Global tech giants hold their breath for the Indian election to declare its winner

Global tech giants wait for India's new government to come into play before placing any more capital in the countryBusiness Insider India


  • Global tech giants like Facebook and Amazon are waiting on the results of the Indian election to gain some clarity.
  • Companies have put their investments on hold until the new government comes into power and has some answers around new e-commerce and data location regulations in India.
Global tech giants are waiting alongside the world in anticipation to see who will form India’s next government. Their investments hang in the balance as counting day, May 23, inches closer.

Companies like Facebook and Walmart-owned Flipkart are hoping that the new government will provide some answers to the questions around the new e-commerce policy and regulations for data localisation according to a report in Business Standard.

Both of which have hit global conglomerates where it hurts.

TikTok, Facebook, Flipkart and Amazon plan on meeting with officials from the government — finance ministry, IT ministry, and the Department for Promotion of Industry and Internal Trade (DPIIT) — after the Indian election has declared a winner.

Bringing on local servers to save user data is an added cost for companies.

And, barring deep discounts — one of the new regulations of the e-commerce policy that was enforced on February 1, 2019 — led to a 20-25% decline in online shares for Amazon and Flipkart.

Facebook’s many questions

Facebook-owned WhatsApp’s ‘ not so new’ feature, WhatsApp Pay, has been in its ‘beta’ phase for over a year now. Even though the company brags of a million users, the feature is still waiting on a full roll out.

One of the primary reasons for that is the Reserve Bank of India’s new financial data localisation policy that requires foreign companies to save the financial data of Indian users within India.

Aside from WhatsApp, Google Pay has also come under question by the Delhi High Court on operation without a licence. That basically means that the global tech giant has been operating without authorisation from the central bank.

Nonetheless, Google assures users that since it operates through the United Payments Interface (UPI) set up by the Indian government, it in fact, does not need a license.

Facebook, the social networking platform now known for its many data breaches, has been under the gun of the Indian government. On the issue of data localisation, Mark Zuckerberg — Facebook’s CEO — asserts that it is akin to “violating human rights like privacy or freedom of expression”.

There's an important difference between providing a service in a country and storing people’s data there.

Mark Zuckerberg, Facebook CEO, in a blog post

E-commerce squabbles

Since practices like deep discounting have been barred by the new policy that came into effect on February 1, 2019. For nearly three months there were no flash deals and discounts to be found on Amazon or Flipkart. In the first quarter of 2019, whatever discounts were offered were down by 11-14% on average.

Both companies are reportedly hoping that the new government will fend off the offline trade body that comprimes of a massive vote bank and has been lobbying against deep discounts.

PwC has predicted that the new regulations could cost both companies as much as $46 billion in loss of sales by 2022.

The last phase of the Lok Sabha election ended yesterday and the final results are scheduled to be released on May 23. If the exit polls are anything to go by, the National Democratic Alliance (NDA) seems to be leading the coop.

Modi’s return to power for a second term will mean that the policies are unlikely to change and the tune of localisation will continue to ring.

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