Our goal with The Daily Brief is to simplify the biggest stories in the Indian markets and help you understand what they mean. We won’t just tell you what happened, but why and how, too. This piece curates the stories that we talk about in both video and audio formats.
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In today’s edition of The Daily Brief:
- Google knocks on the Supreme Court’s door
- The unseen ways Indian farmers adapt to extreme heat
Google knocks on the Supreme Court’s door
In a significant move, Google has approached the Supreme Court, seeking intervention in a pivotal antitrust case that could reshape the landscape of India’s digital economy. The implications of this case extend beyond mere legalities; they touch on how Indians engage with Android apps, the operational dynamics for app developers, and the extent of influence wielded by tech giants over their competitors.
At the core of this case lies Google’s dominance over Android, the operating system that powers nearly all smartphones in India. A contentious requirement mandates that app developers utilize Google’s payment systems, which can impose commissions as steep as 30%. This raises critical questions: What limitations should be placed on the power of tech giants? Should they be allowed to operate without constraints to maximize profits, or does their integral role in the digital economy impose additional responsibilities?
Understanding the conflict
Android as an ecosystem
The consumer technology market is uniquely structured. When purchasing a smartphone, consumers are not merely buying a device; they are investing in a platform that grants access to a myriad of applications. Typically, users navigate to the Google Play Store—the pre-installed marketplace that serves as the gateway to app developers. However, Google’s involvement extends far beyond this initial access; it orchestrates an entire ecosystem. If the Play Store is likened to a digital mall, Google assumes the roles of architect, security personnel, payment processor, and even a competing shop owner.
Consequently, all Android applications operate within the confines established by Google, granting the company substantial control over the smartphone landscape in India, where Android dominates over 95% of the market. This raises a pivotal question: Is such control justifiable? This inquiry is currently being deliberated in the legal arena.
Payments
The impact of Google’s control manifests differently for various developers, particularly concerning payments:
- 97% of app developers pay a nominal one-time registration fee of to list their apps on the Play Store.
- Conversely, the remaining 3%—those who charge for apps or offer in-app purchases—face a starkly different financial reality, paying a commission of 15-30% on each transaction. For example, a user paying ₹1,000 monthly for a premium subscription to a dating app would see ₹300 deducted by Google before the developer receives any funds.
In September 2020, Google implemented a significant policy shift, mandating that developers offering paid apps or in-app purchases utilize the “Google Play Billing System” (GPBS) for payment processing. Prior to this change, developers enjoyed flexibility in payment processing, often opting for alternatives like Razorpay or PayTM. The new policy provided developers a two-year window to transition to Google’s systems, regardless of whether the alternatives were more cost-effective.
This shift granted Google direct oversight of all financial transactions involving developers, allowing the company to deduct its commission before any funds reached the developers.
To circumvent these high commissions, some developers directed users to alternative payment options outside the Play Store. However, Google’s anti-steering provisions effectively restricted developers from promoting these alternatives, thereby asserting control over the content of Android apps.
Interestingly, YouTube was exempt from these regulations, benefiting from separate agreements with third-party payment processors that charged significantly lower fees than those imposed on other developers. This preferential treatment raised concerns regarding fairness, as it positioned YouTube advantageously against competitors like Disney+ Hotstar.
UPI discrimination
Google’s control also sparked discontent among rivals in the Unified Payments Interface (UPI) sector. While most Indian consumers prefer UPI for digital transactions, Google Pay competes fiercely with platforms like PayTM and PhonePe. However, the experience of making payments through the Play Store varied significantly depending on the UPI app used.
Users of Google Pay enjoyed a seamless transaction process, while users of other UPI apps faced cumbersome procedures, which ultimately influenced consumer choices. This disparity in user experience further solidified Google Pay’s dominance within the Play Store.
The data dimension
Perhaps Google’s most significant advantage lies in its access to data. As transactions flowed through GPBS, Google gained comprehensive insights into the economics of every Android app, including user spending habits and subscription patterns. This data could potentially enable Google to refine its offerings and target users more effectively, raising concerns among developers about competitive fairness.
Complaints from developers like Hungama and MapMyIndia highlighted fears that Google could leverage this data to undermine their businesses.
The legal case
This complex situation culminated in a case before the Competition Commission of India (CCI), which is responsible for enforcing competition law. The CCI’s mandate is to prevent companies with excessive market power from manipulating the market to their advantage.
The CCI’s findings
The CCI concluded that Google was a dominant entity in the Indian market, with the ability to significantly influence app developers reliant on the Play Store. This dominance raised alarms about potential abuse of power, prompting the CCI to investigate whether Google’s practices constituted unfair competition.
The CCI’s inquiries focused on several key questions:
- Did Google have the right to mandate its payment system and impose high commissions? While Google argued that it was entitled to a reward for providing a viable platform, the CCI viewed this as a potential form of extortion.
- Was it permissible for Google to favor YouTube with preferential payment terms? Google maintained that this was a non-issue, but the CCI perceived it as discriminatory against competitors.
- Did the Play Store’s design favor Google Pay over other UPI apps? Google defended this as innovation, while the CCI regarded it as further discrimination.
- Was it appropriate for Google to access data from competing apps? Google argued this was standard practice, but the CCI considered it excessive power that could harm competition.
Ultimately, the CCI determined that Google’s practices constituted abuse of power, leading to a substantial penalty of ₹936 crores and a series of prohibitions on Google’s operations.
The appeal
Unsurprisingly, Google contested the CCI’s findings, filing an appeal with the National Company Law Appellate Tribunal (NCLAT). The NCLAT’s ruling was more tempered, rejecting the notion that Google was a “gatekeeper” with special responsibilities under the law.
While the NCLAT acknowledged that Google could not force apps to use its payment systems or provide preferential treatment to Google Pay, it reduced the penalty significantly to ₹217 crores and clarified data-sharing policies.
What now?
Google remains dissatisfied with the NCLAT’s decision and has filed additional appeals with the Supreme Court, which has agreed to hear the matter in November. The Court faces a challenging task: balancing the need to regulate Google without disrupting the digital ecosystem that has become integral to millions of users.
The outcome of this case will not only redefine payment structures but also influence how India approaches the regulation of major tech companies that play a central role in the digital landscape.
The unseen ways Indian farmers adapt to extreme heat
Picture a sweltering day in rural India, where temperatures soar to 45°C during the growing season. While urban dwellers may retreat to air-conditioned spaces, rural families, often reliant on small farms, experience profound impacts from such extreme heat. This single day of scorching weather influences their diets, work patterns, spending habits, and overall survival.
A recent study by researchers Paul Stainier, Manisha Shah, and Alan Berreca surveyed over 300,000 rural households across India from 2003 to 2012, many of whom cultivate food primarily for personal consumption rather than for sale. The study seeks to understand the repercussions of extreme heat on families dependent on agriculture and whether they can adapt or if such conditions disrupt their lives.
The findings reveal the harsh realities of climate change’s impact on Indian agriculture, pushing millions into a struggle for survival, a challenge that is likely to intensify as global temperatures rise.
What the researchers were studying
The researchers aimed to explore the correlation between extreme heat and farmers’ livelihoods, traditionally understood as a direct relationship where heat damages crops, leading to food scarcity and hunger.
A nutritional crisis for rural India
Interestingly, the study uncovered a complex narrative: extreme heat did not significantly alter the average calorie consumption among the households surveyed. They examined the effects of varying numbers of days with temperatures exceeding 43°C during the growing season, discovering that even a single day of extreme heat had minimal impact on overall calorie intake.
However, the underlying story reveals a troubling reality. On days when temperatures exceed 43°C, the incidence of “strong undernutrition”—defined as households consuming 80% or less of their recommended calorie intake—increased by 0.36 percentage points. This translates to approximately 3 million individuals facing food insecurity due to a single day of extreme heat.
Moreover, a significant portion of the population experienced multiple days of extreme heat, particularly in states like Rajasthan, where over ten such days occurred. These conditions could push one in every thirty households into under-nourishment.
Despite the apparent stability in average calorie consumption, the researchers identified a grim explanation for this paradox: increased mortality rates associated with extreme heat. As the number of extreme heat days rises, many individuals succumb to heat stress, thereby reducing the overall caloric demand.
Extreme heat also exacerbates nutritional deficiencies, particularly in iron, with 54.7% of households already consuming less than 80% of the recommended iron intake even under normal conditions. This deficiency leads to severe health issues, including anemia and mental health challenges, and worsens with rising temperatures.
The costs of adaptation
How do households respond to extreme heat? The researchers found that adaptation is a necessity. When heat destroys crops, families do not simply resign themselves to hunger; they seek alternative food sources.
However, the question arises: where do they find the funds to purchase this additional food, especially after losing their crops? Many are compelled to migrate in search of employment, leaving their farms temporarily to secure income. A single day of temperatures above 43°C results in an additional 0.26% of the population seeking non-farm jobs, indicating a significant shift in labor markets.
While the study does not delve into the specifics of these jobs, it is likely that they are neither more productive nor better paying. Many individuals may find themselves trapped in informal, low-paying positions, as highlighted in previous research indicating that 27% of India’s workforce struggles to maintain stable employment.
For others, extreme heat may force them to abandon their jobs altogether. A single day of temperatures exceeding 43°C correlates with a 0.16 percentage point decline in employment among working-age individuals that year, illustrating the detrimental impact of heat on job retention.
Access to credit is another hurdle, as many households lack easy access to loans, leaving them vulnerable during income shocks. In the absence of job opportunities, they face difficult choices: sell essential assets or incur debt from informal sources, often at exorbitant rates.
The implications of these adaptations are dire. While Indian agricultural families demonstrate remarkable resilience in the face of climate change, the costs are steep. They engage in a precarious balancing act to ensure their survival, often sacrificing long-term investments in health and education.
The lowest-income families bear the brunt of these challenges. They experience severe malnutrition and struggle to adapt due to limited skills, lack of access to credit, and fewer opportunities for non-farm work. This inequality is compounded within families, as research indicates that female children typically receive a smaller share of resources, a trend that worsens during crises.
In summary, climate change is leaving a significant mark on Indian agriculture, and the situation is likely to deteriorate further.
The policy implications
What do these findings mean for policymakers in India and beyond? The researchers propose several practical recommendations.
Firstly, efforts to enhance agricultural resilience must extend beyond traditional measures like heat-resistant crops and improved irrigation. As families increasingly seek to exit agriculture, it is essential to facilitate this transition rather than resist it. Policymakers should focus on creating non-agricultural job opportunities in rural areas, ensuring access to credit during crop failures, and improving infrastructure to facilitate food access.
Secondly, early warning systems connected to direct assistance are crucial. Waiting to respond after a heat-related crisis has already impacted millions is insufficient. Instead, governments should provide immediate cash transfers—essentially a form of climate insurance—to vulnerable households when extreme heat events are forecasted or occur.
Indian agriculture needs a solution, fast
Extreme heat devastates crops, but the repercussions extend far beyond the fields, plunging vulnerable populations into cycles of economic hardship and adaptation. Families struggle to secure food, abandon their homes, and liquidate assets—all while navigating the challenges posed by climate change.
As these challenges intensify with ongoing climate shifts, finding solutions is imperative. The pressing question remains: how can we build systems that protect individuals from the worst impacts of climate change?
While the answer is complex, it is one that demands urgent attention.
Tidbits
- India’s cabinet has approved a one-time ₹300 billion (.4 billion) payout to state-run fuel retailers—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—to compensate for losses incurred from selling LPG to low-income households at subsidized rates. This payout partially offsets a challenging FY25, during which LPG under-recoveries totaled ₹413.4 billion.
Source: Bloomberg
- Tata Motors reported a 63% year-on-year drop in Q1 consolidated profit to ₹3,924 crore, impacted by declining volumes across segments, trade tariffs, and reduced profitability at Jaguar Land Rover (JLR). Revenue fell by 2.5% to just over ₹1 lakh crore. Management anticipates a stronger performance in H2, particularly with the planned demerger separating commercial and passenger vehicle businesses by October 2025.
Source: Business Line
- Nayara has faced scrutiny from the EU over Russian oil. In response, Reliance Industries may pivot back to sourcing crude from the Middle East—specifically Saudi Arabia and the UAE—if U.S. pressure compels India to limit its Russian oil imports. With its extensive Jamnagar refinery and flexible sourcing strategy, Reliance is well-positioned to adapt to new suppliers as global sanctions tighten.
Source: Reuters
- Telecom companies received some relief as India’s Supreme Court upheld a Delhi High Court ruling, classifying telecom towers as movable property and thus eligible for input tax credit (ITC) under GST. This decision provides significant tax relief for telecom players such as Bharti Airtel and Indus Towers.
Source: Economic Times
- Following its entry into India, Tesla India has signed a nine-year lease for an 8,200 sq ft flagship showroom at Delhi’s Aerocity, paying ₹17.22 lakh per month, with rent set to increase by 15% every three years. This deal includes parking and security deposits and paves the way for a Gurugram launch as part of Tesla’s expanding retail footprint.
Source: Business Standard
This edition of the newsletter was written by Pranav and Manie.
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