Google, Apple payment monopolies under threat; Tata postpones ‘super app’

By Daisy On Sep 2, 2021

A day after South Korea approved a landmark bill that bans Google and Apple from forcing app developers and companies to use their proprietary billing systems on their app stores, Indian tech firms told us they plan to petition the government for similar rules here.

Also in this letter:

Tata puts off ‘super app’ over proposed ecomm rules
Why haven’t mental health startups taken off in India?
India has averaged one seed round a day this year

Tech firms want govt to tackle Google, Apple payment monopolies

On Tuesday, South Korea’s parliament approved a bill that bans Apple, Google and other app store operators from requiring users to pay for apps with their own in-app purchasing systems. This made South Korea the world’s first country to tackle the two tech giants’ monopolies on how apps on their platforms sell digital goods.

Taking inspiration from this, many top Indian digital firms are gearing up to petition the government to draw up similar rules to prevent Google and Apple from insisting on the use of their proprietary payment systems. Both companies charge hefty commissions — up to 30% — on in-app purchases.

The petitioners: The Alliance of Digital India Foundation (ADIF), which claims to have 350 members, now believes it has precedent to cite, and will re-engage with the new leadership at the ministry of electronics and IT, executives told us.

ADIF, which was formed earlier this year to protest Google’s decision to impose a hefty commission for in-app purchases on its Play Store, counts Paytm, GOQii, Innov8 and BharatMatrimony among its founding members.

Yes, but: Sources have previously told us that the government did not want to intervene as the issue relates to the policies of private companies. However, Meity is also seeking to scale up the government-owned app store, Mobile Seva, to level the playing field.

Apple, Google tweak policies: Apple last week made concessions in its policies and agreed to allow companies to tell their users about other modes of payment. And in March, Google had said that only apps with revenues of more than $1 million would have to pay a 30% commission, while others would have to pay 15%.

But Indian startup leaders have dismissed these attempts as eyewash that do nothing to solve the problem.

Global pushback: Australia’s Competition and Consumer Commission is also said to be considering regulations for the digital payments systems of Apple, Google and WeChat.

In August, the US had introduced a bill to rein in app stores of these companies.

Awaiting clarity on ecomm rules, Tata postpones ‘super app’

Tata Digital president Mukesh Bansal (left) and Tata Sons chairman N Chandrasekaran

Tata Digital, which was planning to launch its ‘super app’ later this month, has now put it on hold until the government provides clarity on the proposed ecommerce rules, sources told us.

What’s the issue? Since Tata Digital is an ecommerce entity, it will have to rework plans — and may even have to set up a separate company — if the draft Consumer Protection (E-Commerce) Rules, 2020 are implemented in their current form.

That’s because the app hinges on goods and services offered by various Tata group companies. The proposed amendments, however, bar ecommerce entities from selling goods on their own platforms.

“Going by strict legal interpretation, related parties of e-commerce entities will now (if the draft rules are made effective as is) not be able to undertake activities which such e-commerce entities cannot themselves undertake. Thus, they will not be able to list themselves as sellers on the e-platform,” said Stuti Nemji Galiya, partner at law firm Khaitan & Co.

Not just Tata: Executives at Reliance Industries have also said that the company would have to re-engineer its Jio marketplace plans if the rules are implemented in their current form.

There’s hope: News agency PTI reported on Tuesday, citing a senior official, that the consumer affairs ministry was examining stakeholders’ views on provisions of the draft e-commerce rules, including the definition of ‘related party’.

Read our explainer on the proposed ecommerce rules here.

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Why mental health startups haven’t yet taken off in India

Risk money has largely eluded mental health startups in India, a sector that receives very little public money as well.

Data sourced from industry tracker Traxcn showed that Indian mental health startups raised $20 million combined between 2016-2020. Meanwhile, risk investors pumped $556 million into the sector in the US in 2020 alone.

What’s the problem? The small number of qualified professionals and the stigma still associated with mental health issues here have been a key barrier, investors told us. Another challenge is that mental health issues are hard to identify and easy to dismiss.

Yet, but: This seems to be changing — albeit slowly. As the pandemic has brought discussions about mental health to the forefront, funding for the sector as of August 18 was $10.74 million, five times more than in the whole of 2020.

New ideas: The few mental health startups that have received funding since 2020 are using tech and data to scale and monetise their businesses in a way that older startups failed to.

Since tangible metrics help attract companies, one of the three possible payers in the ecosystem, MindPeers has developed a Mind Care Index that helps corporates and individuals measure interpersonal relationships, motivation and cognition.

Preventive healthcare startups Breathe Well, although not strictly in the mental health space, blends patients’ well-being into its digital therapeutics programme, which combines exercise and meditation to manage and reverse type 2 diabetes.

India has averaged one seed round a day in 2021

Early-stage funding is at an all-time high in India, with the country averaging one seed round a day this year.

Fundraising rush: The unprecedented rush of risk capital has led to more than 240 seed rounds with total disclosed investments of $284 million so far in 2021, according to data from specialist staffing firm Xpheno.

In context: The total value of deals this year has already surpassed those for the whole of 2020 and 2019, when startups raised $181 million and $186 million in seed capital. With four months still to go, the number of deals is also expected to surpass the 302 done in 2020 and 257 in 2019.

Bigger rounds: The average seed size in 2021 so far stands at $1.2 million, double the average in 2020. The growth in ticket size shows the strong investor confidence in the ideas they are betting on.

The reasons: Industry experts attributed this to a combination of factors, including an increasing number of quality entrepreneurs, a tidal wave of global capital, anti-China sentiment, widespread digital adoption across sectors, and a buoyant primary market for well-established startups.

India becoming global ransomware capital, says NPCI CEO

Dilip Asbe, CEO, NPCI

India is said to be fast becoming the ransomware capital of the world, with mounting cases of cyberattacks, Dilip Asbe, chief executive of the National Payments Council of India (NPCI), told us. He added that the only way to reduce these substantially was to tokenise all payment mechanisms, despite high initial costs.

Here are some excerpts from the interview:

How is NPCI dealing with cyber attacks?
This is a super critical issue for the ecosystem. This is something that keeps us worried and awake. Recently I read that India is becoming or has become the Ransomware capital of the world, and most of these demands are in cryptocurrencies. The regulator has recently delivered a strong “tokenisation framework” which reduces the risk to almost zero for card payments, if the ecosystem adopts them effectively. While there may be some criticism that it may increase the consumer friction in short term, finally, if there is a large breach, the blame is always on the regulator.

What was the rationale behind the 30% market share cap for UPI apps?
The market share cap has been implemented keeping in mind the concentration risk while ensuring that it doesn’t hinder the growth of UPI to the extent possible. We still believe existing players such as Paytm, Amazon Pay and WhatsApp will increase their market shares in due course so that we don’t need to interfere or take any action to reduce or curtail the growth of UPI. Now, we also see that popular banks’ apps have been converted to full-fledged UPI apps.

Read the full interview here.

Zerodha gets Sebi’s approval to set up an AMC

Zerodha has received a licence from the capital markets regulator, Sebi, to set up an asset management company (AMC). The in-principle approval will allow the Bengaluru-based startup to launch its own mutual funds, founder and chief executive Nithin Kamath tweeted on Wednesday.

Zerodha, which is India’s largest retail broker by number of registered users, had applied for the licence in February 2020, just months after Sebi allowed fintech firms to enter the mutual funds business.

Flipkart cofounder Sachin Bansal’s fintech venture Navi has also received regulatory approval to launch its own AMC.

Zerodha has led the pack of new-age fintech brokers including Groww, Upstox and Paytm Money, which have seen huge traction as millions of Indians flock to stock investments, amid an unprecedented bull run since the start of the pandemic.

ETtech Done Deals

Skit, the voice automation startup formerly known as Vernacular.ai, has raised $23 million as part of its Series B round from WestBridge Capital. Existing investors Kalaari Capital and Exfinity Ventures also participated, as did angel networks LetsVenture and Angelist.
Tech-focused wealth management startup Dezerv has landed $7 million in seed funding from investors led by Elevation Capital and Matrix Partners India, company officials told ET.
Six-month-old startup Jar, a platform for savings through investments in gold, has raised its first institutional funding in a $4.5 million round led by Arkam Ventures.
Electric vehicle (EV) infrastructure startup Revos has received $4 million from venture capital firms, US-based Union Square Ventures (USV) and Bengaluru-headquartered Prime Venture Partners (PVP), as part of its Series A round. Revos has raised about $4.5 million so far, including the latest round.
Codingal, an edtech startup focused on coding, has secured $1.2 million in a seed funding round led by Y Combinator, Summer Capital, Day One Syndicate and Rebright Partners to provide a more personalised learning experience on its platform.
Peppermint, an industrial robotics startup, has raised Rs 5 crore in a funding round led by Venture Catalysts and Indian Angel Network. It will use the money to ramp up its production capacity, for research and development, and to expand in India and the Middle East.