Jeff Bezos, meet Mukesh Ambani.Its time the Amazon.com Inc.
boss took notice of his real rival in India, the only billion-strong consumer market open to Western tech firms.
While Walmart Inc.s acquisition this year of Flipkart Online Services Pvt., a homegrown e-tailer, might have given the impression that the battle for India would be an all-American contest, a new national e-commerce policy doing the rounds in New Delhi should disabuse Bezos of that notion.If the draft policy becomes law, the oil-to-telecom tycoon whos Indias richest man will emerge as the most formidable challenger to the wealthiest person on the planet.The core contest comes down to warehouses.
Foreign-funded firms arent allowed to hold e-commerce inventory in India.
Thats a disadvantage for Amazon, since it prevents the firm from fully capitalizing on the strengths of its vaunted logistics operation, seen as one of its most decisive edges in the United States Amazon was hoping that those rules would be loosened, but the proposed policy instead calls for harsh controls on even the phantom sellers that Amazon and Flipkart have been using to get around the no-inventory problem.
If the new policy is strictly implemented, Amazon, and its preferred resellers, wont be able to offer deep discounts.Meanwhile, Indian-managed companies like Ambanis Reliance Retail Ltd.
will be free to control and improve their supply chains while building a fearsome online presence in partnership with his mobile operator, Reliance Jio Infocomm Ltd.Thats not the only onerous aspect of the policy.
The draft speaks of a two-year period after which data generated in India on social media (Facebook Inc.), via search engines (Alphabet Inc.s Google), or e-commerce (Amazon) will have to be stored on local servers.
As the Wall Street Journal noted this week, the move is bound to push up costs for Western firms.This new restriction will probably make it to the final law.
The Indian central bank is already directing all payment firms like Visa Inc., Mastercard Inc.
and PayPal Holdings Inc.
to keep their Indian data exclusively in the country by October, so theres little reason to expect that rules for e-commerce data will be much less stringent.Besides, similar laws already exist in China.
Amazon sold its Chinese servers and some other cloud assets to a local partner to comply with Beijings local storage rules.
Alphabet, which has no data centers in China, is also looking for a local partner to bring its Google Drive and Google Docs to that country, Bloomberg News reported recently.Other aspects of the policy may die without Bezos needing to move a muscle.
Indian privacy activists will balk at the idea of a social credit database, to be set up in a very Chinese fashion by mixing state and non-state citizen data.
While the goal of the database is to promote digital lending, theres no guarantee it wont be used to stifle dissent.A more problematic suggestion in the draft is that the Indian government would have access to the data stored in India, subject to rules related to privacy, consent etc.
A proposed Indian data-privacy law is yet to be passed by parliament, and whatever makes it onto the books will in turn be shaped by the Indian apex courts verdict in a case challenging the constitutional validity of a biometric identification system that the government has rolled out to 1.2 billion Indians.Detractors argue that the biometric database is unsafe, a threat to privacy, and a tool for digital exclusion because the failure rate of authentications is too high.
For business, however, the stakes in the central data repository are significant.
Fast customer acquisition made possible by the unique ID database helped Jio sign up 215 million users in just 22 months for its low-priced 4G telecom service.
The draft e-commerce rules now promise a single know your customer data portal, akin to Singapores MyInfo.
This move could help Jios payments bank acquire customer deposits cheaply.A report in Factor Daily, an Indian tech news website, gives a detailed account of how executives from Jio and Reliance Industries Ltd., the group flagship, helped shape the India First doctrine of the new e-commerce rules.The Reliance boss owes it to his shareholders to try to make the most of his home-field advantage.
The only way his big telecom investments already amounting to $36 billion, and counting will make sense is if Jio can succeed in locking in Indias consumers with a triple play of carriage, content and commerce.
Of those three, carriage may drive ubiquity of Reliances services and content will bring a sticky audience but only commerce will make real money.India is pegged to be a $1 trillion digital economy by 2025, and Bezos, Ambani, and the Bansal and Walton families backing Walmart-Flipkart all want a piece of the action.
Judging by this first round of regulatory skirmish, its the Reliance boss that Bezos needs to worry about most.(Andy Mukherjee is a Bloomberg Gadfly columnist covering industrial companies and financial services.
He previously was a columnist for Reuters Breakingviews.
He has also worked for the Straits Times, ET NOW and Bloomberg News.)Disclaimer: The opinions expressed within this article are the personal opinions of the author.
The facts and opinions appearing in the article do not reflect the views of TheIndianSubcontinent and TheIndianSubcontinent does not assume any responsibility or liability for the same.(Except for the headline, this story has not been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)