Are Tech Giants In India Facing A New Reality?

• (1:00) - Impact of New Retail Regulations: Data Is The New Oil
• (9:30) - Regulating Content On Mobile Applications
• (12:15) - Impact on The 2019 India Elections
• (17:00) - Mobile Payment, Ikea and Netflix (NASDAQ:NFLX) Expansion
• (22:40) - Episode Roundup: WMT, AMZN, TWTR, FB, MSFT, BABA, NFLX
• Podcast@Zacks.com

Welcome to Episode #167 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Zacks Director of ETF Research, Neena Mishra, to discuss what is going on with India’s online retail and technology scene.

Online Retail is Hot

In past podcasts, the emphasis has been on which companies were getting the upper hand in online retail. Hundreds of millions of Indians now have smartphones and Internet data plans are cheap. That has meant an explosion in online shopping and online payment options.

Several years ago, Amazon (NASDAQ:AMZN) dedicated $5 billion in order to build out its marketplace business in India.

Walmart (NYSE:WMT) recently became a big player when it bought India’s Flipkart for $16 billion.

Combined, Amazon and Flipkart have 70% of the online retail market.

New Regulations: Leveling the Playing Field?

But small merchants have been getting squeezed as the dominant players have lowered prices on products from preferred vendors and have taken market share.

As a result, starting on Feb 1, 2019, new e-tail regulations went into effect which have upended the online retail market place as it forbids an ecommerce marketplace from mandating that a seller sell products exclusively on its platform.

It also prohibits marketplaces from making more than 25% of purchases from one sole vendor.

As a result, thousands of products disappeared from Amazon’s marketplace overnight.

Can Walmart and Amazon work around these new regulations?

Or will companies like Paytm, India’s large e-commerce payment system and digital wallet, which is backed by Alibaba (NYSE:BABA) ), gain an opening to take market share?

New App Regulations: Will They Stick?

In addition to cracking down on the big players in online retail, there have been proposed rule changes to mobile apps.

Facebook’s (NASDAQ:FB) WhatsApp is still one of the most popular in India, with over 250 million users.

But in recent months, several Chinese apps have become popular, including ByteDance’s TikTok lip-syncing app that is popular with young people.

Concerns about data privacy have been growing.

New proposed regulations entail requiring Internet companies to proactively screen user posts, videos and messages to make sure the posts aren’t libelous, hateful or deceptive in some way.

Can the apps find workarounds?

Microsoft (NASDAQ:MSFT) has already commented about the tremendous cost with complying with this new rule.

Find out the challenges, and opportunities, facing big technology in India in 2019 on this week’s podcast.

[In full disclosure, the author of this article owns shares of AMZN and FB in her personal portfolio.]

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