‘Desi Amazon’ is fine but not in the government sector

IT bloomed in India not because of what the government did, but because the government kept away from it. Technology is never safe in the hands of the state and the consumers will lose out in the process, writes K RAVEENDRAN.

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The reported move by the Government of India to set up a state-owned Indian version of Amazon.com is, to say the least, a move that is against the trend of technological power concentrating away from the hands of governments.

In fact, the development of information technology has historically occurred outside the domain of governments and has always been anchored on private enterprise and expertise.

The evolution of India as an IT powerhouse can be traced back to what the government did not do, rather than what it did.

The babus did not have a clue of what was happening until technology itself grew to penetrate every sector. They were caught completely unaware and it was too late for them to poke their nose and cause trouble by then. Had they been in a position to influence the course of technology, the story would have been entirely different, as is the case with anything that the bureaucrats have a decisive say in with predictable results.

According to an announcement by the Department of Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce, a new steering committee has been formed to examine the development of a government based e-commerce platform that hopes to not only rival the giants but to also work to minimise malpractices. Its members include, among others, representatives of the Government e-Market, the Ministry of Electronics and Information Technology, the Ministry of Micro, Small and Medium Enterprises and the NITI Aayog.

The committee will provide oversight on the policy for the Open Network for Digital Commerce (ONDC), which is an e-commerce platform that has government-backing.  ONDC is supposed to provide the infrastructure for setting up the final storefront on the lines of Amazon, Flipkart, and others.

The stated intention of the government in setting up an indigenous e-commerce ecosystem is to deal with the shortcomings and fault lines in the existing system, which the babus argue is inhibiting the growth of e-commerce in the country.

It is also meant to reign in the likes of Amazon, Alibaba, and others as well as to integrate a multitude of the brick and mortar retailers into the powerful technology platform. The e-com giants have been accused by the retail trade of predatory pricing, deep discounts and exclusive sales, diverting large amounts of business away from the retailers in the past.

Irrespective of what the objectives are, what is most likely to happen is the transfer of government inefficiency to this sector as well, and along with it, its huge cost to the consumers, who now stand to benefit from the intense competition which has created a buyer's market rather than the opposite. In such cases, the level playing field argument is often used to distribute inefficiency across the sector rather than to lift the laggards to optimum levels of efficiency.

With a higher than the optimum cost of operation, a government-owned platform will turn into a liability for the sector, invariably leading to calls for a level-playing field, which in effect could mean more fetters on better performers. Instead of promoting competition, which alone can further the interest of consumers, this will lead to a more regimented market with all kinds of restrictions so that the sector's efficiency level matches that of the state sector operators.

Clearly, the consumers stand to lose.

Conceptually, too, technology is never safe in the hands of government and monopolies. We have seen how Android has evolved over time to emerge as one of the most powerful technology platforms ever. But this entirely happened in the Open Source route where innovators are constantly working on improving and contributing to a collective effort in a highly decentralised system. The success has forced even monopolists to change for fear of losing relevance in the new ecosystem.

One of the major contributing factors to the success of the open-source development model is its transparency and ability to accommodate distributed collaboration among project teams. This is accomplished using communication methods that are accessible to all within the project community for strategic decision making, architecture discussions, and code reviews. This has never been possible in a monopoly situation or a government-controlled environment.

The biggest showpiece success of the open-source development model is the Android operating system. It has been just over a decade since the first official Android phone hit store shelves and the operating system has become the most popular mobile operating system in the world today, defeating many competitors like Symbian, BlackBerry, Palm OS, WebOS, and Windows Phone. Apple's iOS is the only platform still standing as a serious competitor to Android.

The key decision in Android history was Google's commitment to make Android an open-source operating system that allowed it to become highly popular with third-party phone makers. (IPA)

(K Raveendran is a senior journalist. Views are personal.)