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Koo, an Indian startup with a yellow bird logo and a 400-character limit, has never hidden which U.S. social media company it wants to emulate. Founded in 2020, Koo gained success at a time of rising tensions between Narendra Modi’s ruling Bharatiya Janata Party and Twitter Inc., which ignored government requests to take it down during the massive 2021 farmer protests, forcing ministers and supporters to switch to the startup.
But Koo, which raised funding from Tiger Global and became known as India’s “nationalist Twitter” thanks to its pro-BJP user base, never replicated the network effects of its big tech rivals and quickly faded. Its brief popularity in Brazil was fueled not by anti-monopoly sentiment but by a running joke about its name resembling an offensive Portuguese word for “butt.” Koo finally filed for bankruptcy this month after a rescue effort failed.
Koo’s downfall highlights the failure of efforts to replace U.S. social media companies in India. But the Modi government now has a much more effective strategy: control. Rule changes from 2021 will force foreign tech companies to comply. And after being re-elected to a third term last month, Modi is planning even more.
Around the time of its standoff with Twitter over the farmers’ protests, India tightened rules, including imposing criminal charges on social media executives. This worked: Even Elon Musk, the self-described free speech champion who bought Twitter in 2022 and renamed it X, has publicly acknowledged that he has little choice but to comply with India’s takedown requests.
Prime Minister Modi has made preventing tech monopolies a pillar of his policy, telling world leaders at the Group of Seven summit last month that “technology must be creative, not disruptive.” His administration is preparing several new laws, including the Digital India Act, which aims to overhaul India’s existing information technology laws, and the Digital Antimonopoly Act.
India’s move to regulate foreign technology mirrors global trends in many ways. Like Europe’s Digital Markets Act, India’s Digital Competition Bill allows authorities to crack down on companies before they become monopolies, rather than punishing or breaking them up after the fact.
But at its core, India’s approach is an attempt to create what Udbav Tiwari, director of global product policy at Mozilla, calls a “fourth way” of internet regulation, aiming to take a lighter touch than Europe and put more emphasis on consumer protection than the U.S. But it also gives the state broad powers to police online speech in a way that critics say is more similar to neighboring China than other democracies.
For example, a data privacy law passed last year gives authorities exemptions for a wide range of reasons, including “maintaining public order” and “friendly relations with foreign countries,” while introducing strong consumer protection standards for companies.
The vagueness of the rules means “executive discretion prevails,” said Prateek Waghley of the Internet Freedom Foundation, who sees checks and balances eroding and ample room for abuse. “The signals are becoming more aggressive” in Modi’s third term, Waghley said.
Foreign tech companies have mounted a limited resistance, with U.S. lobbying groups reportedly asking authorities to reconsider competition laws in May. But they have decided that missing out on the fast-growing Indian market is not an option, especially after being shut out of China. Facebook and YouTube have more users in India than anywhere else, more than 375 million and 475 million respectively. Entrepreneurs like Musk, who want to build a Tesla factory in India, may decide that there is no point in annoying the Modi government over how it handles X’s posts.
AI will be the next big test for India’s tech policy. While US companies like Meta and OpenAI are currently leading the cutting-edge research and development of large-scale language models, a huge amount of additional work will be required to train AI for Indian languages and package it into products for Indian consumers and businesses. Tiwari argues that this is an opportunity for India to create its own AI tools, rather than simply importing US tech. Given India’s lofty ambitions, is now the time to innovate rather than seek to imitate or dominate?
benjamin.parkinn@ft.com
