Exploiting the Chinese exit

A boy plays an online game PUBG on his mobile phone sitting outside his house. File   | Photo Credit: AP

The current India-China border standoff has expanded watchful Indian eyes into cyberspace; but the Chinese put up blinding shields on their own Internet territory more than a decade ago. The Chinese government began erecting censorship barriers (what I like to call the Great Internet Wall of China) and banned several popular Western websites and applications years ago.

In January 2010, Google announced that in response to a hacking attack from within China on it and dozens of other U.S. companies, it was no longer willing to censor searches in China and would pull out of the country completely. Meanwhile, in the intervening years since Google and others were forced out, the Chinese Internet market exploded, and has grown to over 900 million users, most of them on mobile (paradoxically via Google’s Android) from just over 300 million in early 2010. This is according to the China Internet Network Information Center, a branch of the country’s Ministry of Industry and Information Technology.

Also read | China’s netizen population hits record 904 million: Report

China’s lead

In hindsight, China’s censors look like superb long-range economic planners and technology strategists. The Great Internet Wall did not filter and screen Western content so much as it insulated Chinese entrepreneurs from Big Tech in Silicon Valley. The Chinese web market was left with substantial appetites for Internet-based social, commerce, and lifestyle services which Big Tech could not fulfil. Home-grown firms such as WeChat and Alibaba had a field day building apps that were at first faithful reproductions of Silicon Valley, but soon morphed into distinctly Chinese applications tailored solely to the home market.

Baidu has replaced Google in China. Youku Tudou is YouTube, and Xiaohongshu is a version of Instagram from which users can shop for goods directly. WeChat began as a simple messaging app, but is now many things for the Chinese (social media, news, messaging, payments, and digital commerce).

As far back as 2016, U.S. President Barack Obama released a strategic plan which addressed many issues, but the most striking part of this report is that it appeared the Chinese had learnt their lesson from failing to make themselves an IT outsourcing services superpower like India had.

According to the 2016 White House report, the Chinese have leapfrogged even the U.S. in AI research, especially in the components of “neural networks” and “deep learning”. In this case, the intellectual property being produced actually belongs to China and is not a faithful duplicate of someone else’s product or technology. This has far-reaching implications. Current affairs show us that the U.S. is likely to follow India’s lead by banning Chinese apps and technology companies.

With the rise of Jio, and the response from its competitors, the widening reach of Internet connection across the country will provide hundreds of millions of non-urban Indians with fluid access to the Internet. India now has the lowest Internet data costs in the world. In its attempt to dominate the rest of the world, the Chinese Internet industry desperately needs India’s freshly minted 500-plus million netizens to continue to act as a training ground for the AI algorithms they put together. China’s Internet ecosystem is entirely self-created, self-run, and self-serviced, yet it exports the newly banned apps such as  Tik Tok and PUBG worldwide — adding to the user base of 900-plus million Chinese netizens whose data they already have exclusive access to.

The Hindu Explains | What will be the impact of Chinese apps ban?

The decision to ban such apps in India is not only a geopolitical move but also a strategic trade manoeuvre that can have significant economic impact. Banning these Chinese websites and applications to the Indian public effectively allows our home-grown IT talent to focus on the newly arrived Internet user. Big tech firms from Silicon Valley and China in both hardware and software have been in a tussle over the Indian consumer, but India’s focus remains on exporting IT services while paying little attention to servicing our own nation’s tech market.

Most alarmingly, while we have spent the last two decades exporting the bulk of our technology services to developed countries in the West, the vacuum created as the Indian Internet grew has been filled by American Big Tech and by the Chinese. After the removal of more than 118 Chinese apps, Indian techies have started trying to fill the holes with copycat replacement websites and applications. But faithful copies are not enough for us to make full use of China’s exit.

The primary Indian IT objective must shift from servicing others to providing for ourselves. In the absence of Chinese tech, Indian entrepreneurs should not simply look to replace what the exiting firms have so far been providing. They should focus instead on providing services and products of high quality that will be used by everyday Indians across the country. The aim of providing netizens with the same services across diverse markets is overarching — regional barriers created by language exist within our own nation. These provide an accretion of excellent smaller markets, with opportunities for specialised Internet services created for a local community, by the community itself.

Apps ban | China says India ‘abusing national security’, colluding with U.S.

The fundamental focus of the new digital products that plan to emerge in the growing market should be to provide for hyper-regional necessities and preferences. With this in mind, there are several commercial opportunities available. For example, apps and services that provide specific market prices, local train and bus routes, allow for non-traditional banking and lending, education, health, online sales, classified advertising,and so on.

It’s hyper-local, hyper-regional

Accessibility is also crucial. With the rise in migrant work and labour all over the country, a news or banking app with, say, an Odiya interface should work everywhere that Odiya-speaking people migrate to. However, national accessibility on its own will not make an app a game changer. Indians are savvy enough to know what a world class app is.

If we create hyper-local and hyper-regional services of high quality and great accessibility that are also portable across our linguistic diversity, we are far more likely to succeed in creating one of the strongest Internet markets in the world, rather than creating copycat apps or apps that only cater to English speakers.

Technology companies all over the world have focused their efforts on the 15% of the world’s population with deep pockets while largely ignoring the other six billion denizens of the world’s population. Some sympathetic noises about ‘emerging’ markets are made, but the waters remain largely untested.

If we go forward with the aim of servicing our own, India’s experiences as a modernising power are of great use to the bulk of the world’s population, which lives in penury when compared to its western counterparts. We can export our “India stack” to other countries in the “south”, such as those in Africa and Latin America. We have successfully done this before with our outstanding railway technology. There is no reason we cannot pull off the same achievement with our home-grown Internet power.

Siddharth Pai is founder of Siana Capital, a venture capital firm focused on Indian Deep Tech and Science

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Printable version | Apr 12, 2021 9:38:59 AM |

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