Why International Application Providers Are Targeting Weak Regulatory Environment Of India For Investments


In recent past, most of the companies are moving from wired level access to wireless level access mechanism post explosive growth in mobility segment post phenomenal adoption of Android mobile ecosystem. Many young and experienced entrepreneurs captured the potential opportunity in the Application segment given the explosive growth in Smartphone segment as access medium. The adoption of chat services both on text and voice level started the dynamics of the mobility segment. The success of WhatsApp acted as motivational factor for new entrant into the segment. The ongoing bubble in the Application segment where everything thinks of making money by reusing contextual pattern of mobile user created competitive environment among Application developer to rush for user acquisition.

The housing bubble burst, financial crisis, manufacturing downturn in US, EU and other part of world prompted investors to look for new avenue to invest. The tough regulatory environment in China, EU and US and language barrier prompted International Application Companies to turn their focus towards India. Given the huge consumer base of more than 744 million mobile users’, growth forecast in Smartphone segments and loosely coupled regulatory environment in India offered hassel free environment to application companies to gain consumer base faster than the other geographies. Most of the application developer works on the Application UI/UX and mapping it with basic backend system with a focus to capture only the contextual pattern of the user. Given the boom in Big Data domain, Applications instead of network domain are now considered the best tool to analyze the adoption trends. The main goal of Applications developers/companies are to collect the contextual pattern and accordingly push usages behavior centric Ad or other Application push.

It is also interesting that the Applications developers from sector such as BFSI, Utilities, Infotainment, Entertainment or Social are relying completely on Advertisement revenue compared user charging model. Most of the Application providers are not being able to charge consumer base given the regulatory environment in India. Even more interesting that most of the Application developer companies are not even aware of regulatory dynamics in India and for them legal opinion is equal to regulatory opinion.

Due to the segregated regulations and absence of Application regulation created an easy path for both domestic and international Application companies to push Applications to Indian consumers. Easy acquisition of userbase enables Application companies to offer selling points to their potential investors about prospects of revenue potential to prospective investor group. Many international Application companies are even clearly violating Law of Land by not adhering to the regulation w.r.t Telecom, IT and Cyber Security Law. Some of them only hire sales representative in India to run their business without opening office in India. Due to such companies engaged in collecting contextual pattern of users as well as playing with valuation game, Indian mobile users are getting more pesky calls, SMS as well as premium service redirect attacks. The lack of awareness among Indian mobile users makes it even more difficult for mobile operators to track premium number redirect attacks and inturn losing millions of dollars in lost revenue opportunities.

It would be disastrous for both PE investors as well as such companies engaged in taking undue advantage of current environment once combination of lawful agencies of India comes out with stringent regulation for such companies to operate in India. Such companies must recognize the power of open platform but should not misuse it as it would spoil the whole ecosystem. At the same time, applications users must be vigilant to raise unlawful activities of such companies so that law abiding application companies gets their deserve right to be successful.

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Visionary Leader with 22 years of multi-functional experience - combine astute tactical, strategic, business, technology and industry skills in ICT domain at domestic and international level (Wired/Wireless/ networks /platforms/ connected device) .... More

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