Why There Is Nothing Wrong In Union Ministers Refusing To Meet Jeff Bezos

Why There Is Nothing Wrong In Union Ministers Refusing To Meet Jeff Bezos

by Rajeev Srinivasan - Jan 29, 2020 02:49 PM +05:30 IST
 Why There Is Nothing Wrong In Union Ministers Refusing To Meet Jeff BezosUnion Commerce and Industry Minister Piyush Goyal and Amazon’s founder and CEO Jeff Bezos. 
  • Why there is nothing wrong in Indian Union Ministers refusing to meet Jeff Bezos after the latter patronised Indian industry in remarks.

It appears that Commerce Minister Piyush Goyal was underwhelmed by Amazon boss Jeff Bezos’ announcement that they would spend $1 billion on Indian MSMEs, apparently to help them to Make in India and export.

The Minister let it be known that if Amazon were investing $1 billion, it wasn’t doing India any favours. He was charged by some with being undiplomatic, and not grovelling enough at the feet of Bezos, the richest man in the world (or close to it, on any given day).

“We need FDI”, the usual suspects cried, “to revive GDP growth. This is no way to treat one of the most important companies in the world. See, they have 50,000 employees in India. Imagine the message you’re conveying to others!”

It is certainly true that India needs an enormous amount of investment, especially in infrastructure. But then, it is equally true that Amazon will only do what makes business sense to it.

Amazon, by the way, doesn’t give a damn about “India’s reputation as a liberal democracy, which is being hurt by the recent protests” according to lefties shedding copious crocodile tears.

Yeah, ‘liberal democracy’ and Rupees 50 will get you a cup of coffee. No firm gives a damn about the ‘woke’ CAA-type politics on display recently. They look at the bottom line: rightly so.

Besides, $1 billion? That’s it? For what is shaping up to be the largest e-commerce market in the world that Amazon has a free rein in, that’s chump change.

And “largest e-commerce market” is the operative phrase. What Bezos is doing is a propaganda blitz to try and induce the Indian government to continue giving it free rein.

That would be a bad idea, for several reasons. One is that it is very much in India’s interests to constrain Amazon and Walmart (via Flipkart) from turning the Indian e-commerce into a cozy duopoly.

Left to themselves, that’s exactly what the dynamic duo would do, and it makes perfect sense.

Indian consumers need competition. Monopolies (including Alibaba-owned Paytm’s dominant position in payments) kill consumer choice and, even if cheaper at first, eventually force high prices.

I saw this kind of predatory pricing in action when I lived in Syracuse, New York. A big CVS drugstore (part of a major chain) opened up, often undercutting the small mom-and-pop corner drugstore.

After a while, the little guy went out of business; CVS raised their prices.

We have seen a similar dynamic at play with Uber and Ola in India. To begin with, these call-taxis were very appealing to consumers, and almost wiped out the existing taxi services.

But that was when Uber and Ola were shoveling money at India to buy market share. Drivers got large incentives, and both they and consumers were very happy.

Today, things are radically different. Consumers complain about dirty, ill-kept cars, drivers that accept your ride and then cancel for no reason, and long delays, as the incentives have dried up, and drivers must pay a 25 per cent or so commission to the aggregator.

Amazon is going down that path. As correctly pointed out by Piyush Goyal, Amazon India is losing a billion dollars a year in predatory discounts, and the famous investment of $1 billion is to prop that up, not to create the mythical tens of thousands of jobs we think will be created.

Second, in any case, what kinds of jobs? Amazon is notorious in the US for ill-treating its employees (Walmart is no better).

The Atlantic monthly says “Ruthless quotas at Amazon are maiming employees”. ABC News says “Former journalist describes physical, mental toll of working for Amazon facilities during holiday season”.

There is a litany of lawsuits about brutal working conditions and low wages.

Are these the jobs that India’s young want, or deserve? Sweatshop stuff?

In a 15 January 2020 cover story,The Evil List: Which tech companies are doing the most harm?” Slate magazine anointed Amazon the most evil tech company.

If this is the view of a tech magazine in Amazon’s home country, how much worse will it be in India, where it can depend on lax regulation?

From another perspective, too, it was appropriate for Minister Goyal and Prime Minister Narenda Modi to avoid meeting Bezos. Remember the arrogance with which Twitter boss Jack sat with Modi?

Jack’s body language was that of some white boss-man disciplining an uppity native, with legs crossed arrogantly. Not a posture one takes with the leader of a nation. And then he posed holding a poster saying “Smash Brahminical Patriarchy” with some ‘woke’ journalists.

Why should Indian ministers put up with this nonsense? In Bezos’ case, he owns the notorious Washington Post. Need I say more?

India is no longer a shrinking violet about asserting its economic power. About time, too. Mahathir Mohammed of Malaysia found this out when India, its biggest customer, cut off palm oil imports. Teyep Erdogan of Turkey found out when an order for naval ships was cancelled.

There is one more angle: mercantilism. All governments around the world support their own companies. China does it most obviously, but do you remember a US Secretary of Defense saying “What’s good for America is good for General Motors, and vice-versa”?

It is alleged by the usual suspects that India wants to favour JioMart (Reliance Jio’s e-commerce arm) over Amazon and Walmart. If so, bring it on, baby!

Jio is no angel, but I am reminded of US President Roosevelt saying about a Nicaraguan President that “he may be a **********, but he’s our **********”. It’s time India had a global digital firm, like Alibaba and Tencent came out of nowhere.

Rajeev Srinivasan focuses on strategy and innovation, which he worked on at Bell Labs and in Silicon Valley. He has taught innovation at several IIMs. An IIT Madras and Stanford Business School grad, he has also been a conservative columnist for twenty years.

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