Companies

Why has Google made a $10-billion bet on India now?

Our Bureau. Mumbai | Updated on July 13, 2020 Published on July 13, 2020

Google CEO Sundar Pichai   -  Reuters

In 2014, even before he became the CEO of Google, Chennai-born Sundar Pichai had envisioned Google placing big bets on India. Back then he had predicted that the growth in internet user base would make India not only a huge market but also a country where Google would invest for the long term. Six years later, Pichai has committed to a $10-billion investment in India.

A huge market

There are three reasons why Pichai has announced this investment now. First, this comes at time when broadband user base in India has crossed 500 million and Indians are using more data than ever before – 4GB on average every month, projected to grow to 11GB per month in the next four years. India is clearly one of the biggest markets for any global digital company, given that China has a highly regulated market.

Second, Google’s rival Facebook recently invested nearly $6 billion in Mukesh Ambani’s Jio Platforms. The ₹43,574-crore deal with Reliance Jio is a culmination of what Zuckerberg has been wanting to do – grab a piece of the growing data usage in India with Facebook at the forefront. “India is in the midst of one of the most dynamic social and economic transformations the world has ever seen, driven by the rapid adoption of digital technologies,” Facebook had said in a post. Amazon has also announced $1-billion investment earlier this year, in addition to the $5-billion investments announced earlier. India is clearly at the centre of a battle between the global tech majors as they chase for a larger share of the next billion customers.

 

So far, what Google has missed out when compared to Facebook and Amazon is with regard to building a community that can be monetised. For example, Amazon has ‘Prime’ and Facebook has Instagram and WhatsApp, which are strong community networks. “The effort is to build a digital platform so that customer spend happens within the ecosystem,” said Sanchit Vir Gogia, Chief Analyst of Greyhound Research.

Perfect test bed

Third, India has been the testbed for several of Google’s products and services. Nearly eight products that were first launched in India have been rolled out globally. For example, Google Pay, the UPI-based payment app from Google, has been a huge success, which has been replicated in other parts of the world. Then there is the Google station in collaboration with RailTel, under which public WiFi hotspots have been set up at railway stations across the country for free. If a product works in India then it is bound to work in other developing regions of the world such as Africa and South America. Google is also interested in the start-up ecosystem, so the new fund will be used to acquire some of the interesting ones here. Pichai also said that the investments will be used for infrastructure. This could lead to an investment into one of the telecom operators in the country.

Concerns raised

But industry experts have raised concerns over the lack of proper laws governing internet data, especially since Google has been in the middle of several anti-trust laws. “ FDI is good, but its a case of placing the horse before the cart. We still do not have adequate data protection and privacy laws. How do we ensure that user data stands protected,” asks BK Syngal, former Chairman, Videsh Sanchar Nigam Ltd.

“Google owns a search engine, a leading web browser (Chrome), the world’s largest mobile operating system in Android, YouTube and Google Maps, all of which have significant user base in India. More investments could mean more influence over user data. Vocal for local campaign needs to translate into having big Indian companies that can do what Google wants to do,” said an industry analyst.

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Published on July 13, 2020
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