India is one of the fastest-growing internet-user markets in the world and, at 120 million users, it’s already the third-largest (behind the US and China). Not surprisingly, most of the new start-ups are dotcom ideas as young entrepreneurs see clicks convert to revenue.
The quality of that growth could do with lot of improvements as bandwidth issues and high costs of connectivity and devices make internet out of reach for the masses. Nikesh Arora, internet giant Google’s senior vice-president and chief business officer, believes this is just the start of India’s internet journey.
“When we compare with the best around the world, India is not there. Our bandwidth capacities are not there and penetration of devices is not ample. Also, our quality of service is not good. We need to improve. In developed countries, the high-quality bandwidth user base is 70-80% of the internet user base. That is what we need. 120 million is a good start. But we have another billion to go,” he says.
As growth attracts all kinds of dotcom start-up ideas, what are the challenges? “The challenge is that there are only three ways to make money online: subscription, transaction or advertising. For advertising, you have to get 20 times more users than you need if you are a transaction or subscription services provider, to make the same amount of money.
People see the highest probability of success in getting someone to buy something online, say, a T-shirt for Rs 500 and make a 10% margin, or Rs 50. It’s easier because, to get Rs 50 from advertising, they will have to get at least 20 people to watch it.”
Are not categories such as books and music definitely shifting online? “Books are going to be double whammy. The first whammy was when you could order books online. The second whammy is that books are being produced in digital formats – gratification happens much faster. If not your kids, their kids will definitely see books as collectors’ items,” says Arora.
As internet user base grows in India, some of the concerns around it are getting amplified. Should service providers control the internet and how liable are internet companies to content that is being put on their websites?
“The internet should be looked at as an infrastructure that people will use for a lifetime. When roads or railway lines were built, life changed completely. People got to new places faster, goods and services started moving, pricing became different and businesses got started around them.
Internet is a change of that magnitude – and will go on for the rest of our lives, changing the way things happen in society. If you believe that thesis and think about it for the next 10 or 15 years, yes, we can do a lot of things right to shape it in such a way that we accelerate the transition to an internet-based life,” says Arora.
How can one do that without running into problems on what people post on the internet? If a post is not up to someone’s liking or religious beliefs, it cascades into a bigger problem. “One thing important for a country to grow fast is certainty in business environment.
If rules keep changing, then your behaviour is, ‘Oh my God! what do I do if rules change?’ The biggest thing a government can provide for the success of business and, therefore, the success of an economy is certainty,” says Arora.
How does one provide that? “The answer is light-touch regulation to ensure things get steered in the right direction. And that is what democratic capitalistic societies do. The only sectors that get excessive regulation are sectors related to basic services where you have to, sometimes, take uneconomic decisions to ensure all of humanity is served.
For example, if you provide telecommunication or utilities purely on commercial terms, then companies would not service rural areas, or people who are not affluent may not get the services of the same quality as others. So, in that case, yes, it makes sense to create a society where regulation may be needed to some degree, but in areas where industries are innovating and creating new services, like internet, I’m for light-touch regulation.”
What is your strategy on Google Drive (the recently-started cloud-based file-storage service)? “We are getting more reliant on the internet and, as we do that, we are beginning to shift major aspectsof our life on to the web. Part of that is managing documents, managing information in a way that we can access it from wherever we want – be it a picture, an important paper or whatever.
So, I save it at work on my work computer and when I am home, I can log in with my laptop, or when I am travelling, I can log in with my phone and access the content I want, and it is going to be safe forever,” says Arora.
But isn’t Google asking people to give up their rights on copyrights? “I don’t think so. We have only tried to ensure we have access to stuff so that we continue to improve services as we need to in future.”