PhonePe tears apart Google, FB over data localisation: Hails RBI for level playing field

With the increasing dominance of fintech in India, the government has emphasised that financial data must be stored inside the nation. The apex regulator Reserve Bank of India (RBI) had issued a circular that mandates all digital payments firms to set up data centres (DC) locally by October 15.

Cheering the move, payments majors Paytm, PhonePe and MobiKwik and many others hailed it. But it didn’t go well with foreign giants - Google, WhatsApp, Mastercard and Visa. They have been lobbying against the circular and asking an extension of the deadline.

A couple of days ago, Google’s CEO Sundar Pichai advocated free flow of data across borders with a focus on user privacy and security.

Lambasting Google’s projection that moving data centres to India would require more time, PhonePe said that it’s pretty much doable but Google, Amazon, and Facebook don’t intend to.

“This is 2018 people. MNCs like Amazon, Microsoft and Google are building/managing massive data centers in India, and selling cloud services with geofencing capabilities to other local Indian startups today. These companies are in no real position to claim that DC infra is the problem,” reads a PhonePe blog.

Citing tax evasion is the primary reason for avoiding local data centres by the global tech behemoths, PhonePe clarifies that the argument of moving data centres to India for MNCs would be costly is baseless.

PhonePe hails RBI diktat for making level playing fields in an open market like India.

Given that, they have bet billions of dollars in India and see it as a long-term market, investing mere tens a few tens of million dollars on domestic processing and storage capacity won’t be expensive.

“Much older & larger domestic payment companies, with much more complex tech stacks and much larger data archives, have already complied with the RBI circular,” notes the blog post.

Asking a straight question to Google, PhonePe wants the search giant to clarify whether it would store payment transactions related data only within India or simply doing data mirroring (duplicate database).

Revenue earned in India must be taxed in the country, argues PhonePe. “They cannot claim that the revenues generated from these apps fall under foreign jurisdiction, just because their data servers are abroad,” mentions the blog post.

Before PhonePe, Paytm and its CEO Vijay Shekhar Sharma have been alleging favourable treatment to WhatsApp and Google. He even termed Facebook as ‘the evilest company in the world’.

PhonePe has come out the public for the very first time on data localization issue. Its argument seems fair and in line with regulator interest. Going forward, it would be interesting to see how these biggies react to PhonePe arguments and whether RBI extends the 15 October deadline or not.

By the way, US technology giants have chalked out fierce lobbying plans against stringent Indian data localisation requirements. Trade groups comprising including Amazon, Microsoft, and American Express already opposed the diktat. After e-commerce, digital payments have become an interesting space. Be ready for more actions :-)