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India is the new lab for US tech giants to test apps before global release

India is now more popular to test apps than markets like China because it has the same growth dynamics but with fewer regulations.

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Singapore: India is emerging as the testing and acquisition playground for global consumer technology companies, especially the so-called FAANGs, according to a veteran internet analyst.

RBC Capital Markets’ Mark Mahaney, who calls himself Wall Street’s “oldest internet analyst” after covering the sector for more than two decades, said India is now more popular than markets like China because it has the same growth dynamics but with fewer regulations.

As one of the largest economies and most populous countries in the world, India has turned into a testing ground for companies such as Facebook Inc., which has used it to beta-test a payments feature for WhatsApp. Netflix Inc. rolled out a mobile plan in India at 199 rupees ($2.80), much cheaper than what it charges for a basic plan elsewhere, and has created original content to capture more market share.

“India does have regulations but it doesn’t seem to be as protectionist as China,” said Mahaney. India has been considering a new law that would require personal data to be stored locally, which could impair the operations of the Internet giants but Mahaney remains confident they can still penetrate the market.

Besides organic growth, acquisitions are another strategy for these companies in India, especially since they are facing more scrutiny back home and in western Europe. “There’s an opportunity to build growth” in Asia, particularly in India, Mahaney said. Inc. has already tried its hand at deals in the South Asian nation by attempting to acquire Indian e-commerce pioneer Flipkart Online Services Pvt., before it was snapped up by Walmart Inc. last year.

Facebook, Netflix, Amazon and Alphabet Inc. can all win big in India, said Mahaney, who has a buy rating on the stocks. “India is less than 5% of the Amazon’s total revenues but it has the potential” to get to that level within five years, Mahaney said. -Bloomberg

Also read: ‘Digital colonialism’: Why countries like India want to take control of data from Big Tech


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