
                                                                             out of it. Equally, the salience of these
                                                                             conceptual markers, how they combine
                                                                             and their impact on markets and societies
                                                                             may vary across time and place. Big Tech,
                                                                             in other words, is a concept rather than a
                                                                             fixed set of companies.

                                                                                                                                     12
A Balancing Act: The Promise and Peril of Big Tech in India |   What is Big Tech? Four Conceptual Markers |

       i                                                                                                       Basic
                                                                                                                                                               World’s top 20 companies by market
                                                                                                                                                         capitalization, by sector, 2009 versus 2018
                                                                                                                                                                                            (per cent)
                                                                                                               Materials
                                                                        Telecommunications

       World Top                                                                             10%
                                                                                                   4%
                                                                                                           8%
                                                                                                                           Consumer Goods

       Companies
       by Market                                        Technology &
                                                   Consumer Services

       Capitalization
                                                                                 16%                                        8%              Healthcare

                                                                                                                                                                2018
       In 2009, only three technology
       companies featured in the top twenty
       global firms; most of the biggest firms
       were from the oil, gas and mining
       sectors. By 2018, 8 technology and
       consumer service companies featured in
       the top 20 firms; only 2 from the oil and
       gas sectors remained.

                                                   Financial Services         18%                                                                                                       Consumer Goods

                                                                                                                                                                               6%                 Healthcare

                                                                                                                                                                                       4%
                                                                                                                                                                                                         Oil & Gas
                                                                                                                                                                                              7%
                                                                                                                              Oil &
                                                                                                        36 %                  Gas
Source: UNCTAD, based on PwC, 2018b.

                                                                   2009

                                                                                                                                                                                                           Financial
                                                                                                                                                                                           27%             Services
                                                                                                                                    Technology &
                                                                                                                               Consumer Services          56%

                                                                                                                                                                                                                     13
A Balancing Act: The Promise and Peril of Big Tech in India |   What is Big Tech? Four Conceptual Markers |

ii
                                               Global Internet                            World’s online                                             Global cloud
A few Big Tech                                 search market                              retail activity                                       infrastrucure services

companies
dominate many
important
markets

                                                            90%                                         > 1/3                                                    > 1/3

                                                        Google                                     Amazon                                                 Amazon
                                                                                                                                                      Web Services

US and China giants
share in the global digital
services market
                                               Global social                             Mobile payment                                                 Global
                                               media market                                 solution                                                  active users

                                                            66%                              100% of                                                       > 1 billion
                                                                                     Chinese markets
                                                     Facebook                      We Chat and AliPay                                                WeChat users

Source: Digital Economy Report, 2019, UNCTAD

                                                                                                                                                                          14
A Balancing Act: The Promise and Peril of Big Tech in India |   What is Big Tech? Four Conceptual Markers |

                            Big Tech companies
                            collect and process a large
                            proportion of the world’s data.

2.1                                                                                                           2.2
Data-centric Models                                                                                           Network Effects
The collection, analysis, and monetization of          with the aim of better personalization.23 Similarly,   While most technology companies today employ             through vertical and horizontal integration.
data is now central to value creation in the digital   while Microsoft’s Bing and LinkedIn sell ads, the      a data-centric business model, not all can               They can leverage their existing user base
economy.20 Big Tech companies collect and              company as a whole is not as dependent on              be called Big Tech. Big Tech companies gain              and accumulated data intelligence to enter
process a large proportion of the world’s data.21      utilization of personal data.                          immense scale and resilience because they                new markets. For example, Google bundles its
The nature of data collection has evolved over                                                                are structured as multi-sided platforms that             applications and search engine onto Android
time as the digital touchpoints between users and      Pulitzer Prize finalist Julia Angwin traces the        demonstrate strong network effects.26                    phones as default; Facebook is trying to launch
Big Tech companies have expanded from only             evolution of this data-centric business model to                                                                its own finance system with the creation of a
computers and mobile devices, to include digital       the early 2000s. She suggests that the bursting        The more users there are on the platform, the            cryptocurrency, Libra;30 and Amazon seeks to
assistants like Amazon’s Alexa, Google’s Home          of the dot-com bubble led many Silicon Valley          more valuable the platform becomes to other              disrupt the health care sector by entering the
Mini, and Apple’s Siri.22 This data collection also    companies to search for new business models,           users. More users means more data, which                 online medical supplies market.31 Operating
extends to non-commercial interactions such as         leading to the birth of a new strategy based on        implies a stronger ability to outcompete rivals          in many distinct sectors also allows cross-
search engine queries, social media likes and          targeted advertising.24                                through better product design and more efficient         subsidization—the economic losses from a
even items left un-bought in a user’s cart.                                                                   operations.27 Many Big Tech companies offer free         product that has low revenues but many users
                                                       Harvard professor Shoshana Zuboff traces the           or discounted products and services to kick-start        can be balanced with other arms of the business
Big Tech companies leverage the collected              origins of this data-based business model to           this cycle and accumulate initial users.28 Once          that are more commercially viable.32
data in several ways—from targeted advertising         Google. She states that ‘Google realized that all      a platform begins to gain traction, users face a
(e.g. Google and Facebook) and optimizing              the ‘behavioural surplus’ data it was generating,      high cost of switching to another service provider.      Finally, digital monopolies, unlike traditional
e-commerce operations (e.g. Amazon and                 could actually be used as ‘prediction products’,       Such network effects give companies a ‘first-            monopolies, have the kind of network effects
Alibaba) to diversifying their portfolio of products   that could nudge consumers towards certain             scaler advantage’, allowing them to eventually           that seemingly enables consumer choice.
and services. Apple stands in slight contrast          preferences and habits in a new ‘behavioral            dominate markets.29                                      Google Search, for example, presents
since its core business model does not depend          futures market.'25 She hypothesizes that once                                                                   consumers with a range of product and service
on leveraging personal data. However, many of          Google demonstrated the commercial value of            Market dominance in one sector also enables              choices, while simultaneously funnelling users
the applications it owns collect individual data       data, others like Facebook followed suit.              Big Tech companies to influence other sectors            through its own platform.33

                                                                                                                                                                                                                               15
A Balancing Act: The Promise and Peril of Big Tech in India |   What is Big Tech? Four Conceptual Markers |

Like railroads or
other utilities, Big
Tech companies
provide many essential      2.3
services for individuals,
                            Infrastructural Role
                                                                                             2.4                  Civic Function
businesses, and even        Big Tech companies provide critical market and
                                                                                                                  Big Tech companies have assumed a civic role in
                                                                                                                  society through their consumer-facing platforms.
                                                                                                                  Consumers are dependent on these platforms

governments.                societal infrastructure. Their products and services
                            have attained such levels of use that they appear
                            to be closer to traditional infrastructure providers in
                                                                                                                  for essential services like news, commerce, and
                                                                                                                  social interactions.39 This helps Big Tech firms
                                                                                                                  dominate, what Tristan Harris from the Center for
                            scale, ubiquity, and necessity to everyday life.34                                    Human Technology calls, the ‘attention economy’.
                                                                                                                  Through their data intelligence, they can shape
                            Like railroads or other utilities, Big Tech companies                                 preferences and behaviour—to know and
                            provide many essential services for individuals,                                      influence how people think and interact.40 This
                            businesses, and even governments.35 For                                               gives them civic power in society.
                            example, Big Tech companies provide core market
                            infrastructure such as cloud services, software                                       Martin Moore, director of the Centre for the Study
                            development kits and other business development                                       of Media, Communication, and Power at King’s
                            tools. A wide ecosystem of businesses and third-                                      College, associates six types of civic power
                            party developers benefit from these tools. Similarly,                                 with Big Tech: the power to command attention;
                            companies like Google and Facebook are part                                           the power to communicate news; the power
                            of our everyday informational infrastructure.                                         to enable collective action; the power to give
                            According to Brooklyn Law School Professor, K.                                        people a voice; the power to influence people’s
                            Sabeel Rahman, they facilitate the ‘distribution of                                   vote; and the power to hold power to account.41
                            and access to news, ideas and information upon                                        This ability to shape world views and beliefs also
                            which our economy, culture and politics depend.36                                     distinguishes Big Tech from other forms of Big
                                                                                                                  Business, such as Big Pharma or Big Tobacco.
                            To a significant extent, Big Tech companies have
                            acquired this coveted position through strategic                                      Despite their financial ‘bigness’, Microsoft or IBM
                            mergers and acquisitions. For example, Google                                         are often not associated with Big Tech because
                            added as many as one new company to its portfolio                                     civic power is an important conceptual marker of
                            every ten days in the early 2010s.37 Facebook has                                     Big Tech. These firms are primarily B2B and have
                            acquired 92 companies since 2007, most notably                                        not assumed some of the civic roles of companies
                            Instagram and WhatsApp.38                                                             like Google or Facebook.

                                                                                                                                                                          16
A Balancing Act: The Promise and Peril of Big Tech in India |   What is Big Tech? Four Conceptual Markers |

Large amounts of data
collected by Big Tech         2.5
make their services more
customized and responsive.    Cyclical Relationship
                              of Conceptual
This increases the            Markers
platform’s attractiveness     Together, these four conceptual markers
                              characterize Big Tech as data-driven, large-
                              scale, consumer-facing technology platforms

for users and enhances        that provide essential market and information
                              infrastructure for a digital society, and perform
                              essential civic functions. The combination of

network effects. Higher       these features allows them to exert civic power
                              alongside market power.

user engagement and           Each of these four conceptual markers is an
                              integral interconnected part of a single moving
                              system, influencing each other in a cyclical

dependence, in turn, leads    movement. For example, the large amounts
                              of data collected by Big Tech make their
                              services more customized and responsive. This

to an increasing civic role   increases the platform’s attractiveness for users
                              and enhances network effects. Higher user
                              engagement and dependence, in turn, leads to

for these platforms.          an increasing civic role for these platforms.

                              This relationship also works in the opposite
                              direction. The civic power they gain through
                              user attention and public participation, when
                              combined with existing market power, further
                              enhances data collection and aggregation. It
                              also increases the platform’s efficiency and
                              public utility.

                              Infographic ( iii )

                                                                                                                                                             17
A Balancing Act: The Promise and Peril of Big Tech in India |   What is Big Tech? Four Conceptual Markers |

iii
Cyclical
relationship
between
conceptual
markers
These markers exist in a cyclical        data-centric models          network effects                              infrastructural role                             civic function
relationship, building and reinforcing
one another.

This diagram draws on examples from
Big Tech companies to illustrate each
of the markers.

                                         Facebook processes 2.5       By intergrating maps                          Many online sellers gather                       Whatsapp has become
                                         billion places of content    directly into the SEO,                        on Amazon to sell their                          a critical medium for
                                         and 500+ terabytes of        Google benefits from                          products rather than                             civic society to organise
                                         data each day. Facebook      network effects. Indirect                     selling them directly.                           and develop collective
                                         has multiiple touch points   network effects are also                      Similarly, content creators                      campaigns, reaching a
                                         for data collection across   accrued through other                         rely on Youtube to                               wide and new user base.
                                         social media interactions    businesses integrating                        monetize videos. AWS
                                         and other businesses using   Google Maps into their                        also dominates the cloud
                                         the platform.                websites and platforms.                       market.

                                                                                                                                                                                                 18
3                                     A Balancing Act: The Promise and Peril of Big Tech in India |   Who are the key Big Tech players in India |

          Who are the
          key Big Tech
          players in India?   Three of the global Big Tech companies
                              have a widespread presence in India—
                                                                                    Chinese counterparts such as TenCent,
                                                                                    Alibaba and Baidu have also invested
                              Google, Facebook, and Amazon. Google                  in India, funding some of the biggest
                              products and services are ubiquitous                  unicorn start-ups such as Paytm and
                              in India. Google Android is a market                  Ola Cabs. ByteDance-owned TikTok
                              leader in the mobile operating system                 has amassed a huge user base averaging
                              market, with 94.45% market share;42                   200 million monthly average users
                              Google Pay has also clocked more than                 in India and can be said to exert ‘civic
                              300 million transactions in India as of               power’ through its ‘power to command
                              June 2019.43 India constitutes Facebook’s             attention.'48 At its peak, in 2016, Alibaba-
                              largest market, with more than 270                    owned UC browser had a 60% market
                              million total users and 400 million                   share in India and was used by more than
                              monthly average users for Whatsapp.                   300 million people.49 It was the most
                              Amazon also has a large presence,                     popular mobile browser in India, but has
                              with at least 30% market share44 in                   now been surpassed by Google, leaving
                              e-commerce and more than 5.5 lakh                     UC with only 24% of the market share
CHAPTER

                              sellers on its platform.45 While Apple is             as of 2019.50 The UC Browser example
                              considered to be a Big Tech company                   shows that firms belonging to this
                              globally, it has a significantly smaller              category can change, especially as new
                              market presence in India, with less than              competitors emerge in the market. This
                              a 3% share in the smart-phone market.46               section outlines the market influence,
                              Other foreign companies that display                  strategies and investments of Big Tech
                              some of the conceptual markers of Big                 companies in India.
                              Tech also have a significant presence
                              in India. For example, Walmart is a
                              leader in the e-commerce space, with
                              reportedly 60% market share through
                              its subsidiary Flipkart.47

                                                                                                                                               19
A Balancing Act: The Promise and Peril of Big Tech in India |   Who are the key Big Tech players in India |

iv
Big Tech Market
Presence in India
Big Tech is a concept rather than a static
set of companies. Google, Facebook,                                  Digital                     Logistical
                                                                    Payments                      Services
Amazon, Walmart-backed Flipkart, and
TikTok demonstrate conceptual markers
associated with Big Tech.

                                                          Cloud
                                                        Computing                                             Audiobooks
                                                        & Storage                                                 &
                                                                                                              Publishing

                                                                         Amazon
                                                                               Revenue in INR
                                                                                 328.29 bn
                                                                                 FY 2018 -2019
                                                          Retail                                                IoT &
                                                          Goods         Total Prime subscribers               Hardware
                                                                           10 Mn (As of 2019)

                                                                    E-commerce                   Streaming
                                                                                                  Services

Revenue Source: Ministry of Corporate Affairs Filings

                                                                                                                                                                                   20
A Balancing Act: The Promise and Peril of Big Tech in India |   Who are the key Big Tech players in India |

                                                      Search Engine               Developer
                                                      and Database                  Tools

                                                               27.4

                                      Operating
                                       System                                                 Advertisements

                                                                Google                                                                               8%
                                                                                                                                                                                                             37%

                                                                 Revenue in INR
                                                                   43.47 bn
                                                                                                                                                                   Digital Payments
                                                                                                Cloud and
                                     Mobile And Web
                                      Applications                                             Data Services                                                           for India
                                                                                                                                                                                Paytm
                                                                             72.6                                                                                               PhonePay
                                                                                                                                                                                GPay
                                                                                                                                                                                Others
                                                                                                                                                      24%                                                    31%

                                                        Hardware                    Others

Revenue Source: Ministry of
Corporate Affairs Filings. As per
the National Industrial Codes, ‘IT                                                                                                                                                         Source: Ramanathan, A. (2019,
services’ includes all information                                                                                                                                                         September 16). In India’s digital
processing services done by                                                                                                                                                            payments, Google Pay has a Midas
Google, and other IT-enabled                                                                                                                                                                 touch. Retrieved from https://
services. ‘Data processing’ refers                                                                                                                                                       the-ken.com/story/indias-digital-
to all the revenue generated by                                                                                                                                                          payments-googles-achilles-heel-
Google from advertising.                                                                                                                                                                               turns-midas-touch/

                                                                                                                                                                                                                               21
A Balancing Act: The Promise and Peril of Big Tech in India |   Who are the key Big Tech players in India |

                                                                                                                                           Total Monthly Average
                                                                                                                                              Users combined
                                                                                                                                                 350 million
                                                                                                                                                 (As of 2019)

                                          800+ Indian Businesses
                                              21 languages

                                                                              Facebook                           Social
                                                                               offered                          Media and
                                                                              products                          Messaging

                                                                                         Facebook
                                                                                         Revenue in INR
                                                                                            8.92 bn
                                                                                           FY 2018 -2019
                                                                                          Business Support
                                                                                              Services

                                                                                                              Facebook           Digital Ads
                                                                                Others                                            APK/SDK
                                                                                                             for Business

                                                                   Spark AR
                                                                    Studio                                      Facebook
                                                                                                                 Shops

Revenue Source: Ministry of Corporate
Affairs filings. Here, business support
services encompass support activities
provided to businesses.

                                                                                                                                                                                                                     22
A Balancing Act: The Promise and Peril of Big Tech in India |   Who are the key Big Tech players in India |

                                 50 Million monthly
                                   average users
                                    (As of 2019)

                                                                                            60% marketshare

  120 Million
   monthly
average users
 (As of 2019)

                                                               5%                                                                                         Video
                                                                                                                                      13.6%
                                                                                                          E-commerce
                                     Social                                   Music                                                                     Streaming
                                    Media and                               Streaming
                                    Messaging
                                                                                                                                   (Walmart)

                                                      ByteDance                                                                 Flipkart
                                                        Revenue in INR
                                                                                                                                Revenue in INR
                                                          437 Million
                                                                                                                                 357.35 Billion
                                                        FY 2018 - 2019
                                                                                                                                FY 2018 - 2019
                                                      95%                                                              86.56%

                                                                                                             Digital                                     Retail
                                                                                                            Payments                                     Goods

                                                             Video                                                                                                   Citron
                                                                                                                                                                    Smartbuy

                                                                                           380 Million Transactions
                                                                                                 (May 2019)
Revenue Source: Ministry of Corporate
Affairs Filings. As per the National Product                                                                                                             Source: Ministry of Corporate Affairs filings.
Classification for Services Sector, Support            20 Million monthly                                                                                  Here, seller services encompass the sale
services (IT services in the infographic)                average users                                                                                        of traded goods on the platform. Other
includes all support services provided by                 (As of 2019)                                                                                        services include marketplace services,
ByteDance. Advertising corresponds to the                                                                                                                logistics services, advertising services, and
sale of internet advertising space.                                                                                                                                        payment gateway services

                                                                                                                                                                                                          23
A Balancing Act: The Promise and Peril of Big Tech in India |   Who are the key Big Tech players in India |

3.2
How Big Tech companies are
adapting to India
A large and vibrant digital economy is opening up in India due to the

                                                                                       i                                                       ii
proliferation of mobile phones, spread of internet services, a rising youth
population and growing adoption of digital services.51 Currently, there are
over 500 million internet users in India, making India the second largest
internet user base in the world.52 Projections indicate that by 2023 India
will have more than 900 million internet users, with most of them accessing
the internet through vernacular languages and video content.53 By 2017,                Provision of digital infrastructure                     Entry into Fintech
the number of Indian-language internet users (234 million) had already
surpassed that of English users (175 million).54 Concurrently, the economies           In 2016, Google launched the Google Station             Fintech in India has boomed after demonetization
of mid-sized towns and cities are growing and the spread of e-commerce                 project (now defunct) in India to provide free          and the launch of UPI. Big Tech companies have
is driving digital initiatives aimed at ‘building for Bharat’ i.e. the mobile-first,   high-speed public Wi-Fi to more than 400 train          adapted their business models to ride this wave.
non-English speaking, non-urban internet users in India.                               stations in India. At its peak, in June 2018, more      Digital payments are an attractive revenue model
                                                                                       than eight million people used the service              for Big Tech companies, especially because per
As the number of internet users in India continue to grow, India is rapidly            every month.60 Google also announced plans              user ad revenue in India is still quite low.63 Since
emerging as a significant market for Big Tech companies. For instance,                 to launch a second cloud region in India, to            the launch of UPI, Google Pay has acquired
Facebook has 328 million monthly active users (MAU)55 and a user base of               strengthen cloud services in India for businesses,      nearly 70 million users and carried out more
270 million users in India—the highest in the world.56 WhatsApp has more               hospitals and public sector organizations,              than 2.5 billion transactions,64 closely followed
than more than 400 million MAU57 in India—also the highest in the world.58             amongst others.61 Similarly, many businesses            by Walmart-owned PhonePe. Whatsapp Pay has
Indians account for the highest activity on the Android operating system’s             and government services rely on Amazon’s                been allowed a phased roll-out in India, provided
official app store, with up to 1 billion app downloads every month.59                  cloud infrastructure.62 By providing such               Facebook maintains compliance with RBI’s data
                                                                                       digital infrastructure, Big Tech companies align        localization norms.65 Aside from Amazon Pay,
Big Tech companies have adopted specific strategies for India to                       themselves with the nation-building narrative           Amazon has also launched an instant zero-
benefit from this digital demographic shift and the concomitant                        around technology in India.                             interest credit service in India, called Amazon
socio-economic transition.                                                                                                                     Pay Later.66

                                                                                                                                                                                                          24
A Balancing Act: The Promise and Peril of Big Tech in India |   Who are the key Big Tech players in India |

iii                                                iv                                                    v                                                       vi
Emphasis on voice and vernacular                   Offline and Online                                    Filling infrastructural gaps through                    Investment in R&D and tech
services                                                                                                 auxiliary business expansion                            entrepreneurship
                                                   Many Big Tech companies are leveraging
Several Big Tech companies in India provide        offline models of service delivery to effectively     Big Tech companies have added India-specific            Big Tech companies seek to leverage and
services over voice-based interfaces and in        reach users in smaller towns and cities in            business verticals to bridge pre-existing               develop India’s large demographic pool for both
regional languages to address literacy-related     India. For example, Amazon has enlisted small         infrastructural gaps and serve the Indian market        global and India-focused R&D. In 2019, Facebook
barriers to digital services. For example,         stores as package depots along its distribution       better. For example, Amazon is developing supply        re-hauled the structure of its operations in India75
Google’s AdSense is available in Marathi, Hindi,   network.70 It is enlisting other small retailers as   chain management and storage capacities,72              and decided to focus on bridging the gendered
Bengali, Tamil and Telugu.67 In 2017, Google       Amazon learning centres, so that new shoppers         as well as setting up a sorting, grading and            digital divide, encouraging social interventions
partnered with Reliance Jio to reuse its voice     can walk into these stores and shop online in         packing centre for fruits and vegetables. This          to boost economic growth in India.76 It has done
assistance technology to operate on feature        an offline setting.71                                 will enable Amazon collection centres to source         so by investing in startups like Meesho, aimed
phones.68 The user base of Google’s voice                                                                fruits and vegetables directly from farmers and         at nurturing female entrepreneurship.77 Similarly,
search has grown exponentially, with most                                                                local markets.73 Flipkart is also building its own      Google recently established the Google AI
users searching in Hindi.69                                                                              delivery network of freelancers to deliver to           Lab, a global research lab that aims to provide
                                                                                                         rural areas and has asked the government for            opportunities to local Indian talent. The lab will
                                                                                                         permission to carry out drone deliveries.74             also explore opportunities to leverage Artificial
                                                                                                                                                                 Intelligence (AI) for social good.78

                                                                                                                                                                                                                            25
4                                                                                         A Balancing Act: The Promise and Peril of Big Tech in India |   How Big Tech is transforming India |

     How is Big Tech
     Transforming India?
          Big Tech companies in India have brought    particular type of complex social problem,
          benefits to citizens, businesses, and the   whose boundaries are hard to define, and
          government alike. These benefits are        which involves complex and interwoven
CHAPTER

          amplified because Big Tech companies        trade-offs. Addressing one part of the
          fill critical gaps in state, market, and    wicked problem often creates new issues
          R&D capacity. Yet, certain features and     to grapple with.79 Further, there is no
          practices of Big Tech companies result in   single solution to the problem; solutions
          harms and risks, whose impact in India      are neither true or false, nor right or
          is also amplified because of the above-     wrong. Instead, they involve complex
          mentioned gaps.                             value trade-offs. Solutions to wicked
                                                      problems depend on how the problem is
          Because Big Tech companies in India         defined, which is typically a reflection of
          provide both benefits and harms, they       the world views of different stakeholders,
          pose a wicked problem for public policy.    often grounded in moral positions.
          The term ‘wicked problem’ refers to a

                                                                                                                                                                                            26
A Balancing Act: The Promise and Peril of Big Tech in India |   How Big Tech is transforming India |

                                                                                              Problems
                                                                              Can take a      are never
                                                                                              completely                No clear
                                                                              long time
                                                                                              solved                    problem
                                                                              to evaluate
                                                                                                                        definition
                                                                              solutions

                                                           Solutions are                                                                    Multi-casual,
                                                           not right or                                                                     multi-scalar
                                                           wrong but                                                                        & inter-
                                                           better or worse                                                                  connected

                                                                                             Wicked
                                                                                            Problems
                                                            Every                                                                            Multiple
                                                            solution                                                                         stakeholders
                                                            ramifies                                                                         with
                                                            throughout                                                                       conflicting
                                                            the system                                                                       agendas

                                                                             Every wicked                            Straddle
                                                                             problem is                              organizational
                                                                             connected to                            & disciplinary
                                                                             others                                  boundaries

Source: Wahl, D. C. (2017, April 24). Facing Complexity:
Wicked Design Problems.                                                                                                                                                                                     27
A Balancing Act: The Promise and Peril of Big Tech in India |   How Big Tech is transforming India |

4.1
Market Power
Big Tech companies have significant market             For example, many start-ups in India benefit
power because of their scale, financial resources,     from the deep learning tools and software
and interconnectedness with the rest of the            development capacities developed by Big Tech
ecosystem. They often leverage this market             players.84
power in a way that brings benefits to the market
as a whole. Big Tech companies have created            Big Tech companies’ investments in public
many layers of digital infrastructure for other        policy help voice issues and concerns faced
businesses and have fuelled new business               by other tech-based businesses. However, this
models and innovation. For example, our                representation at times can be skewed toward
interviews with technology policy experts and          interests of Big Tech or foreign companies.
start-ups suggest that many Indian start-ups rely      Insights from interviews conducted suggest that
heavily on products and services such as search        Big Tech companies also have cultural power
engine optimization and advertising platforms
provided by foreign technology companies,
including Big Tech.80 Similarly, many start-ups rely
                                                       within the start-up community, as an aspirational
                                                       model for new businesses or even as a source of
                                                       potential exit.85
                                                                                                                        Several stakeholders,
on backend infrastructural support like AWS and
Microsoft Azure for their software products and
services.81
                                                       While Big Tech companies clearly create market
                                                       value as infrastructure providers, investors, and
                                                                                                                        including regulatory and
Many global Big Tech companies fund research
and provide business support to start-ups.
                                                       market representatives, the exercise of market
                                                       power creates an uneasy tradeoff between
                                                       market dominance and market support. In
                                                                                                                        industry bodies, have
WhatsApp, for example, has partnered with
Invest India for the Startup India-WhatsApp Grand
Challenge to address local problems.82 Both
                                                       particular, the actions of Big Tech companies in
                                                       India lead to three sets of concerns.                            raised concerns around
Google and Facebook run accelerator programs
for start-ups in India.83 Apart from generating
employment opportunities, such initiatives also
                                                       First, several stakeholders, including regulatory
                                                       and industry bodies, have raised concerns
                                                       around anti-competitive behaviour of global Big
                                                                                                                        anti-competitive behaviour
help Big Tech firms recruit talent locally and build
collaborative relationships within the industry.
                                                       Tech companies. For example, the CCI, in early
                                                       2019 ordered a full probe into the alleged anti-
                                                       competitive actions of Google in India, particularly
                                                                                                                        of global Big Tech
Big Tech companies’ R&D initiatives are often an
important source of technological breakthroughs.
                                                       in relation to its dominant market position in the
                                                       Android market.86 In the e-commerce sector, both                 companies.
                                                                                                                                                                                                               28
A Balancing Act: The Promise and Peril of Big Tech in India |   How Big Tech is transforming India |

The activities of Big Tech    the All India Online Vendors Association (AIOVA)
                              and Confederation of All India Traders (CAIT)
                              have filed cases against Flipkart and Amazon,
                                                                                      of its Indian subsidiaries.96 The ability of Big Tech
                                                                                      companies to create auxiliary industries in order
                                                                                      to support their operations also creates steep

companies, rather than        accusing them of abusing their dominant
                              market position, favoring ‘preferred sellers’ on
                              the platform, and hurting small sellers through
                                                                                      competition for brick and mortar stores who are
                                                                                      unable to scale up.97

those of smaller players,     discriminatory pricing techniques.87 Further,
                              sellers add that Amazon is able to leverage
                              access to vast amounts of purchase data to
                                                                                      Second, Big Tech companies affect competition
                                                                                      by acquiring direct competitors and nascent
                                                                                      companies. Columbia Law School Professor

often attract the attention   introduce private labels or made-for-Amazon
                              only brands.88 Dana Mattioli, in the Wall Street
                              Journal reported that Amazon’s search algorithm
                                                                                      Tim Wu highlights how Big Tech companies
                                                                                      sometimes use mergers and acquisitions
                                                                                      to reduce competition, add talent through

of regulators.                returns favored products and private labels, at
                              the expense of those listed by other vendors.89
                                                                                      acqui-hires, and expand into new sectors and
                                                                                      industries.98 This trend can now be observed in
                                                                                      India as well. For example, Google has absorbed
                              Smaller domestic firms struggle to compete              promising ventures in the Artificial Intelligence-
                              head-to-head with Big Tech companies. The               Machine Learning (AI-ML) space in India.99
                              latter’s size allows for greater risk-taking            Facebook’s activities are also geared towards
                              capacity and manufacturing the same products            making it a ‘trusted source of information’
                              at much higher margins.90 They also have                through strategic partnerships with news and
                              control over inventory (in case of e-commerce           content delivery services, especially in vernacular
                              platforms) and have the financial resources             languages.100
                              to offer deep discounts or zero prices for a
                              sustained period.91 Since they are platforms, Big       Such consolidation or vertical integration (through
                              Tech companies benefit from the commissions             mergers and acquisitions) by Big Tech companies
                              as well as the data from smaller competitors on         in the B2C segment has been identified as
                              their platforms.92                                      an important factor, amongst others, that has
                                                                                      prompted many Indian start-ups to shift to B2B
                              Some of the home-grown start-ups we spoke to            models.101 Other factors such as low profitability,
                              also suggest that they struggle to compete with         lack of patient capital, hefty executive salaries,
                              Big Tech companies because of the latter’s large        and issues with business models also have a role
                              capital investments, data-based intelligence            to play in this shift.102
                              and ability to set up and invest in auxiliary
                              industries.93 For instance, one of the key pillars      Third, the activities of Big Tech companies, rather
                              of Amazon’s competitive advantage in India is           than those of smaller players, often attract the
                              its network of large warehouses and ability to          attention of regulators. Resulting policy directives
                              invest in auxiliary industries. Amazon India has        are thus also based on practices of Big Tech
                              more than 41 warehouses, with the largest being         companies, often not taking into account the
                              more than half a million sq. ft in size.94 Further,     needs of smaller players.103 While Big Tech
                              data intelligence from its large user base allows       companies may have the ability to comply with
                              Amazon to also stock warehouses according to            heavy regulations and policies, many smaller
                              area-wise customer demands, thereby enabling            players may not have the organizational or
                              them to compete with even neighbourhood                 financial resources to comply fully.104
                              stores in terms of speedy delivery.95 In 2019
                              alone, Amazon infused $631 million into several

                                                                                                                                                29
A Balancing Act: The Promise and Peril of Big Tech in India |   How Big Tech is transforming India |

4.2   Informational
      Gateway
      Big Tech companies provide the informational             ‘on how to better research, report, distribute,
      infrastructure for India’s digital society. Most         and optimize stories for the internet’.108 Google
      Indian internet users rely on one or more Big Tech       Trends helps journalists by providing real-time
      platforms to access information, communicate             updates on trending topics, arranged by region,
      and participate in political and social life. A recent   country, and trending terms.109 Media outlets
      study conducted by the Reuters Institute and             heavily use social media platforms such as
      University of Oxford shows that people in India          Facebook and WhatsApp to distribute news and
      increasingly rely on digital platforms—search            information.110
      (32%) or social media (24%)—as their main way
      of accessing news online. Only 18% access news           In the expanding digital landscape of India,
      directly from traditional media companies or news        access to information is empowering individuals
      channels.105                                             through new forms of communication, solidarity,
                                                               and agency. However, Big Tech platforms also
      Big Tech platforms are thus enabling new                 contribute to a range of societal challenges and
      forms of democratic participation and inclusion,         risks. While these issues are not unique to India,
      leveraging the rapid growth in mobile phone              they are amplified by low levels of education
      usage and internet access in both urban and              and literacy, a large youth population , high
      rural India.106 This is significant because large        levels of societal heterogeneity and low levels of
      parts of the population were hitherto excluded           regulatory capacity.
      from mainstream political and social discourse
      due to lack of access or affordability, as well as       Big Tech platforms have tremendous power in
      language barriers. Big Tech platforms have also          shaping people’s beliefs and preferences, since
      enabled new forms of two-way communication               they are information gateways for much of India’s
      between the Indian state and citizens, even for          population. This dominance is amplified in India
      citizens who are difficult to reach otherwise.107        due to the increasing reliance on social media
      Activists, workers and civil society members can         platforms to access print and television news
      discuss issues and organize themselves through           coupled with algorithms often deciding what
      social media forums and groups. This creates an          content people view.111 For example, Google,
      opportunity for a more informed, inclusive, and          with 95% of India’s desktop search enquiries,
      vibrant public sphere.                                   is a gateway to the internet for a vast majority
                                                               of Indians and has considerable influence over
      Social media platforms have also impacted                people’s beliefs and preferences.112 Google’s
      the ways in which news and information are               search algorithms can be tweaked to alter what
      produced and distributed. For instance, Google           users see first,113 an important consideration since
      launched the News Lab initiative in 2015 to              users tend to choose higher-ranked results more
      work closely with the journalism industry. News          than lower-ranked results.114 A study conducted
      Lab covers a range of services and tutorials on          in India in the run up to 2014 Lok Sabha elections,

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A Balancing Act: The Promise and Peril of Big Tech in India |   How Big Tech is transforming India |

Big Tech platforms are not
simply publishers, but curators,   showed that search engine manipulation
                                   can have a large impact, especially because
                                   elections are often won by small margins.115
                                                                                            social heterogeneity. Recent studies show that
                                                                                            those aged below 20 and above 50 are most
                                                                                            susceptible to fake news. Writing for The Hindu

editors and amplifiers of news     Big Tech platforms can also shape public
                                   discourse through their content moderation
                                                                                            BusinessLine, Shriya Mohan argues that for both
                                                                                            these age groups, the 'excitement of sharing
                                                                                            content' for free on a platform such as WhatsApp,

and information. They wield        policies and practices. For example, Facebook
                                   and Twitter are criticized for bending to political
                                   pressure and biased moderation against certain
                                                                                            through their first smartphone, often 'proves
                                                                                            irresistible'.124 Similarly, the virality of TikTok
                                                                                            content is linked to the cultural context of small

immense gatekeeping powers,        social groups, such as women and religious
                                   minorities.116 A recent report by Equality
                                   Labs, a research organization that focuses on
                                                                                            towns in India.125 Journalist Nilesh Christopher
                                                                                            observes that in these towns, consumption
                                                                                            and distribution of content is often driven by

especially for the millions of     digital security for South Asian religious and
                                   cultural minorities, found that Facebook did
                                   not sufficiently enforce its own content policies
                                                                                            pre-existing caste politics and division along
                                                                                            community lines.126 Observers also link the
                                                                                            spread of misinformation to declining trust in

Indians coming online for the      in India. The report highlighted Facebook’s
                                   failure to permanently delete hateful content
                                   that contain calls to violence, casteist slurs, and
                                                                                            established media institutions.127

                                                                                            Social media has also become a virtual space for

first time.                        sexist insults.117 Further, Facebook has reported
                                   a spike in requests for user information and
                                   content takedowns by the Indian government.118
                                                                                            political contestation and mobilization, leading to
                                                                                            the increasing politicization of these platforms.
                                                                                            Big Tech social media platforms have become
                                   Thus, through search algorithms and content              instruments and sites of mass dissemination of
                                   moderation, private actors are shaping the               political ideologies and brandishing of political
                                   exercise of a constitutionally-guaranteed                identities.128 The 2014 Lok Sabha elections came
                                   fundamental right—free speech.                           to be known as ‘India’s social media election’.129
                                                                                            Since then, platforms like WhatsApp, Twitter and
                                   Big Tech platforms have also facilitated the             Facebook are ‘the preferred medium’ of political
                                   risk of identity politics, leading to unfortunate        messaging across political lines.130 Many political
                                   instances of caste-based violence119 and mob             parties have adopted social media campaign
                                   lynchings.120 Globally, research has linked              strategies and have set up social media or IT
                                   such incidents to misinformation, algorithmic            cells devoted to the task.131 Political parties,
                                   amplification, and computational propaganda.121          candidates and other stakeholders spent $7.74
                                   A recent report by the EU Disinfo Lab also draws         million to enlist the services of companies such
                                   attention to the funding and monetization of             as Google and Facebook in the run up to the
                                   disinformation. It uncovers instances in which           2019 Lok Sabha elections.132
                                   the Amazon Associates program played a key
                                   role in funding disinformation by providing ‘a           In summary, Big Tech platforms are not simply
                                   constant flow of monetized links usable by a             publishers, but curators, editors and amplifiers
                                   disinformation actor(s).'122                             of news and information.133 They wield immense
                                                                                            gatekeeping powers, especially for the millions of
                                   In India, these issues are amplified as they             Indians coming online for the first time.
                                   intersect with prevailing socio-economic
                                   and cultural factors, including low levels of
                                   literacy,123 a burgeoning youth population and

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