Online Internet companies face fierce competition from global giants


Christie Arokiaraj, 23, is a welder working from a small shop outside the lively Krishnarajapuram railway station in the eastern district of Bengaluru. For nine to 10 hours a day, the skeleton hangs over metal fragments to cover a steady stream of orders from small businesses and homeowners in the area.

His life begins after 9 pm when Arokiaraj gets along with four or five friends and relaxes on the platform 4 of the station. Using the free WiFi offered, young people use their smartphones to browse the internet and check videos on YouTube, Facebook and WhatsApp between the talks. The last ones are exchanged and the anecdotes are erased.

However, over the last three to four months, another app hit their imagination: TikTok, Bytedance's small video sharing application, the world's most valuable start-up, estimated at $ 75 billion by the end of 2018. For 20-30 minutes a day, Arokiaraj and his friends watch comedy slaps, strangers immortalizing the stars of the film Tamil and Bollywood and disastrous in women dancing to slow music off Madhya Pradesh and Mumbai – all in the app.

In the last 12 months that TikTok was operating in India – including six months, when it survived the ban – the launches quickly brought about 200 million users in June, according to its own data. The application has been taken over a billion times all over the world. "We allow people from every corner of the country to have a global platform that gives them an unlimited opportunity to capture and share their creativity," says Sachin Sharma, sales and affiliate manager, Bytedance India. "TikTok is a popular pan-India because we recognize that creativity is not limited to audiences belonging to certain cities or users who speak a particular language."

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The team's cheer on platform 4 shows that Sharma is on the mark. Arokiaraj says TikTok has become the new mold application between its peer group. Videos on the electronic platform dominate latenight talks, which take place between strong train whistles.

But they are not all excited about the explosive development of TikTok. Application critics say it was built in China in a fenced garden – with almost no threat from foreign competitors – funded by local investors and launched for the first time in a well-known market. Developers who are rich in cash later launched the application. Chinese companies such as the Helo label provider, the beauty and lifestyle App Club Club and UC Browser have benefited from this strategy. The financial muscles of American companies like Amazon and Walmart – which have acquired the Flipkart – have also put the stadium for home players who have overshadowed, they say.

This, as observers say, has led to a growing market concern, which has been split into two businessmen worried about being fungus by foreign investors and multinationals who claim that success is determined by market forces and not by economic impact. It has also forced entrepreneurs to make tough decisions. Craftsvilla, for example, had to quickly shrink its activities in the last 12 months, says Manoj Gupta, Managing Director of the platform selling ethnic clothing and fashion accessories. "It is impossible to defend your business model with this kind of competition and the money you have. Local businessmen must be protected."

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Vinay Bagri, Managing Director and founder of the NiTo launch, says: "The threatening Chinese and American threat is something we feel everyday when we worry about the sustainability of our business."

Industry observers report that the changing market dynamics has aggravated the chances of success for some of these entrepreneurs. Over the past five years, even when the introduction began, the number of early supporters for these start-ups has declined. Subsequent investors have also begun to offset their bets, preferring to invest only in the top few players in each division. "In many cases, it's a tough, profitable market," says Anand Lunia, founder of India Quotient, an early-stage investor in start-ups. "The outbreak of foreign capital and ideas has only aggravated a rough market."

Foreign capital accounts for 80-90% of total investment in India's start-ups, according to industry estimates. Even if some companies are building the desi flavor – Paytm's Vijay Shekhar Sharma claims its company is as local as Maruti and SBI, although Softbank and Alibaba Group are the largest investors – the influence of foreign investors is obvious. Big investors like Softbank, which has invested $ 2 billion in India and plans to add more than $ 2-3 billion, provide the key (and rarely available) later capital to the ecosystem. After Independence, India had a protective economy to help domestic industries. But the economy opened in the 1990s and world-wide partnerships were almost established, especially in the technology field. The voices of protectionism seem to be coming back now with local entrepreneurs beginning to punish their pain. "American companies have a market depth and Chinese companies have a depth of purse, they are penetrating the country, what do Indian companies do?" Says the founder of technology-based technology on condition of anonymity. "We need protection as China has. Look at how big their technology industry has grown."

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Companies like TikTok set the bar. Its biggest competitors, ShareChat, started with a stroke in 2015 and brought up to 50 million users by June 2019. But today, potential investors are asking ShareChat for hard questions about how to deal with foreign rivals with deep pocket.

Executives in companies such as Amazon Bristle, with the suggestion that their growth has hit the chances of success of home entrepreneurs. A company spokesman tells ET Magazine that the protective narrative is dated and untrue and that $ 200 billion is a value generator in India. "Amazon.com is a thriving market with a prime role to enable Indian small businesses for e-commerce." With continued investment in technology and infrastructure, it has enabled more than 450,000 small and medium-sized businesses to turn into successful online retailers online "says a company statement. As a result, Amazon has helped more than $ 1 billion in exports from US, English, Japanese, and Gulf countries. "Amazon continues to work closely with the local small business ecosystem with multiple programs such as Launchpad, Amazon Easy, I Have Space, and Amazon remains fully compliant with the laws of the earth."

Bytedance's Sharma says the combination of TikTok with great product experience and local and personalized content recommendations was a hit with users. "We will continue to focus on enhancing product experience. We recently started earning money from the platform and working closely with the brands to further develop our advertising solutions to understand what works for their audience and whether TikTok can work together to help their consumers across the country " , says.

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Protective voices in India's ecosystem are worried about some sort of indigenous Indian internet economy colonization by foreign companies. "I believe we have the opportunity to build major Internet companies from India," said Sachin Bansal, then Flipkart's executive president, at the business conference in February this year. "At the same time, we must do this by creating unfair competition for some companies and creating a level playing field for all. I believe that if you create a level playing field, Indian companies will have a great advantage and we will be able to build companies to make overtime ".

In 2018, Bansal sold his share of the e-commerce company that escorted an apartment in Bangalore to Walmart. He has since become a key first investor in start-ups. In 2019, he invested $ 100 million in Ola. Bhavish Aggarwal, managing director and co-founder of the giant who shares the walk, has rediscovered shareholders' voting rights to hold the investors who were theft. The Japanese SoftBank group, which owns an important part of Ola, recently wanted to invest $ 1 billion in the cabin divider. Aggarwal, however, had rejected the offer, as it would have meant a reduction in his participation rights.

Regulators have responded to some of the concerns of domestic entrepreneurs. A notable move was the data tracking series, which aims to protect the data of private citizens. This dictatorship – backed by fintech companies such as Paytm and Phone Pe and opposed to multinationals – seeks to force companies to host data they produce within India's geographic boundaries.

Data localization
However, opponents of this movement say that such a seismic shift is unrealistic, with technological and operational issues slowing down the implementation. "There are a lot of issues to consider when you locate the data," says Anirudh Rastogi, Chief Executive Officer of Ikigai Law, a law firm in Delhi that deals with technology and political law. "Where do you find enough space to build these server units to host this mass of data? Housing all the data in a country mitigates the risk?"

The explosion of mobile phone users in India is expected to produce 2.3 million pentacles of data by 2023, from 40,000 in 2010. One petabyte is equivalent to 1,000 terabytes or 1,000,000 gigabytes. Parminder Jeet Singh, executive director of IT for Change, says that company data produced in India should be treated as a national asset. "There is no reason to sign our lives so easily. Let the government plan a policy that will make these companies pay to capitalize on these resources. "

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Not just the content section that attracts protectionist attention. From finesse to fashion, lobbying is hard at work by trying to put the interests of domestic entrepreneurs first. For example, the Tech Institute, a lobby that measures MakeMyTrip, Ola and Quikr as members, wants to ensure a level playing field for the e-commerce industry, says Rameesh Kailsasam chief executive officer. "There is a fear that foreign companies may be curtailing the law with regard to regulatory issues. We want to ensure that Indian companies are not disadvantaged when it comes to crucial regulatory issues."

At the beginning of June, a large number of start-up investors, with about $ 800 million of funds, joined a fund of clubs to take over foreign investors and act as a defense platform.

With India's e-commerce market expected to reach $ 1 trillion by 2021 – according to the February report of India's retailer and Deloitte – the battle is expected to intensify. No matter who wins, the customer should not lose.