Last week, Google delisted the apps of 10 Indian businesses from its proprietary app store. This followed protracted court battles over Google’s right to charge app developers for the Play Store’s distribution services. This incident, which saw some apps relisted after mediated discussions, highlights the need for a thoughtful resolution of business disputes in the digital economy, increasingly contested on the notion of “fairness”.
Last week, Google delisted the apps of 10 Indian businesses from its proprietary app store (REUTERS)
At the heart of this matter is the compression of operating margins in India’s digital economy. Digital businesses have had to reduce expenses and prioritise profitability, leading to thousands of layoffs, since the digital boom during the Covid-19 pandemic. This situation highlights the importance of empathy in the face of well-functioning but harsh markets, where rivals fiercely compete for every bit of revenue and consumers display fickleness. The margins-led fight between apps and their distributors has many analogues, such as telecom companies demanding a “fair share” of app market revenues. Indian telcos operate internet networks and are demanding that large digital businesses that attract more traffic, such as video-on-demand apps, compensate them for their role in last-mile distribution. This stems from commercial concerns of telcos, linked to the high costs of their new 5G networks that remain underutilised. These fights raise the question of whether notions of fairness borrowed from social justice contexts have a place in business.
Since fairness is subjective, it could be weaponised. This is the experience in Europe which has no homegrown digital champions like India, and where the chief of the nodal antitrust authority, Margrethe Vestager, seems to be on a moral crusade. “In my work on competition, I sometimes say that what is at stake is as old as Adam and Eve,” she said in a speech at the International Martin Luther Foundation. “For all the economic theories and the business models, it all comes down to greed,” she stated. However, policymakers need to resort to objective standards rather than political sermons to unlock dynamism in digital markets.
At the outset, policymakers should decouple the notion of fairness from the debate, focusing instead on what is best for all economic agents. When considering disputes between businesses, for instance, it’s crucial to assess whether they are rivals, if there are alternative avenues for distribution, and if there are any limitations on these alternatives. The mutual dependence between apps and app stores, the existence of several app stores with different commercial terms, and the absence of limitations on alternative distribution channels are all factors to consider.
Basing economic policymaking solely on sentiments is not a viable approach. However, this doesn’t imply that we should overlook the value of corporate citizenship. Even though the most successful tech companies are privately owned, they bear a responsibility to ensure their actions benefit both societies and markets. This concept of stewardship, already recognised in managing the impact of industrial activities on ecological systems, should similarly become a standard practice in the digital realm. Adopting practices that go beyond what is required by formal rules and obligations will indeed help ensure that big business is welcome in a world awash with uncertainty. In the Indian context, this could mean redefining fairness as technological parity rather than economic redistribution. That is, large companies should facilitate the flow of technology to geographies from which they profit, while the public sector should create conditions for this to happen.
Policies linked to “trusted supply chains” assume salience here — via which partner jurisdictions protect and promote trade and commerce across their borders. India has adopted early versions of this idea in the context of its Trusted Telecom Portal, where only products from “trusted sources” or countries are listed. Similarly, the data protection law enacted in 2023, in effect, provides for the free flow of non-sensitive data between trusted jurisdictions. Both these policies provide space for an enlightened corporate stewardship which does not compromise their very ethos.
Tech companies from trusted jurisdictions now have the space to forge cross-border strategic partnerships that align with India’s developmental goals. For example, enhancing local computing capacity to enable Artificial Intelligence (AI) research and development is crucial. India’s supercomputing infrastructure primarily serves high-performance computing for traditional use cases. However, global tech giants possess supercomputing capacities surpassing those in the developing world. Therefore, creating shared infrastructure that India’s digital startups can access and leverage is an idea whose time has come.
Vivan Sharan is partner, Koan Advisory Group. The views expressed are personal
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