Google is betting on digital payments and wants to tap into the SME sector in India. Sanjay Gupta, country head and vice president of Google India, in an conversation with Mint, outlined the company’s future direction and revenue models. Edited Excerpts:
Google is betting on digital payments and wants to tap into the SME sector in India. Sanjay Gupta, country head and vice president of Google India, in an conversation with Mint, outlined the company’s future direction and revenue models. Edited Excerpts:
How do you foresee India’s economic growth?
I joined Google four years back, and this is one of the most exciting times in India. India is changing very dramatically. But when I look at the fact that we are now a $3.6-3.7 trillion economy, the likelihood is, by 2030, we will be a $7 trillion-plus economy, minus a few $100 billion here or there.
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How do you foresee India’s economic growth?
I joined Google four years back, and this is one of the most exciting times in India. India is changing very dramatically. But when I look at the fact that we are now a $3.6-3.7 trillion economy, the likelihood is, by 2030, we will be a $7 trillion-plus economy, minus a few $100 billion here or there.
How fast is the consumer internet economy expanding?
The consumer internet economy is $170 billion today and it will be at least a trillion dollars by 2030. That’s a massive force of change, which means the consumer internet economy moves from 4% to close to 13 to 15%. So, not only becoming digital is core to the country, it is also the moving force for the growth of the economy. It is adding $850 billion to $3.5 trillion economy.
What is fuelling this growth in India?
The reason India is growing so deeply is of three reasons. One is the young population which is willing to embrace change very quickly. Whether it’s the telecom revolution, UPI or anything you look at, people have embraced technology faster than you ever imagined. We introduced digital payment only in 2016 and it took off with Google Pay in 2017. It is six years old and the best in the world, the largest in some way.
The second big change has been digital public infrastructure. For the first time anywhere in the world, the economy or technology is being enabled by providing infrastructure, where there is a common infrastructure in some way being pulled together by the government. Still, private entities are what is driving it. UPI is one of the best-case examples.
The third big thing is there are digital natives who are investing in technology and there are old business houses who are as deeply investing in technology. So, there is as much work happening with Zerodha as with the other business houses. They may succeed at a different point in time, but both appreciation and aggression towards using technology are unprecedented.
What were the important milestones for Google in India?
One is Android. India was under-penetrated on smartphones. Android came in and became such a massive force of change by making smartphones affordable. We give a lot of credit to Jio. But I think Android and (Reliance) Jio together have shaped the leap that happened in 2016 -2017.
The second really big interesting thing has been Google Play store, which is less understood and less appreciated. Google Play store made distribution easy. Anybody in any part of this country could come up with an idea and get to every part of this country with the click of a button. And today, I’m not surprised when people say ₹100 crore brands can be built in six months.
The third has been YouTube. We went down to a small village where in their homes people have no doors, but they have a smartphone and are YouTubers. When you ask them, they say, “It connects me to the world. This is my window to the world”. YouTube has become the learning platform of the country.
Fourth has been Google Pay led by UPI. We believe that payment apps are the bedrock of e-commerce in this country.
How can Google Pay help in tapping into the SME sector?
Building on Google Pay, which has really enabled payments. India still suffers deeply from lack of access to credit. We haven’t built a great SME part in this country. SMEs only contribute to 28 to 29% of GDP, whereas in the US and China, it goes to 55 to 60% because there is not enough capital (in India) which is easily accessible. If we can enable credit to be made affordable to every Indian in a simple and easy manner, it will be a game changer. With ONDC (Open Network for Digital Commerce) powering through our Google Cloud business, enabling commerce to thrive in India.
We believe citizen services consumers are viewers. Although people have smartphones, they are not using the phone as effectively. The information is accessible very easily and using the power of AI, we can enable citizen services on our surfaces. But can it be brought together in an easy way? In my local language? So far India has seen an English language internet. We are really committed to making our Indian language internet work.
Will news websites be an area you would like to invest in?
We have invested in solving for language, future-looking technology, AI, and agriculture.
Revenue sharing is a contentious issue. The Australian government forced Google to share revenues with media companies. Here in India, what is the latest position? Would it be voluntary? Or would you wait for the government which is not pushing hard now?
We believe that we should do what is right, what we think is right on our own rather than governments pushing us. We believe that regulation should come but we are a company which has been about defining the right things or principles and going by it. And AI is a good example. Nobody, no government has found regulation but at Google we formed AI principles in 2016. We believe that open media is critical to our society, and we are very deeply supportive of it.
During the covid-19, we took a conscious call that the media industry was going through a tough time. And we said we should enable the industry to help and support them in ways. So, what we committed and implemented was with a large number of media publishers, not forced by the government but on our own, we opened up the Discover platform of Google. We thought that was the right way, to pay money, because we are taking stories and storyboards for people to put there and we paid money for it.
So, we have also enabled Discover, where people showcase their brand a lot, so it is a brand-building opportunity. We are also invested in enabling the editorial rooms to go digital for small and large public publishers and enabling technology for them to leverage. So, both in terms of discoverability and paying money for it, brand building and taking editorial rooms digitally, we are invested behind all these three aspects and committed significantly a lot of money and partnerships with almost all key publishing houses.
So, will revenue share increase for the media businesses?
When do we make money? We don’t make money when people see things. We make money when people click on a certain advertising link, and open it. And that is a very small percentage of what people see. So, the reality is that the money made is so small, it’s not that we can’t share. But we also understand that the media industry is going through a transition phase from physical to digital in a very meaningful way.
What kind of talent are you looking for?
We believe India provides the best technology talent in the world. One of the funds that we announced that the idea of the India Digitization Fund, which we did in 2020, but more than that money, I feel our commitment to India is leveraging the power of Indian talent to shape the next leap of Google. We built a really huge research centre in Bangalore now we are putting a lot of technology teams here and have been scaling up very dramatically in the last few years. In the last three or four years, we have increased our own base of people 4x because we’re building technology capability in India.
What kind of investments are you putting together in Chromebook and Pixel to make it in India?
The investment we made is more technology and we partner with the OEMs. As a model, we are not building our own factories. We work with partners who manufacture those phones for us even globally beyond India as well. We will be manufacturing the latest one which is Pixel 8. We bring the latest technology to India, and it will be with the right pricing.
You are also working on a phone with Reliance…
Yes, Reliance and we have worked together even earlier on making phones more affordable, but it’s a long journey. It’s a journey we started a year back. But getting a good phone at an affordable price is more difficult. Because one of the challenges the right things is that when people want to buy something they want to buy the best product that they can buy, but at an affordable price. Getting that combination takes a lot of work. So, we are working and we are at it together.
Do you see advertising rates going up on YouTube, etc?
India has one of the lowest rates in the world. The advertisements to GDP ratio for a business in India is still very low. It is at 0.4%. In the US, it goes to 1.6%, and in China, it will be 0.7-0.8%. So, we are on the lower side, our economy is small, and our advertisements to GDP ratio is low. It’ll go up when there are enough local and regional brands. We have not built enough SMEs, we have not built enough competition to buy the same inventory be newspapers or television or even digital.