Clash of the conglomerates

In 1961, at the height of the Cold War, India and Yugoslavia worked to create the Non-Aligned Movement or NAM. It would comprise all the countries that didn’t identify with either of the two power blocs led by the only two superpowers, the US and Russia (then the USSR).

The Cold War is over. Russia is no longer a superpower. But the US still has a rival superpower, China.

The new Cold War is subtler because it is largely economic.

Still not set though

India, meanwhile, is still nominally “non-aligned”. But unlike the old Cold War which did not touch her shores, this time she’s the battleground for American and Chinese internet behemoths.

With Chinese companies largely unwelcome in America, and the reverse true in China, India is where a proxy fight is taking place on the largest scale. And leading it are Google, Amazon, and Alibaba.

Google was the first entrant, and Alibaba the last. And for a while, they stayed in their own swim lanes. But their ambitions are now colliding. Google has a tremendous market share advantage with products like Search, Android, YouTube, and Gmail, but risks losing mindshare to Amazon when it comes to higher-order e-commerce transactions.

Amazon, meanwhile, has ramped up at an incredible pace in India since formally launching operations in 2013. Today, it is neck-and-neck with market leader Flipkart. But it lost the opportunity to acquire both Flipkart (to Walmart) and grocery leader BigBasket (to Alibaba).

Then there’s Alibaba, which is trying to replicate its loose ecosystem approach, with the frequency of transactions as the invisible glue that connects its various bets.

Yet, despite pumping billions into India, Amazon and Alibaba have barely scratched the surface of India’s retail market. This is why they are reportedly now looking to invest in a large brick and mortar retail chains for an omnichannel retail strategy.

The pieces of the puzzle seem to be coming together for the trio. But what’s the larger puzzle that these three behemoths are working to build in India?

Google’s game

Google’s investment portfolio in India is divided into two sections—strategic and vertical. Into the strategic bucket falls hyperlocal delivery company Dunzo and Fynd, an O2O (online-to-offline) fashion e-commerce platform.

“I think companies where they (Google) invest directly, they see overlap in their future interests,” says K Vaitheeswaran, who set up India’s first e-commerce website, Indiaplaza.com.

Both Dunzo and Fynd are direct investments by Google, unlike the others which are via its venture arms.

Both of these fill in the largest missing pieces from Google’s puzzle: fulfillment. Google is great at capturing its users’ attention and intention, but not so good at fulfilling them. It realizes that sending users to third-party platforms for fulfillment isn’t a sustainable strategy.

Monetization Layer

Dunzo can easily be visualized as a monetization layer for every local search query that contains a product. (“Would you like to get this delivered in the next 30 minutes via Dunzo?”). Similarly, Fynd does something similar for apparel from local stores. Fynd connects local shops and their inventories to the web, with the ability to deliver it to customers.

“It makes sense for Google that, going forward, not only can you search, but you can also fulfill, says Sarbvir Singh, managing partner at WaterBridge Ventures. “So, I think to that extent Dunzo and Fynd, it could be argued, are strategic.”

But Kunal Walia, managing partner at Khetal Advisors, says there’s more than just fulfillment. “The Dunzo investment isn’t about Google making money. Google wants data. Google is a data company and not a search company.”

Google’s other bets are vertical-specific and more of venture investments. As the internet grows, what were formerly niche verticals become large enough to become horizontal platforms. Like, say, a MakeMyTrip for travel. Google realizes that search can become redundant when platforms become very big—users go directly to the platform.