Competition is Absolutely Essential

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  • The author is Professor Sridhar Samu, Senior Associate Professor of Marketing – Great Lakes Institute of Management, Chennai.

Imagine that all manufactured goods and produce were only allowed to be sold through one supermarket. Or, that all cars can be sold only through one dealer. And that these manufacturers had to pay a fee to be allowed to sell their products through these stores? Would consumers be happy about this? Would they stay silent? Or, will they protest and ask for more avenues to shop? And, will some enterprising person set up another store or open a dealership? Of course, they would.

The world has allowed Android/IoS to set up Google Play and Apple Play to control all the Apps that operate on their respective systems.  Countries have allowed them to charge a fee for developers to offer their products on these systems. It is time to challenge this monopoly so that both developers and consumers’ benefit. When we allow such monopoly situations, we are reducing competition and this may lead to inferior products.

We examine this from three of the important “P”s that form part of the 4 Ps commonly used in marketing. The 4 Ps are product, place, price and promotion. Since product, place and price are involved in such situations, it is important for us to go into more depth.

Product: By limiting distribution only through Google/Apple Play, we are allowing firms with more resources to be able to introduce their products in the marketplace. Smaller or start up firms may not have the resources to do this. Hence, it is possible that breakthrough products never make it to the Google/Apple Play App and consumers lose out on an opportunity to use these new Apps. And that would cause harm to the consumers.

Price: When a new product App is being developed, less resources are used in the development phase as resources are needed to be diverted to Google/Apple Play to host this new App. Hence, price or cost could dictate what products are developed and the quality of such new products.

Place:  Having only Google/Apple play as the source for new apps, requires consumers to visit that site and to register their details there. This allows these companies to collect consumer data and sell it to advertisers and to make money through such sales. Hence, this gives them revenue over and above what they earn through hosting the app on their page.

Also Read: InterDigital Files Patent Infringement Actions Against Xiaomi India

Multiple countries have already started to question and take action against Google and Apple Play. South Korea is a great example and this will shortly be followed by the USA, Europe and Australia. It is important to understand what these countries are doing to allow competition. While South Korea has recently introduced legislation to their Telecommunications Business Act, the USA is in the process of introducing such legislation to promote competition. A second key aspect of these legislations is to remove the gatekeeping ability of Google and Apple Play.

India should not lag behind and should open up the market to other distribution systems. And India should force Android and IoS to allow such systems to operate on their platforms. 

How will such a move help the Indian consumer? There has been a lot of research that indicates that when consumers are allowed to make choices, they will be happier than when they are forced to accept only one option. Second, more consumers may actually select more Apps when it is available in multiple places rather than in just one place. Third, new and better Apps may be developed and delivered to consumers as firms could focus on the development process rather than having to negotiate with Google/Apple play. Hence, overall, consumers should benefit when they are given choices.

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