Happy Sunday.
If the early weeks of 2021 are anything to go by, we will be spending a lot of time debating platforms, their rights and responsibilities, and the ever-growing power they wield.
It started with Donald Trump and the decision of Facebook and Twitter to pull him off their platforms. This divided the social media universe into three groups – the free speech absolutists, those willing to accept limits to free speech given the context (and, admit it, given it was Trump!), and those who believe that private enterprises have the right to knock-off content off their platforms based on their own policies.
Thinkpad doesn’t have a strong—or particularly unique—view on the matter. Yes, that’s permitted even in today’s ‘opinions-on-demand’ age. But we do have an opinion on India’s latest brush with platform power.
Google Inc. had to pull down nearly 200 loan apps this week. BloombergQuint’s Vishwanath Nair reported that nearly 500 apps have been red-flagged and about half have already been removed. Read the details here.
The action wasn’t exactly prompt. For over a year now it has been reported that all sorts of personal loans are being offered in the market. Don’t get us wrong. We have nothing against personal loans as a product. There are legitimate banks and NBFCs doing the business, though even some of them pushed the boundaries over the last two years. But trouble started when the surge in demand for small ticket consumption loans attracted the digital equivalent of money lenders.
The reason this links back to platforms, in this case, Google, is because these apps would never have had the kind of reach they did if it wasn’t for the app store.
So here are some things for everyone involved to think about.
First question. Yes, Google has pulled off the illegal apps now. But should it be held responsible for allowing them on their platform in the first place? These apps weren’t selling soap or steel. They were pushing loans—a regulated business. What was Google doing allowing apps with no licence on their platform? If Google is to be held responsible, who is the competent authority to do that?
Second, how do you ensure constant monitoring of financial services being hawked on app stores? Once you weed out illegal apps, there may be some errant NBFCs using the app store to push products in a way that is against the (slightly wishy-washy) Code of Conduct and Fair Practices Code? And who does this monitoring? An already stretched RBI?
Third, recall that not too long back a fight had broken out between Paytm and Google. The latter had removed Paytm from its app store after it alleged that certain policies had been violated. Paytm cried foul and said that Google (which runs the very successful Google Pay) was being “judge, jury, and executioner”. Even if you discount what Paytm was saying, surely you must recognise that Google has the power to prioritise and deprioritise apps on the play store to maximise its own interests.
Amid all these questions about illegal loan apps, the aggressive recovery practices, and the power of digital platforms, the RBI has decided to set up a committee to look into regulation governing digital lending.
Sir Humphrey Appleby’s words from “Yes Minister” come to mind: “I recommend that we set up an interdepartmental committee with fairly broad terms of reference so that at the end of the day we’ll be in the position to think through the various implications and arrive at a decision based on long-term considerations rather than rush prematurely into and precipitate a possibly ill-conceived action which might well have unforeseen repercussions.”
We leave you with a dire warning about passwords. If you, like us, forget passwords all the time, know that it can cost you $220 million. Then again, if you, like us, don’t have $220 million to lose, don’t worry about it.
Have a good weekend.
