Indian dream suddenly turns sour for these American companies

While the government’s recent moves may have been necessary in some cases, these would have an adverse impact on the investment cycles of some of these companies. The marquee global names are suddenly finding themselves out of favour as local flavour is gaining currency in the run up to 2019 elections.

Not too long ago wooed for their big buck investments and technological prowess, global tech and retail giants are facing regulatory heat in India, a destination that’s got everything going  from economic growth to demographic dividend.

The marquee global names are suddenly finding themselves out of favour as local flavour is gaining currency in the run up to 2019 elections.

Amazon, Walmart, Facebook, Google and Twitter are in it together.

While Twitter chief executive officer and co-founder Jack Dorsey is planning to make a hurried trip to India next week responding to summons from the Parliamentary Standing Committee, search giant Google is under the scanner of the Competition Commission of India (CCI) for allegedly using its popular Android mobile operating system to block rivals.

Amazon and Walmart had to overnight revamp their business strategies after the government made changes in e-commerce norms linked to foreign direct investment (FDI).

Facebook and WhatsApp have had a rough run in connection with spread of fake news.

According to industry insiders, while the government’s recent moves may have been necessary in some cases, these would have an adverse impact on the investment cycles of some of these companies.

These five to six companies together have invested more than $50 billion in India and have plans to invest more.

Dorsey might come next week

According to sources in the know, the Twitter CEO is contemplating making a second trip to India to meet members of the Parliamentary Standing Committee on Information Technology.

The committee has asked Dorsey to come in person or depute someone from the global team for a meeting within the next 15 days. Twitter did not comment.

“The company’s understanding is that the committee is undertaking a study of the whole ecosystem. There is no immediate trigger on why Twitter has been summoned,’’ said a source close to the firm.

While Dorsey is likely to come to India within the next 10 days, the company is apprehensive of a combative approach of the government, in contrast to a collaborative one, he said.

“The committee unanimously decided to not hear the Twitter representatives. We have given them 15 days to get the  CEO of Twitter or somebody who reports to the CEO to appear before the committee,” sources in the committee said.

Experts, however, said Dorsey, if he wants, can give the summons a miss.

“The Parliamentary Standing Committee has the power to summon people, so it is legal to call Jack Dorsey.

"If he does not turn up, there is not much the committee can do. At the most, the Speaker can issue contempt. A standing committee is not a court,” said Alok Prasanna Kumar, an advocate and Senior Resident Fellow at legal think tank Vidhi Centre for Legal Policy in Bengaluru.

Last year, Dorsey had met Prime Minister Narendra Modi and Congress President Rahul Gandhi, besides leaders of regional parties to pitch the company as a campaigning platform for 2019 general elections.

“For Twitter, 2019 elections is supposed to be a major game changer…. That is why Dorsey is contemplating coming to India,” a source said.

Experts back regulations

According to industry experts, encouraged by the favourable verdicts in European Union against Facebook, Google and some other global data giants, Indian government is planning to regulate these platforms.

“Most of these companies are going through challenges in various parts of the world.

"Data privacy is a common issue to many. Misuse of these medium is well documented in affecting elections,’’ said Arvind Singhal, chairman, Technopak Advisors.

In Amazon’s case, the Indian government is trying to articulate fears that other countries have already voiced, he said.

"Regulators are beginning to notice that these companies have the potential to cause some kind of damage to competition or society and are beginning to take notice,” according to Singhal.

Google faces CCI heat

Google faced a case of exploiting its market dominance in the mobile operating system space in Europe that led to a fine of $5 billion by antitrust regulators last year.

The investigation found Google was forcing manufacturers to pre-install Google Search and its Chrome browser, together with its Google Play app store on Android devices since 2011.

In India, CCI reached out to Google for an inquiry in the preliminary stages, and it was too early to call it an investigation, sources said.

The technology giant has challenged the order.

Last year, CCI had imposed a fine of Rs 136 crore on Google for unfair business practices in the Indian market for abusing its dominance in the area of online search through practices leading up  to search bias and manipulation, among others.

Facebook has also been embroiled in a controversy over claims that it let big data firm Cambridge Analytica harvest user profiles to influence voting preferences.

While it was reported that both the ruling party Bharatiya Janata Party and opposition Congress were approached by Cambridge Analytica, both denied the claims.

With inputs from Veena Mani

Photograph: Reuters