
U.S. Tech Giants Bet Big on India, and Now It’s Changing the Rules - r_singh
https://www.wsj.com/articles/u-s-tech-giants-bet-big-on-india-now-the-rules-are-changing-11575386675
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netcan
I expect we're going to see more of this over the next 5-10 years, especially
in the digital economy.

In the 70s, where a country was protectionist about cars, that probably meant
fewer, worse and more expensive cars. Same for steel, dishwashing soap,
telephones and shoes. Trabants instead of Toyotas, and less of them.
Protectionism came with a high efficiency cost, and that meant poverty.

Today's digital economy can be very different. The relationship between
incoming revenue and outgoing expenses is often arbitrary and that means
efficiency is squishy. If Toyota had to operate on half it's current budget,
Toyota would produce half as many cars. If Facebook had to operate on half (or
less) of it's current budget, they "produce" the same social media (or
advertising) "product."

The cost of protectionism in this environment is totally different to steel,
cars and ikea furniture. If Facebook and twitter cease to exist, the "supply"
of social media experienced by the public isn't a problem... at least not for
long.

An ecommerce business is not a social media business, but it is further along
that spectrum. So is a smartphone business, financial services business,
online ad platform and many of these "digital monopoly" sectors.

The protectionist proposition is just more attractive, with the big,
immediate, obvious costs removed.

Protectionism has always been popular, politically. It's nationalistic, and
that's popular with the public. It puts a lot of policy making power in
politicians hands and that's popular with politicians. Business tends to like
it, domestically. Opening trade was, imo, and contrary to popular opinion, a
forced hand. It was never ideological. Ideologically, it's _unpopular_. The
"stable state" is protectionism.

Protectionism was just very costly in the 70s, 80s & 90s... so it died down
some.

~~~
fsloth
Asian economies such as Korea grew precisely due to government enforced
industrialization programs. Protectionism is excellent for an economy's
'bootstrap' phase where you wish to create some sort of viable industry where
none existed before. To make this long term tenable, you have to then slowly
pull back and return to a more market based approach.

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icsllaf
Well it worked for China, they now have large corporations of similar (enough)
caliber to their Western counterparts creating a lot more jobs than if Amazon
or Google were allowed to run free.

It's hard enough to compete against these established Tech Giants if they just
come in and buy all the domestic companies. Not to mention the companies are
starting with a massive head start.

~~~
vezycash
> Well it worked for China

What worked for China was acting a fool for a few decades. No rules, no
regulations, nothing.

Like a boa constrictor, staying motionless, allowing its prey to feel
completely relaxed, then slowly but surely, tighten its grip until it's too
late for the prey to escape.

With its proximity to China, India could have had China's business.

~~~
elfexec
Goodness, you can count on the weirdiest analogies on social media when it
comes to china. But I guess it's par for the course in any trade war.

What china did was nothing special. It wasn't revolutionary. It was what every
industrial power today did - from the US in the 1800s to germany and japan and
the asian tigers like south korea and taiwan did. Protectionism + foreign
investment + manufacturing.

The united states created the blueprint for success in the 1800s. All the
smart nations have copied it and gotten successful.

One of the first things the US did was to place tariffs to protect local
industry. And for 100 years, protectionism was how the US rose from a
relatively insignificant nation to the largest economy in the world.

[https://en.wikipedia.org/wiki/Protectionism_in_the_United_St...](https://en.wikipedia.org/wiki/Protectionism_in_the_United_States)

Without the tariffs and protectionism, the US industries would have been owned
by britain, france, etc. Or maybe it was like a boa constrictor. I don't know.

~~~
true_religion
US tarrifs were originally intended to hurt Britain, as the US had recently
rebelled against them.

The tarrifs then increased during every war the US had with Britain.

It’s no surprise that the US talks of trade wars, due to the way its history
of tarrif is entangled with warfare, and dislike of the nations a tarrif is
aimed against,

~~~
bernawil
It was quite literally a rallying point for Lincon and a reason for the civil
war. Southerners wanted free trade to export tobacco and cotton. Northerners
wanted tariffs and protection for their industries (both to make their
factories more competitive against European manufactures as to get cheaper raw
materials from American farmers).

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roenxi
Reflect for a moment on the system we currently use for big corporations which
has a lineage roughly dating back to the East India Company in 1600. The
reason we still use them is because they proved so devastatingly effective at
draining wealth from exotic foreign lands that nobody could do without them.

The free market is best for maintaining general prosperity; it gives
individual people the freedom to make what they think is the best choice. But
there are probably military implications to letting key infrastructure for
social and economic organisation enter the control of US corporate giants.

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sandGorgon
One of the thoughts in India is that all these regulations can be read to
favor just one gigantic entity - the Reliance Jio group..who is going to reap
the benefits of this protectionism. But no other startup probably is (because
all startup fundraises originate in the US)

~~~
jagannathtech
invoking Reliance is just a convenient boogeyman.

can see plenty of domestic and govt investment in local startups.

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sairamkunala
[https://www.morningstar.com/news/dow-
jones/201912036105/us-t...](https://www.morningstar.com/news/dow-
jones/201912036105/us-tech-giants-bet-big-on-india-now-the-rules-are-changing)

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m0zg
Nothing a billion dollars in bribes couldn't alleviate. Which is why India is
"changing the rules" in the first place. Look at how much their civil servants
make, and then look at their lifestyles, and it'll all be clear as day.

~~~
tsjq
your comment nailed it.

~~~
m0zg
Coming from a high-corruption country myself (Russia) the pattern is easily
recognizable. It's also recognizable in the US, but people here seem to still
believe, at least to some extent, that the politicians have something other
than their own self interest in mind. A perilous belief, guaranteed to be
proven wrong.

~~~
throw51319
What's the pattern? People enter "public service" and then become rich or
their lifestyle inflates to imply that?

At least in the US we can easily find out this information and vote on it.

~~~
m0zg
People with $150-170K in yearly income living in DC (which has a very high
cost of living) easily become multi-millionaires in a few short years, and so
do their spouses and children. A crackhead son of a vice president gets paid
more than an Exxon Mobil board member in spite of having no experience. He
then also lands a gig running an investment firm in China with $1.5B under
management. A very talented young man. Joe's brother, James Biden is also very
"talented", and he somehow got a $1.5B construction contract in Iraq in spite
of having no experience in construction. The fact that you didn't know
anything about this until earlier this year tells you everything you need to
know about the "free" press in this country. Moving _up_ the list: Obama gave
Pearson $350M contract for Common Core textbooks, and Pearson paid him $65M
for a book deal. This is the presidency which had "no scandals" at all. That's
just _one_ example of many.

[https://www.politico.com/magazine/story/2019/08/02/joe-
biden...](https://www.politico.com/magazine/story/2019/08/02/joe-biden-
investigation-hunter-brother-hedge-fund-money-2020-campaign-227407)

Dig just a little bit, and you'll find examples on nearly everyone who has
been in DC for a while except perhaps Bernie Sanders who's "only" worth $3.5M.

"You can't get rich in politics unless you're a crook" said Harry Truman. This
holds to this day.

~~~
throw51319
Yeah but how do you not get preferential treatment when you have one of "the
names"? If it doesn't end up influencing policy decisions and such, it may not
be right but it is tough to stop. Should these brothers and kids of famous
people not have jobs?

Obama, probably one of if not the most well-known person IN THE WORLD, wants
to write a book. How could the deal not be worth a ton? Makes complete sense.

Also the book is just a book. If people buy it, then he should make money.

~~~
m0zg
Sounds to me you're OK with pervasive corruption then. How many book deals do
you know of that include a $65M payday? Especially a ghostwritten book which
few people will ever read. Most book authors barely scrape by. Pearson will
almost certainly lose money on this, if you exclude the Common Core contract.

Best thing would be if the president's family already had successful
businesses and did not expand them thanks to "the name", which is what we have
now. Mike Pence's family also didn't suddenly become "very talented" either it
looks like, or we'd know about it already.

At a minimum, I want the "free press" and the various oversight bodies to
scrutinize this shit with a magnifying glass and drag it into the open
_irrespective_ of the political affiliation of whoever is in the White House.

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DeonPenny
I feel this isn't going to work well the second time. Automation right around
the corner and India isn't willing to do the things china was allowed to do.

~~~
r_singh
> India isn't willing to do the things china was allowed to do

Care to a elaborate a bit please?

~~~
pcr0
* Banning major search and social websites (Google, FB, Twitter)

* Mandatory censorship of information (Google before leaving, Bing)

* Foreign ownership limits (aka forced intellectual property transfers)

* Capital outflow restrictions

* Heavy subsidies allowing local firms to sell products at below cost (e.g. steel, bicycles)

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Mbaqanga
Wow! Amazon and Walmart have captured 80% of online retail sales in India.

Modern colonialism.

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tsjq
Share paywall bypass please !

