Nurture ICTs for future of start-ups

The highly technical nature of ICT sector is such that regulatory regimes take time to realise its dominance.

The blending of computing and communications resulting in a networked information infrastructure is the technological achievement of today’s world. Things are changing fast everywhere in response to this and our country is no exception.

On the July 14, 2013, the Bharat Sanchar Nigam Limited, exclusively responsible for providing the 163 year-old telegraphic services, closed it permanently. In this age of e-mails, ordinary post is disparagingly referred to as snail-mail. Post boxes are slowly disappearing from street corners at least in metropolitan centres.

By June, 2015, the country had 975.8 million mobile phone subscribers. India is also thus exiting the post, telephone and telegraph (PTT) age to enter the new Information
and Communication Technology (ICT) dawn.

In doing so, the fact that in the ICT sector, there is considerable leeway for the emergence of giant firms, has to be given due consideration. Distinct advantages from the scale of operations induce ICT firms tasting success to expand.

A recent study of these firms in the US, carried out by The Economist, gives clear evidence of strong predatory capacities in these firms. Six of the top 10 non-financial firms with the largest cash-hoards in the US are ICT firms.

Further, the high share prices of most such firms give them unprecedented fire power as they go hunting. There is also a tendency to grow big by expansion or acquisition and merger putting this fire-power to use. Online travel business in the US illustrates this. This emerged in the late 1990s with many firms cropping up. Now, two giant firms — Priceline and Expedia — have most of the online travel business.

Many of these ICT firms emerge ultimately as multiproduct firms. Google began as a search engine in 1998 to ensure that there is an organised gateway for the entire gamut of information in the world.

But it soon went on to web-mail (Gmail), browsers (Chrome), video-hosting (YouTube) and news aggregation (Google News).

It embarked on balloons to power internet access. With Android, it has now entered
the mobile operating systems too. It is now on to totally new areas like self-driven cars, glucose-detecting contact lenses for diabetics and even to research on technologies that slow down ageing.

The situation is made worse by the fact that the highly technical nature of the sector is
such that regulatory regimes take time to be aware of the dominance and the resultant monopolistic tendencies that such firms may have for a particular product.

Further, any multiproduct conglomerate would have a natural tendency to promote its own brand to the exclusion of other rival brands in all the products that it produces. We can think of a big ICT firm, looked upon as the last word in information because of its early start and sheer size, spreading the word in this manner about its other products.

Such a situation would make the usual claim that ICT helps increase choice in market place and provides access to consumers of otherwise unavailable goods and services, null and void. As has been shown in studies carried out by The Economist, this is precisely what seems to underlie the pulling up of Google by Margarethe Vestager, the new Competition Commissioner of the European Union.

Google Shopping

One of the major accusations is that Google, which handles more than 90 per cent of Europe’s web-searches, is using its dominant position in this regard to steer consumers away from rival services to its own Google Shopping. According to the latest reports, the Competition Commission of India has also found that Google is abusing its dominant position regarding search engines in the Indian market. 

All political dispensations in India, including the present one in power at the Centre, are keen to expedite the transition from the old PTT era to the new ICT age. There is a strong feeling in all quarters that ICT will have an important role to play in fulfilling the overtly declared ultimate objective of the promotion of human well-being.

While no one will question such a policy orientation, the purpose of this note is just to sound a warning that ICT has to be nurtured with great care if the goal in view is to be achieved. It is interesting to note that the ‘Make in India’ slogan of last year has been updated by the ‘Start-up India, stand up India’ one.

This does indicate a welcome concern for the promotion of enterprise in the country. But one wonders whether sufficient thoughts have gone into devising measures required to ensure that start-ups are provided with healthily competitive conditions to enable them to stand up.

Moreover, in the furore about starting up, making and standing up by entrepreneurs, the simple fact that all this is finally for satisfying the needs of the consumers, appears at times, to get left by the wayside.

(The writer is a former professor in the Department of Business Economics, University of Delhi)