Prince Kapoor, 29, is the quintessential young Indian entrepreneur, bouncing with ambition and ideas. A little over three years ago, the Co-founder of Chennai-based start-up Plush got on to Google Display Network (or GDN, which are ads that show up on articles, websites and videos that consumers browse). Estimated to reach over 90 per cent of internet users, GDN allows ads to reach their audience at various points—while they surf the internet, watch a video, or even view emails. It is a cost-effective option known to work well for brands, especially those with limited budgets. “This was a better way to allocate capital,” says Kapoor, whose firm sells women’s health and wellness products. “GDN is very cost-effective and delivers more bang for the buck.” Thanks to its affordable nature, practically anyone from the neighbourhood kirana store to big companies can be on GDN, where space is unlimited, and so is the extent to which innovation is possible.

For Google, however, GDN is a small part of what it does in India, think search, YouTube, affordable handsets, Google Pay, cloud, SMEs… the list is long. In turn, India is a very small part of Google globally. Munch this: Google India ended FY22 with revenues of Rs 9,286 crore (about $1.14 billion at current exchange rates). That was a massive rise of 45 per cent from FY21. Net profit, at Rs 1,239 crore, was up 53 per cent. Now let’s look at the global picture. Google’s parent, Alphabet, ended 2021 (calendar year) with revenues of $258 billion, and net profits of $76 billion.

Our core strategy is about two words— inclusion and trust. We want to make the internet helpful and safe for a billion Indians

Sanjay Gupta
Country Head and Vice President
Google India

That means India is less than 0.5 per cent of Google’s global top line. Normally, that would make the country rather unattractive to any firm that has been here for the 19 years that Google has. But for Google, India is hugely strategic. That explains the 2020 announcement of a $10-billion Google for India Digitization Fund. In a blog, CEO Sundar Pichai had outlined four key investment areas for this fund—enabling affordable internet access in local languages; building products suited to India’s unique needs; empowering businesses in their digital transformation journeys; and leveraging technology and AI for social good. “This commitment underlines our confidence and recognition of India’s growing role in the global technological space,” says Sanjay Gupta, Google India’s Country Head and Vice President. “We have not done this before at this scale in any other country.”

But as Google seeks to step on the gas in India, it will have to deal with several challenges. In India, it has been fined Rs 1,337.76 crore by the Competition Commission of India (CCI) for abuse of Android’s dominant position, a decision upheld by the Supreme Court (more on that later). Globally, it sacked 12,000 employees recently, as it reviews its priorities in an economic environment that is gasping for growth. Not to mention a possible threat to the core of its vast empire—search—from a new AI tech called ChatGPT.

There’s much action and energy at Google’s India office in Mumbai’s buzzing BKC business district. An eclectic mix of retro and modern characterises the office and the walls are adorned with one-liners in Hinglish, provoking laughter. In this informal environment, where ‘casual’ is the buzzword, Gupta looks slightly incongruous in his formal attire (in a blazer but without a tie). But then, one would expect that from someone who spent most of his career in industries like FMCG (at Hindustan Unilever), telecom (Bharti Airtel) and entertainment (then Star India).

“Our core strategy is about two words—inclusion and trust. We want to make the internet helpful and safe for a billion Indians,” says Gupta, 55, who joined the tech giant in early 2020. On inclusion, the objective is to make the internet more accessible—with Indian language access and affordable handsets. “We want to help more women come online and also ensure that the small and medium businesses (SMBs) gain from the internet,” he says. And on trust, he says Google understands that India’s digital transformation brings with it a lot of responsibility. “That means people want control over their data or want their kids to be safe online or just the safety of money while transacting online.”

Prasad Shejale
Founder & CEO
LS Digital

A key moment in Google’s journey here took place around five to six years ago. “We noticed a big shift where more youth were coming online. Almost all of them were mobile-first and a large chunk was mobile-only. The way they used the internet was very different,” says Gupta. The primary drivers of adoption were video, voice and local languages. “The dynamics then were a giveaway on the next big use case for the internet evolving from India. In fact, we will see more innovations from here and other countries in Asia.” The groundwork for the ‘next billion users’ strategy took off there. “If we focus on solving the needs of people in these countries, we will learn how to evolve our core products for the rest of the world,” says Gupta. Since then, better mobile connectivity and affordable data costs have led to large-scale adoption of smartphones, adding fuel to Google’s strategy for the country.

As cloud computing became a mainstream technology, we saw an opportunity to offer this to our potential customers

Bikram Singh Bedi
Managing Director
Google Cloud India

It has adopted an India-first approach for several products. In Maps, for instance, improvisations include a two-wheeler mode, mixed-mode transit (while looking for public transit routes, this feature combines autorickshaw options with public transport recommendations on the same journey) and driving directions by landmarks. Maps in offline mode were built for India and are now used in other parts of the world. Gupta cites others like Files by Google (an Android app to manage files), YouTube offline or the reading tutor app, Bolo (now called Read Along), which is now a global app.

Perhaps one of the biggest plays in India is the indigenous Google Pay or GPay, the UPI-based mobile payments system. “I really can’t remember the last time I carried my wallet,” says Gupta. Millions of merchants and many multiples of consumers use GPay for all sorts of cashless payments—from buying milk or tomatoes, to paying monthly salaries to the domestic help, to paying the fare to the autorickshaw driver, or to just make an online payment for anything. GPay is India’s second-biggest UPI app (after PhonePe) in terms of both transaction volume and value. Last December, data from National Payments Corporation of India shows that GPay handled 2.7 billion transactions worth Rs 4.4 lakh crore.

Advertising is the company’s most visible form of revenue generation. In FY22, it clocked close to Rs 25,000 crore in gross advertisement revenue. According to advertising industry trackers, of this, Google Search ads accounted for over Rs 8,500 crore, GDN Rs 3,500 crore, and YouTube, more than Rs 12,000 crore. But then, that money is ‘gross’ revenue, which means it is split with a host of people Google works with. After deducting the payouts to partners, Google’s net ad revenue level for FY22 is only Rs 2,080 crore (comparatively, Facebook in India made Rs 2,309 crore through advertising). The balance—and the bulk of revenue that forms Google’s FY22 total revenue of Rs 9,286 crore—came through areas such as rendering IT services and IT-enabled services, where it doesn’t have to share monies with anyone.

So, Google’s story in India is not merely about advertising. “It dominates search, video, payments, maps, and it is well-positioned here especially when factors such as low penetration levels, overall economic growth rate and the growth in advertising work in its favour,” says Jaspreet Bindra, Founder of Tech Whisperer UK, a digital transformation and tech advisory. “An India becoming more digital with the likes of UPI and Aadhaar can only benefit Google.”

But it’s hardly going to be a walk in the park. Take the case of public cloud services. A report by IDC says the public cloud market in India will grow at a CAGR of 23.1 per cent for 2021-2026 to $13 billion. In January-June 2022, the market size was $2.8 billion. Estimates from tech tracking firms suggest Amazon Web Services (AWS) and Microsoft Azure have cornered 45-50 per cent of this market, with Google a distant third. But then, historically, Google has been in consumer-facing businesses. Cloud, on the other hand, is a pure B2B play, but one that Google is dead serious about. Globally, the strategy for Google Cloud is to invest in building solutions for verticals such as banking and financial services, telecom, retail, healthcare, and government-owned entities. “As cloud computing became a mainstream technology, we saw an opportunity to offer this to our potential customers,” says Bikram Singh Bedi, Managing Director of Google Cloud India. “It was a way to build out their whole digital transformation.” To get a bigger chunk of the cloud opportunity, Google is putting in the hard yards with big names in India Inc. The diversified Mahindra Group’s focus areas are customer and employee experience, using data and AI for advanced decision-making, robust cybersecurity, data privacy, and agility. “Cloud technology comes in handy here,” says Mohit Kapoor, the group’s Executive Vice President & Group Chief Technology Officer. According to Kapoor, factors such as technical and commercial considerations apart from the opportunity to co-develop led to a partnership with Google Cloud. “The decision has enabled us to be agile for our customers, partners and everyone associated with us,” he says.

Globally, we are at 80 million music and premium subscribers... and there is a lot of headroom to grow in India as well

Satya Raghavan
Director, Marketing Partners
Google India

Then, Google Cloud works with some large hospital chains in areas such as virtual care services, creation of e-pharmacy platforms, and building remote patient monitoring systems. Bengaluru-headquartered Manipal Hospitals deploys Amwell, a digital care delivery enablement platform that facilitates virtual visits. “The physical hospital is not a necessity now since the access is now significantly larger. Google brings in the technological capabilities that hospitals do not have,” says Dilip Jose, MD & CEO of Manipal Hospitals. Google’s solutions on the Indian language front have helped—today, a patient can listen to a medical expert in around 10 Indian languages.

The need to make products simple can never be exaggerated. Roma Datta Chobey, Senior Director-Digital First Businesses at Google India, points to Performance Max, a solution that uses AI to help advertisers manage their entire Google Ads inventory from a single campaign. “You can now drive profitable growth and reach high-value customers across channels like Search and YouTube to reach customers you may not have considered before with help from our AI,” says Chobey.

Google’s understanding of what works for the evolving consumer is a lot sharper, too. “Digital plays a central role in the consumer journey. Every consumer interacts with at least one digital touchpoint before making a purchase and it may be the most important one. In this multi-channel, multi-touch journey, consumers leave behind a wealth of data, which marketers analyse to build strategies,” says Prasad Shejale, Founder & CEO of LS Digital, a digital transformation group. Citing the example of a life insurance firm where 60-65 per cent of sales attributed to traditional channels actually had at least one digital touchpoint, he says “Brands need to incorporate these touchpoints. These could be either paid or organic to improve sales in traditional channels or risk reducing conversions.”

Satya Raghavan, Director-Marketing Partners at Google India, says its content strategy is about media, tech and creative coming together. He says video is the gateway to the internet. “A new user first thinks about video and then does other things.” And the gateway to video is YouTube. Gupta says YouTube is about democratising content creation at scale: “Today, you have them coming from remote corners and managing to find an audience. Our ad products have made this more sustainable.”

The kind of users coming on to YouTube is interesting. Raghavan picks out the small film industries in Bihar, coastal Karnataka and in the Dakhani language. “Today, YouTube can generate data for one film trailer and based on the feedback, producers can decide the release strategy in terms of number of prints and where to put them out,” he says. Of course, YouTube channels have proliferated across entertainment, personal finance, cooking, education and pretty much everything you can think of. Raghavan is also optimistic about YouTube Premium, a paid platform in price-sensitive India. “Globally, we are at 80 million music and premium subscribers from 50 million in September 2021 and there is a lot of headroom to grow in India as well.”

A large universe of advertisers can be tapped with YouTube and its product suite. According to Abhishek Maity, Co-founder of Adbuffs, a digital-first agency, one can get started on Google Search for as little as Rs 100 a day. With a roster of clients ranging from enterprises to MSMEs to small entrepreneurs selling imitation jewellery, beauty cosmetics, and much else, he picks out detailed targeting as a huge advantage. “One can narrow the audience to a particular pin code using Google Maps. More importantly, there is scope for course correction,” says Maity.

[the partnership with Google Cloud] has enabled us to be agile for our customers, partners and everyone associated with us

Mohit Kapoor
Executive VP & Group CTO
Mahindra Group

One big area of success for Google has been its Android mobile operating system (OS), which has a 95 per cent share of the smartphone market. A large number of affordable smartphone models on the platform has helped. Navkendar Singh, Associate Vice President of IDC India, goes back to the period starting 2013-14 when Android OS was launched by Indian brands such as Micromax and Lava followed by Samsung and, later, the very aggressive Chinese vendors. “iOS (Apple’s mobile OS) has been and will remain at the premium position, making growth in volumes a challenge. After all, over 90 per cent of the market in India has phones priced at below Rs 30,000, where iOS has almost no play,” he says.

Another advantage, as Tarun Pathak, Research Director-Devices and Ecosystems at Counterpoint Research, puts it, is that Android is an open-source OS that allows for a high level of customisation. “In India, 76 per cent of consumers spend under $250 on a smartphone, and here, Android is dominant, compared to Apple, which targets the over-$400 segment.” The next frontier is the 200 million user base that is still on feature phones. To target this user base, Google partnered with Reliance Jio to launch JioPhone Next, an entry-level smartphone in 2021. “However, its pricing missed the mark and is still out of reach of feature phone users,” says IDC’s Singh. Google’s Gupta speaks of how his teams are “reimagining the experience driven by voice, and we are working with Jio and Airtel to bring more options for users to make that transition”.

The premium smartphone (upwards of Rs 50,000) market is being targeted, too, with the Pixel 7 series, but making headway there won’t be easy. “Although the market is growing, it is almost a duopoly between Apple and Samsung. Many brands have tried to enter this space but not with any great success,” says IDC’s Singh. The opportunity for Pixel will be in looking at parts of the overall mix. Adds Pathak: “Pixel phones have pure Android, providing a smooth UI experience with a camera performance that is among the best.” 

Google’s approach has been to push its capabilities. In fact, so dominant has Android been that it has been pulled up for being, well, too dominant. Last October, the CCI levied a fine of Rs 1,337.76 crore on Google for taking advantage of Android’s massive market share, and not allowing fair access to competing apps in Android-powered smartphones. It also prescribed several actions that the company needs to take. The National Company Law Appellate Tribunal declined Google’s request for a stay and the issue moved to the SC. In January, the apex court, too, upheld the orders of the CCI and NCLAT. In line with this, Google has implemented some changes, including allowing users to select a default browser, and allowing handset manufacturers to license individual Google apps for pre-installation on their devices.

It [Google) dominates search, video, payments and maps; it is wellpositioned here... low penetration, growth in ad work in its favour

Jaspreet Bindra
Founder
Tech Whisperer UK

Globally, too, regulators have started clamping down on the company’s dominant activities. “Google is squarely in the crosshairs since it has over 90 per cent market share across most of its products in multiple countries,” says Whisperer’s Bindra. Adds Arush Khanna, Partner at Numen Law Offices: “This [the SC judgement] was the third hit faced by Google after losing the appeal over the EU’s anti-trust ruling for placing unlawful restrictions on the manufacturers of Android mobile devices and mobile network operators to consolidate the dominant position of its search engine.” On his part, Gupta emphasises that Google has added more granular controls for Android phone users. “They can control which apps have access to which data. The apps only get access to the extent where it is required to implement the core functionality.”

Apart from regulation, there is the not-so-small matter of a serious challenge to its search dominance from ChatGPT, a chatbot launched by AI research firm OpenAI last November, where Microsoft is reportedly looking to invest $10 billion. ChatGPT produces search results that appear like human answers. It can converse freely with a human on multiple subjects, compose poetry, write code (and detect bugs, too), even produce philosophical musings. It comes as close to generating human insights as any chatbot ever has. Bottom line: it does what humans have wished for years that Google Search would do. Hence, it presents a real threat to the company, even though ChatGPT is still in testing phase. Google is taking it very seriously, so seriously that the company’s hands-off Founders Sergey Brin and Larry Page have reportedly turned up in office to strategise with executives and developers. And the result is expected to be a phalanx of more than 20 AI-based innovations this year that will seek to crush this rebel.

Clearly, the next phase of Google’s evolution has begun, 25 years after it was founded by Brin and Page. Bindra says Google did not discover search but did three things very well. “They put together a better algorithm to make it more effective. They also built a tech architecture and algorithm that could scale to global levels rapidly,” he points out. Most importantly, Google built a business model around it, “which has emerged as perhaps the best for any product in any industry across time”.

That business acumen, and tech wizardry, will be severely tested as Google moves into its next phase. And India, with its tech talent and rapidly digitising market, might just play an important role in that journey.