With change in rules, fears of corporate domination loom over Indians

The fear of corporate domination, real or perceived, is growing as Indians fear it signals an onslaught on their livelihoods, data privacy, and competition, a fear magnified by Facebook’s recent announcement that WhatsApp will be integrated with Instagram and its other products.

Corporates have warned against the use of WhatsApp for company work. Some individual users in India are worried that the integration will mean that even more of their personal data will be tapped for commercial gain and are switching to other messaging apps. After all, the figures are huge. WhatsApp has 400 million users in India, Facebook has 380 million, and Instagram has 140 million.

Shopkeepers and traders are worried. The Confederation of All India Traders (CAIT) has written to Communications minister Ravi Shankar Prasad demanding that he ban WhatsApp because it could allegedly violate the privacy of its members.

CAIT suspects that Facebook, when it informed users recently that it was updating its terms of use, was seeking access to data ‘to control trade and the economy of India besides other hidden agendas’.

It believes that WhatsApp will know what users are paying and to whom, what is being purchased and the delivery location. In short, it will know even more than it does already about the spending habits of users, such as what and where they eat and how often and the consumption patterns for cabs, flights etc.  

Facebook rejects such accusations, saying it has a transparent policy about sharing which is clearly laid out.

WhatsApp’s newest competitor, Signal, is the popular choice of those who worry about privacy on Facebook but it has merely 10 million plus customers across the world.

Facebook’s toughest challenger, Telegram, has 500 million customers globally but that is against WhatsApp’s two billion.

The strong resistance to Facebook’s new privacy policy for WhatsApp comes just a few days after Reliance faced the wrath of farmers in Punjab who also have similar fears of monopolies. They targeted Reliance’s infrastructure, vandalising over 2000 mobile towers, damaging stores, and closing its petrol pumps.

Their allegation is that the BJP government is hand in glove with big business houses like Reliance and has pushed through agriculture reform bills primarily to benefit Reliance’s retail business.

Once Reliance has taken over the retail business of the Future group, it will have around a 15-16 per cent of the country’s modern retail market of $102 billion, according to retail analysts Technopak.

The fact is that the next three big retail chains have a combined revenue which is only half that of Reliance-Future’s turnover. The Reliance-Future conglomerate certainly looks big; it is the first modern retail chain with revenues now of over Rs 100,000 crore.

However, if the unorganized sector is taken into account, the Reliance-Future combine’s share is very small - less than one per cent of the $850 billion retail market.

In the foods and grocery segment, the combine will have around 27 per cent of the modern food and grocery business of around $23 billion. But the total size of this retail segment (if you add the unorganised sector) is over $560 billion and it accounts for 96 per cent of the revenue.  

The e-commerce space in this segment is very small with a current gross merchandise value of $2 billion and this market is dominated by Grofers and Big Basket.

Nonetheless, with Reliance’s JioMart now making an aggressive entry into e-commerce and Amazon already in a strong position, the share of online is expected to become larger.

Farmers, though, fear that with Reliance’s growing share of modern retail, it will be able to dictate the price of staples, vegetables and fruits because of the volumes it will command.

This is why they are asking for a Minimum Support Price to fix the price at which Reliance has to buy. Another anxiety is that Reliance might eventually be able to get into buying land for farming, which is currently prohibited.

Some experts believe the fears of market domination by Reliance-Future are unfounded. Ankur Bisen, senior vice-president, Technopak, points out that organised retail is only 12 per cent of the retail market in India and the Reliance-Future revenue share is less than two per cent of this business.

“Only the surface has been touched. I don’t believe niche players will die and other bigger chains will collapse. There is a huge unorganised market and growth to tap. What happens when a big player comes is that there is no distress in the sector like what the Future group was facing,” said Bisen.

Aviation is also passing through the throes of having a dominant market player ever since Jet closed down. Since its demise, Indigo has been able to raise its market share to a dominant 54.6 per cent in October-November 2020.

Its nearest rival Spicejet has been pushed to below 10 per cent market share. Spicejet chairman Ajay Singh has said on many occasions that in India, a monopolistic player is able to drive down fares to below cost.

However, Indigo’s dominance could be in for a serious challenge if the Tatas make and win their bid for Air India.