Filling Big Tech shoes: Game begins for India's tryst with mass app economy

Domestic alternatives for mass consumption apps by Google, Meta or Twitter are still few and far between

For Google Inc, which dominates, along with its rival Meta, India’s mass consumption app economy — from search, social media and messaging to video — the move to unbundle nine popular apps from Play Store was the first step towards reworking its business model in the country.

This move follows its failure to obtain a stay from the Supreme Court against a Competition Commission of India (CCI) order. Last year, the competition body had ruled that Google was indulging in anti-competitive practices and ordered it to unbundle its apps from mobile devices. Complaints have been made to the CCI against Apple Inc, too.

Till then, Android mobile device makers had to pre-install the entire bouquet of Google apps — which include YouTube, Chrome, Gmail, Duo and so on — if they wanted Play Store on their devices. After the CCI order, Google has agreed to unbundle the apps, offer customers a default choice from different search engines, permit sideloading — that is, allow developers to load their apps on mobile devices without going through the app store — and allow alternative payment options.

That’s good for a beginning. But the big question for consumers and mobile device makers is simple: Do they have an alternative choice for their apps and operating systems? As a senior executive of a leading mobile device brand said, “Even after Google agreed to unbundle, what choice do customers have for, say, an alternative to Google Search, YouTube or even a Gmail? Clearly, none or very little.”

To be sure, some moves are being made between industry and government. The good news is that domestic start-ups such as ShareChat (which has Google as an investor) or Koo, which wants to take on Twitter, have already made some headway. The government, too, has made a start — a few weeks ago it tested BharOS, an indigenous operating system, to offer some competition to the Google Android system. But these moves indirectly emphasise the big challenge embedded in the CCI order — India’s overdependence on apps from Big Tech.

Google Search rules India with a staggering 99 per cent of the market, says Statista. Similarly, YouTube dominates the globe with 2.5 billion subscribers — a fifth of that customer base is in India, its largest market with 467 million users. The offering is free to customers in the country though they have an ad-free subscription option, too. For a domestic challenger to make a dent, it will require big bucks and determination.

In striking contrast is China, which has been able to build its own apps leveraging the free Android system, building scale as well as making large revenues. It did so by closing the doors to Big Tech early on and filling the vacuum with domestic tech companies that became giants such as Baidu, Tencent and WeChat.

Google’s search engine, which is banned in China despite recent rumours that it might be back, has been filled by Baidu with 580 million subscribers. YouTube has been replaced by Youku, which has over 380 million subscribers.

Clearly, India cannot follow a similar blanket ban, though the government has closed the doors for a broad spectrum of Chinese apps for security reasons, the latest being a list of 230 apps a few days ago.

Data collected by the India Cellular and Electronics Association (ICEA) on social media shows that TikTok came from nowhere (in 2020, it was not even among the top 100 apps in the world) to hit one billion monthly active subscribers (around 800 million are in China), neck and neck with its chief rival Instagram (banned in China) that had similar numbers.

India banned TikTok in 2020 even as it was growing at a hectic pace with over 200 million customers. But the India ban helped Meta the most, especially as it came close on the heels of the launch of Reels (the two-minute short video) in the country. According to App Annie data (renamed data.ai), the most downloaded apps in social media in 2022 remain Instagram, Facebook, Snapchat and WhatsApp.

Now, some domestic players are gaining traction — short video and messaging apps Josh, Moj and Chingari are among the top 10 in downloads. And they are being supported by big funding — VerSe Innovation, which owns Josh and short news channel Daily Hunt, raised over $805 million last year.

Mohalla Tech, which runs Moj (in which MX TakaTak merged), and ShareChat raised $266 million from a consortium led by Google. These three platforms have already garnered an impressive 400 million users, compared to standalone Facebook’s 489 million users or Instagram (230 million users in India).

But the difference with the domestic apps is the money that the global players make in India already. Facebook India Online Services earned gross advertising revenues of Rs 16,189 crore in India in FY22 with profits of around Rs 300 crore.

In China, domestic app companies have been able to build scale and revenues by keeping Facebook out. Chinese WeChat, which combines the services offered by Facebook and WhatsApp, has hit 1.2 billion subscribers in China and generates substantial revenues of $5.5 billion.

The story is repeated for Twitter, which is blocked in China though users have found ways to circumvent it. But again, microblogging site Sina Weibo is making waves with over 580 million subscribers compared to 330 million Twitter users worldwide.

In India, Koo, set up only in 2020, has been able to make an impression hitting 60 million downloads with 80 per cent of them being non-English users. It has positioned itself to take on Twitter (which has around 25 million subscribers in India). Last year, the company raised $6.3 million in a funding round co-led by Tiger Global and Accel Partners and is already going global.

The blanket bans have worked for China because they have built strong alternatives. That is why if Netflix is not available, the Chinese don’t have to fret. They have iQIYI, known as China’s Netflix — with 115 million daily active subscribers — showing Asian entertainment shows, including Chinese and Korean dramas. It has internal competition, too, with Tencent Video offering an array of entertainment programmes to hit the top slot.

However, Indian OTT streaming channel apps are coming of age. MX Player, a part-subscription streaming site, is on a heady growth path — in calendar 2022, data.ai put it at number one in the pecking order in terms of downloads.

And while Amazon Prime and Disney Hotstar are still strong, there is Zee5 in third (it is partly subscription-based) place and Jio TV at number four, followed by JioCinema at number five. The Ambani companies are leveraging over 400 million mobile phone customers by offering the apps free. So the game has just begun for India’s tryst with the mass app economy. On current reckoning, the road to building winners is still a long one.