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<ul><li>Ola and Uber asked to showcase their algorithms related to ride cancellations and surge pricing.</li><li>Order came after CCPA received numerous complaints of unfair trading practices.</li><li>According to a survey by LocalCircles, 71% of customers continue to face ride cancellation issues.</li></ul>As thousands of commuters find themselves at the mercy of Uber and Ola drivers via ride cancellations, cancellation charges, random surge pricing and long waiting times, the Central Consumer Protection Authority (CCPA) was set to grill cab aggregators over their algorithms on Tuesday. The regulator, under its Chief Commissioner Nidhi Khare, was set to ask cab-hailing platforms to showcase their algorithms related to ride cancellations and surge pricing, along with questioning them over other issues. The CCPA has received numerous complaints of unfair trading practices, such as cab drivers forcing riders to cancel trips that result in the customers paying the cancellation charge. The authority is of the view that old customers are being charged exorbitant rates while new riders are being wooed by low fares for the same distance. Despite the Motor Vehicle Aggregator Guidelines 2020, 71 per cent customers say that ride cancellation issues by drivers continue, according to a survey by community-based social media platform LocalCircles last month. Over 45 per cent of app-based taxi consumers stated they were charged more than 1.5 times in surge pricing despite the threshold being set by the Motor Vehicle Aggregator Guidelines 2020. The extortionist practices of some drivers to undertake private trips were reported by consumers as a major concern, the report said. As thousands of Indian riders continue to suffer from paying cancellation fees sans their faults, the ride-hailing major in Australia admitted that it made false or misleading statements in cancellation warning messages and taxi fare estimates, according to the Australian Competition and Consumer Commission (ACCC). Uber now faces $26 million (Australian dollars) in penalties for adopting those illegal practices. More than two million Australian consumers were shown the misleading cancellation warning. Envisioned to lessen the travel woes, cab-hailing platforms like Uber and Ola have come a long distance in India, but riders are increasingly facing more issues. Most of the time, Uber and Ola drivers ask the riders to reveal what fare the Uber app is showing, and then decide if they want to take the ride or not depending on the amount and if it is in cash, forcing the riders to cancel the ride. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/10-things-in-tech-its-about-to-get-ugly/articleshow/91440115.cms">10 Things in Tech: It's about to get ugly</a> <a href="https://www.businessinsider.in/tech/news/meditation-app-calm-launched-a-contest-to-find-tiktoks-smoothest-voice-the-winner-will-be-paid-5000-to-narrate-a-story/articleshow/91441165.cms">Meditation app Calm launched a contest to find TikTok's 'smoothest voice' – the winner will be paid $5,000 to narrate a story</a>

Indian regulator to grill Ola and Uber over rising customer complaints

<ul><li>Section 80JJAA of the Income Tax Act gives deduction for three years to employers for hiring new people.</li><li>The current limit of this provision is ₹300,000 a year that effectively means that the compensation of these people should be less than ₹25,000.</li><li>If the limit is increased, it could help in boosting the salaries of and the number of jobs for gig workers.</li></ul>One of the major concerns raised by the gig workers — such as <keyword id="4235145" type="General" weightage="20" keywordseo="delivery-partners" source="Orion">delivery partners</keyword>, drivers and more — who work for companies like Zomato, Swiggy, BigBasket and Blinkit (Grofers), is <a href="https://www.businessinsider.in/business/startups/news/bigbasket-flipkart-and-urban-company-may-have-paid-fair-wages-but-it-wasnt-enough-to-earn-a-living/articleshow/88946309.cms">the lack of decent compensation</a>. But what if we were to tell you that if an existing provision of the Income Tax Act is clarified and amended, it could raise salaries for the gig workers. Under Section 80JJAA provision of the Indian Income Tax Act, companies can get a tax deduction for hiring new people. If a company’s workforce increased by 50, the salary paid to these employees would make the company eligible for an additional deduction of 30% for the next three financial years, Hemal Zobalia, Partner at Deloitte Haskins &amp; Sells LLP explains. For example, if the company is paying ₹1000 annually to each of these 50 employees, it will get ₹300 as tax deduction for each of them for each of the next three years. Essentially, 90% of the first year’s salary, for each of the new employees, will be deducted from the company’s taxable profit. The goal of this provision is to create more permanent employment for those who are “low-skilled”, according to Jimit Devani, a partner at Deloitte Haskins &amp; Sells. The provision is applicable for employees whose salaries are ₹25,000 per month or less.Increasing the salary limit to ₹35,000-₹40,000 may push more companies to hire permanent employees instead of contractual ones. Meanwhile, Zobalia is of the belief that this would also help in further increasing their payout and salaries. But there is a bigger challenge here. This is not a widely availed incentive by the companies for several reasons. First, companies prefer to hire people on contract and keep them on a third party’s payroll. Such companies cannot avail tax benefit under the 88JJAA provision. Bringing people on to the payroll makes them eligible for other benefits like pension, insurance, and severance to name a few, Devani said. The third parties, however, do avail these tax benefits for employees that have been on their payroll for at least eight months, Devani added. The second issue with this provision is that the benefit is available only on the net addition of employees. Say, a company has a total of 10 employees. Five of them quit the company in a year, and six more are hired in the same year. While the company has six new employees, the net addition to the workforce is only one. And, so, the tax rebate is available only for one additional employee, and not all six. Improving this provision under the income tax law may go a long way in creating sustainable employment for people with less-valued skills, across a range of industries including the gig economy of which the likes of Zomato, Swiggy, Amazon and Flipkart are part of. The current state of salaries in the gig economy As per <a href="https://www.businessinsider.in/business/startups/news/urban-company-ola-uber-are-not-the-best-places-for-gig-workers/articleshow/88561764.cms">Fairwork India report of 2021</a>, most newage digital platforms — including Zomato, Swiggy, Uber, Dunzo, PharmEasy and Ola — do not offer fair wages to the contractual workers associated with them. Even though companies like Flipkart, Urban Company and BigBasket pay higher and better, it still may not be enough to make local living wage after costs, the report adds. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Company </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Avg income range, including cost </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Flipkart </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹14,500-₹25,000 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Urban Company </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹30,000* </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">BigBasket </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹18,000-₹24,000 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Zomato </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹20,000-₹30,000 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Swiggy </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹10,000-₹15,000 </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>Note: Urban Company’s average salary excludes cost Source: Urban Company’s latest report, Apna.co It is important to note that there has been a further reduction in the payout for delivery executives due to decrease in rate cards and incentives, along with increased input costs of petrol and platform commissions. This has made matters worse for the Indian gig workers like delivery partners and drivers, the Fairwork report adds. Fairwork rates digital platforms on their treatment of gig workers who work for them. SEE ALSO <a class="tout-title-link" href="https://www.businessinsider.in/budget/news/budget-2022-why-income-tax-slabs-may-not-change-this-year/articleshow/89179572.cms">Budget expectations 2022: Here’s why income tax slabs may not change this year</a> <a href="https://www.businessinsider.in/budget/news/the-indian-government-has-spent-less-than-half-the-money-it-had-budgeted-for-capital-investments-so-far/articleshow/88852518.cms">The Indian government has spent less than half the money it had budgeted for capital investments, so far</a> <a href="https://www.businessinsider.in/budget/news/budget-2022-expectation-in-higher-standard-deduction-tax-slabs-and-covid-insurance/slidelist/88891751.cms">From higher standard deduction and change in tax slabs to clarity on Covid insurance, here’s what tax experts want from Budget 2022</a>

There’s a way government can prod Zomato, Swiggy, Uber and Ola to increase salaries of delivery partners and drivers

<ul><li><keyword id="97393" type="ORGANIZATION" weightage="20" keywordseo="Competition-Commission-of-India">Competition Commission of India</keyword> brushed off all the price allegations on the cab aggregators <keyword id="6354720" type="UNKNOWN" weightage="20" keywordseo="ola">Ola</keyword> and <keyword id="1042120" type="PERSON" weightage="20" keywordseo="Uber">Uber</keyword> stating that the fares are algorithmically calculated. </li></ul><ul><li>The CCI rolled out a 13-page order discarding the allegation on the cab drivers for setting a floor price on resale and the alleged <keyword id="6743176" type="UNKNOWN" weightage="20" keywordseo="Price-discrimination">price discrimination</keyword>. </li></ul><ul><li>The cab aggregators furnished a model that shows prices are determined algorithmically and dependant on various factors such as the time of the day and the destination points.</li></ul>India’s largest cab aggregators Ola and Uber were under fire for their pricing strategies, but the Competition Commision of India (CCI) has ruled that there was no incidence of wrong doing. The complaint was filed against ANI Technologies (Ola’s parent company), Uber India Systems, Uber BV (Based in the Netherlands) and Uber Technologies, the holding company of Uber Group. The complaint included Uber BV since it establishes the contract between taxi owners and does the payments and incentive to drivers, said the CCI <a href="https://www.moneycontrol.com/news/business/cci-rejects-price-fixing-allegations-against-ola-uber-3137091.html">report</a>. However, the fair trade regulator, CCI <a href="https://www.livemint.com/Companies/8hX4pI24jsrMUjoAMzJxuL/CCI-rejects-allegations-of-price-fixing-against-Ola-Uber.html">turned down</a> the allegations against the cab aggregators on Tuesday in its 13-page order saying that the drivers charging algorithmically calculated fares doesn’t imply that they were in collusion among themselves. Also, complaints that Ola and Uber are imposing a resale price maintenance system (setting a price higher than the price determined originally by the market forces) on drivers and the alleged price discrimination were brushed off. The cab aggregators have been criticized a lot lately due to the manipulation in fares. In clarification to the claimed price allegation, Ola and Uber have published their model that provides insight into how the price is calculated to the CCI. The model shows that the estimation is done based on large data sets deploying respective algorithms. Further, fares of rides also vary as per the traffic conditions in the area and the time of the day, leading to higher price value during the peak hours. As a result, the prices determined differ specific to each rider by the end of the trip. While the drivers may have quoted fares higher than what is calculated algorithmically, which was the case with the current allegations, but that doesn’t necessarily amount to collusion within the drivers. The CCI reported that the fares are dynamic in nature so there did not seem to be any floor price maintained by the drivers. The dynamic prices also hold some advantage to the regular customers because this might also lead you to a lower price than usual for a certain places as compared to the ones charged by the individual taxi drivers, which saves you a good deal of money. The order stated that there doesn’t appear to be any such agreement or alignment between the cab aggregators and their respective drivers or drivers mutually.

India's competition regulator finds Uber, Ola ‘not guilty’ of charging higher prices

There was a time when a driver associated with cab aggregators <keyword id="6354720" type="PERSON" weightage="100" keywordseo="Ola">Ola</keyword> and <keyword id="1042120" type="PERSON" weightage="100" keywordseo="Uber">Uber</keyword> used to earn as much as Rs 1 lakh per month. However, as moneybags started to shrink, these earnings started to decline, which led to more and more drivers ending their association with the companies. As per analysts and company executives, in the past two years, more than 10,000 drivers have left Ola and Uber in Bengaluru alone, citing lower incentives. Moreover, even the number of new driver registrations has also gone down from 300-350 a day in 2016 to 40-50 across Bengaluru, Mumbai and Delhi. Even so, the analysts told <a href="http://m.economictimes.com/small-biz/startups/undettered-by-high-attrition-rate-ola-and-uber-banking-on-drivers-in-their-20s/articleshow/58935423.cms">ET</a>, that the slowing growth in the numver of drivers is a positive sign, showing that the market is finally maturing and stabilising. "Newer drivers coming on board are aware that the incentives and salaries offered are lower than what they were last year. They are more prepared to work longer hours for lower wages in the pursuit of owning a car in the long run," said Jaspal Singh, partner at Valoriser Consultants. As of now, Ola operates in 102 cities with about 550,000 drivers while Uber has operations in 29 cities with about 400,000 drivers. However, analysts believe that not more than one-third of these drivers are likely to be working actively. An Ola executive, requesting anonymity, said that this downfall in the number of driver registrations has not effected the company much. "Now the market is maturing. The drivers who are likely to stick are often younger drivers who were working at even more unsatisfying jobs and are willing to put in the additional amount of time so they can be independent car owners after working four-five years with Ola, Uber or both," this executive said. (Image source Qz)

High attrition rate amongst drivers might be a good thing for Ola and Uber

A <keyword id="132180" type="ORGANIZATION" weightage="20" keywordseo="National-Consumer-Disputes-Redressal-Commission">National Consumer Disputes Redressal Commission</keyword> bench of Justice K S Chaudhari dismissed the petition filed against <keyword id="1042120" type="PERSON" weightage="20" keywordseo="Uber">Uber</keyword> and <keyword id="6354720" type="PERSON" weightage="20" keywordseo="Ola">Ola</keyword> by NGO ¬¬ 'Nyaybhoomi' ¬¬ saying it was non maintainable. The apex consumer commission dismissed the petition seeking a refund of over Rs 9,200 crore as excess amount allegedly charged by cab aggregators Ola and Uber. The NGOs had filed the petition in September last year, claiming that the cab aggregators indulged in "unfair trade practices" by overcharging in the name of surge pricing. The complaint had alleged that these cab service providers were charging excess fare than the amount notified by state governments and sought imposition of a penalty of the like amount on them. The petition was filed against ANI Technologies Pvt Ltd, which runs Ola, Uber India Systems Pvt Ltd and Serendipity Infolabs Pvt Ltd which runs Taxi For Sure. It had sought a refund of an estimated amount of Rs 9239 crore from the cab operators on behalf of all passengers across the country as the excess money collected by them in the past three years. It said that in August last year, the <keyword id="6355014" type="ORGANIZATION" weightage="20" keywordseo="Delhi-High-Court">Delhi High Court</keyword> had barred the cab providers from charging fares higher than those notified by the Delhi Government after August 22.

Good news for Uber, Ola: Consumer panel rejects plea against Uber, Ola for overcharging

<keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword>, the poster child of the Indian startup ecosystem, was devalued for the seventh time in January 2017, by <keyword id="4205639" type="UNKNOWN" weightage="20" keywordseo="fidelity-partners">Fidelity Partners</keyword>. At a $5.56 billion valuation, Flipkart’s shares were valued at $52.13 in November 2016, down by 36.1 percent from $81.55 per share as of August 2016. The domino effect hit the cab aggregator <keyword id="6354720" type="PERSON" weightage="20" keywordseo="Ola">Ola</keyword> next with the US-based investment firm <keyword id="4205636" type="UNKNOWN" weightage="20" keywordseo="vanguard-world-fund">Vanguard World Fund</keyword> marking down Ola by over 40 percent. 
 According to their regulatory filing with the <keyword id="108474" type="ORGANIZATION" weightage="20" keywordseo="US-Securities-and-Exchange-Commission">US Securities and Exchange Commission</keyword>, the current valuation for Ola is now $3 billion, with its shares dropping from $311.27 per share in the previous quarter to $182.70 apiece. During their peak, Ola had raised $500 million at a valuation of $5 billion. 
 That’s not all. According to reports, e-commerce giant <keyword id="541988" type="COMPANY" weightage="20" keywordseo="SnapDeal">Snapdeal</keyword> is reportedly looking at raising funds at a lower valuation of $4 billion. At their last fundraising round, they raised $200 million at a valuation of $6.5 billion. 
 
Valuations are normally decided according to a company’s market share, its gross margins, and its rate of growth, among other factors, but is anyone talking about the elephant in the room? Does a number decide a company’s worth or does the mettle lie someplace else? 
 
What’s The Big Deal about Valuations? 
 
While Valuations and devaluations are part of the game, they are a mix of market environment, risk appetite, a fund manager’s biases, hot new trends, fear of missing out, the multiples comparable are commanding, and of course, expected cash flows and margins. 
In 2015, we lauded the entry of Flipkart, Ola and Snapdeal in the Unicorn club. The first quarter of 2015 saw over $1.7 billion funding in start-ups and all we hear now are downturns with reality hitting the magic creatures to the ground and forcing them to compete in a horse race for fund-raising. 
 
<a href="http://www.businessinsider.in/heres-how-uber-is-letting-you-earn-from-its-platform-uberdost/articleshow/57083396.cms">ALSO READ: Here's how Uber is letting you earn from its platform 'UberDost'</a> 
 
While there were muffled concerns of profitability and unit economics, the dynamics took a harder turn when in the middle of 2016 the world economic dynamics shifted. 
 
Suddenly, the pouring funding started slowing down, news of firing rounds, internal tiffs, and investor involvement began to cloud the startup skyline. 
 
Now the lauded valuations started to seem bloated and overhyped, and the cost-cutting started and it doesn’t seem to end. 
 
 
 
 
The secret is in the Business Model 
 <keyword id="824043" type="COMPANY" weightage="20" keywordseo="Business-Insider">Business Insider</keyword>, while digging deeper into factors ailing the startup ecosystem in India, realized that business models had to be one of the core ingredients to a startup’s success or failure. So, we got in touch with key players, notable investors and successful companies that had a say in the functions of the industry. 
 
What clearly emerged was that there were mainly three business models that most start-ups and unicorns, followed in India- 
 
1) Cut prices to gain industry share and chase profit later 
2) Set up person-to-person exchanges 
3) On-Demand Model 
 
Now we break down the models to see why Indian start-ups think they’d work and why they haven’t succeeded yet. 
 
Investors’ Point of View 
 <keyword id="262067" type="PERSON" weightage="20" keywordseo="Mahesh-Murthy">Mahesh Murthy</keyword>, Co-Partner, Seedfund, one of India’s most vocal investors told us what’s wrong with the Indian startup ecosystem,”The problem is that we are idolizing businesses that are not ‘New’. There is nothing elusive or different about the companies we look up to, they are just copycats.’’ 
 Seedfund, which is an early stage VC firm has invested in companies like Redbus.in, Chumbak, Carwale, and Voonik. “Real businesses need little or no marketing. The cost of acquiring a customer shouldn’t be higher than your investment in your product which is what is happening right now’’<keyword id="20148" type="PERSON" weightage="20" keywordseo="murthy">Murthy</keyword> comments on the viability of the business models of India’s best-known <keyword id="6362513" type="ORGANIZATION" weightage="20" keywordseo="Startups">startups</keyword>. 
 “Innovation for the sake of innovation is useless. Most consumers prefer the companies that are competitors to Flipkart, Snapdeal, and Ola and that speaks volumes. We are just looking for great service coupled with great value for money and <keyword id="18635" type="CITY" weightage="100" keywordseo="Amazon">Amazon</keyword> and Uber give us that while the other companies don’t hit the mark while getting celebrity endorsements with full-page ads.’’ 
 “Rule Number 1 of business: Never lose money. Rule Number 2: Don’t forget Rule Number 1,” said <keyword id="71133" type="PERSON" weightage="20" keywordseo="Warren-Buffet">Warren Buffet</keyword>, probably the most popular investor in the world. 
 <keyword id="542474" type="PERSON" weightage="20" keywordseo="Reid-Hoffman">Reid Hoffman</keyword> from <keyword id="28120" type="CITY" weightage="20" keywordseo="Linkedin">LinkedIn</keyword> and now a VC says that as a VC, you should be able to put your money into a startup and walk away from your investment and at the most, you are best placed to understand a sector if you have built a business in it or at the very least, worked in it. For Indian start-ups, we see the opposite happening with Flipkart who recently appointed <keyword id="6379357" type="UNKNOWN" weightage="20" keywordseo="Kalyan-Krishnamurthy">Kalyan Krishnamurthy</keyword> as CEO, who is an ex-employee at Flipkart’s key investor, Tiger Global. 
 
What is a business model? 
 
A business model explains which consumer pain a startup chooses to relieve, why your solution works better than competing ones and how big a wedge a company can drive between what customers are willing to pay and the costs. 
 
Breaking down the Business Models 
 
There are broadly the following business models at play when it comes to start-ups that hold the public eye in India: 
 
1. Cut prices to gain an industry share and chase profit later: Target a huge market and sell a product at the lowest price with fast delivery and great service. As the company grows, expand the product line, negotiate volume discounts with suppliers, invest in technology, customer response time and cut waste from the operations. Then deliver the lower costs to customers in the form of lower prices. 
 
This was Amazon’s model which is still one of the fastest growing companies in India and the world. Although it was founded back in 1994, Amazon didn’t actually make a profit until 2001. Amazon has some profitable projects, but the money made from them is typically used as investments to fund other Amazon businesses and ventures. The company invests its profits in new lines of businesses and uses them to expand. In short, Amazon seems to value growth over profits. 
 
 
 
​ <keyword id="8589" type="PERSON" weightage="20" keywordseo="padmaja">Padmaja</keyword> <keyword id="980938" type="PERSON" weightage="20" keywordseo="Ruparel">Ruparel</keyword>, President, Indian Angel Network doesn’t believe in this model simply because she thinks that Indian consumers are flighty, “There is a constant need to lure the consumer to stick with you which is tricky when you’re not the only player in the market. Your focus here is on how quickly you can grow the market and not on your business strategy.’’ Ruparel believes in investing in a much more stable business model, “We are old-fashioned for sure as our focus is on businesses building a top-line and a bottom-line. We ascertain a business by unit economics and even though the cycle might be slightly longer, B2B start-ups create a sustainable business.” 
 
“The consumer is surely attuned to buying online which was their aim, but only some players will remain in this market. Consolidation is inevitable as loss-making businesses can’t stay afloat for long, but only time will tell who will remain the top dogs here,’’says Padmaja when asked about the future for consumer-centric start-ups. 
 
India’s perspective: “E-commerce companies like Snapdeal and Flipkart are following a similar model to that of Amazon in India. The difference is that Amazon can afford to lose money in India as it is profitable in other markets. The former players are just playing in India where they’re losing money trying to compete with Amazon,” comments Mahesh Murthy. 
 
2. Set up person-to-person exchanges: A house owner in a town has a huge house that has idle rooms that aren’t occupied. The young professionals living in the city need accommodation in different towns to work flexibly but they don’t want to own a house or live in expensive hotels. It seems to be working for <keyword id="719382" type="COMPANY" weightage="20" keywordseo="Airbnb">Airbnb</keyword> which doesn’t own any inventory and millions of people have taken advantage of these services, and Airbnb now has a market value estimated at $30 billion—roughly the same size as the <keyword id="183920" type="CITY" weightage="20" keywordseo="Marriott-International">Marriott International</keyword> hotel chain. 
 
Vikram Gupta, CEO, IvyCap Ventures, “India is not a mature market where you can write off $100 million checks to companies that are spearheaded by college graduates or in some cases, dropouts. The entire ecosystem is disturbed as new companies were getting funding at overhyped valuations. The market has started to finally stabilize and we see investors going back to the revenue as a yardstick for company’s growth instead of the GMV. The businesses are coming back to realistic valuations and while they might have money left in the bank, they are looking to reduce their cash burn rate.” 
 
 
 
India’s perspective: Companies like <keyword id="2808667" type="UNKNOWN" weightage="20" keywordseo="OYO">OYO</keyword> are trying to work with small hotels and guesthouses and have even leased their own properties but the burn-rate is consistent. With simplifying its business model and focusing on one aspect; people sharing their homes with people and minimal revamping, Airbnb has revolutionized how the world sees hotel accommodation forever. 
 
3. On-Demand Model: Smartphones have driven transformational shifts in how we consume goods and services, and many consumers have become acclimated to purchasing at the press of a button. The on-demand model allows a startup to leverage new technology while utilizing existing infrastructures. Another benefit lies in the use of freelance labor with its obvious advantages in cost cutting. 
 
Uber is a great example of the sharing economy where they connect the supply to the demand of taxis without investing in their own fleet. 
 
India’s perspective: <keyword id="6362049" type="UNKNOWN" weightage="20" keywordseo="Ola-Cabs">Ola Cabs</keyword> is Uber’s biggest competitor in India and while both companies burn a lot of money trying to lure customers to get into a taxi, Uber is currently the world’s most valuable startup at $69 billion. 
 
<a href="http://www.businessinsider.in/online-cab-players-in-2016-completed-nearly-half-a-billion-rides-with-250-y-o-y-growth-in-india/articleshow/57273938.cms">ALSO READ: Online cab players in 2016 completed nearly half a billion rides with 250% y-o-y growth in India</a> 
 
Winner Speak 
 V. Krishnan, Co-founder, and Director of <keyword id="1675768" type="UNKNOWN" weightage="20" keywordseo="Justdial-Ltd">JustDial Ltd</keyword> who likes to call his company an ‘18-year old startup’ says that for a successful business you don’t need an extraordinary idea, “The problem with start-ups today is that they don’t focus on profitability. To create a profitable business, you need extraordinary execution, not an idea. Giving money to people to use your services doesn’t make sense. The Indian customers are not loyal to brands, but to offers. Our goal was to create a world-class business and a world-class company.’’ 
 
For the first ten years of JustDial’s existence, the company didn’t raise any funding. The company ran on a shoe-string budget and used its own money to survive. In 2006, when internet penetration and broadband gained traction in India, the company was ready with its fully functional website to complement its telecom services. From 2-3% internet users to now 85% internet users, the company has grown to 200 Cr web searches annually, without any cashback or incentives. The company is probably one of the rarely profitable internet companies in the country today. 
 
<a href="http://www.businessinsider.in/65-of-start-ups-feel-indian-startup-eco-system-may-be-in-a-tech-bubble-report/articleshow/57205211.cms">ALSO READ: 65% of start-ups feel Indian startup eco-system may be in a tech bubble: Report</a> 
 
“The core business of start-ups isn’t ready but there is marketing happening. India is going to be giving you a lot of opportunities. Everyone wants to create a company, raise a great valuation and sell it off to do something bigger; the attitude is wrong," he signs off. 
​ 
Business Insider got in touch with Flipkart, Ola, Snapdeal, and Uber for this story but the companies chose to not comment on the same. 
 
​ 
 
Business Insider’s Take 
 
While popular Indian start-ups struggle to survive without additional funding coming in, we see some internet companies like JustDial and BookMyShow staying afloat, without investor-intervention. 
 
When it comes to businesses and business models, investors and successful companies agree that the tried and tested works; build a business with a strong product that you can alter as technology develops. The business of losing money can only take you so far if you don’t put it to good use. 
 
There’s a difference between investment into a product and burning money, and the start-ups better realize that before they get acquired or relinquished by the players who created the game that they’re set to lose. 
 
The market is big enough for companies that create value for customers not just for start-ups that create customers; the difference is everything. 
 
(Graphics: All figures in INR crores for the financial year 2015- 2016. Source: <a href="http://www.livemint.com/Companies/vtqiTC9VgJgnUfOAH2QdiL/Flipkart-still-Indias-top-startup.html">Mint Research</a>) 
 
**For Oyo, the result is from Apr-Dec 2015. 
*BookMyShow is the only company mentioned that has profits.

BI Investigation: Business models akin to Amazon and
Uber’s aren’t working for Indian startups

<ul><li><keyword id="205081" type="CITY" weightage="20" keywordseo="Meru">Meru</keyword> alleged that <keyword id="1042120" type="PERSON" weightage="20" keywordseo="Uber">Uber</keyword> had adopted certain abusive practices to oust its competitors from the market. </li><li><keyword id="47183" type="ORGANIZATION" weightage="20" keywordseo="CCI">CCI</keyword> has observed that Uber is not in the dominant position as Ola too has a strong presence here. </li><li>Meru had previously alleged that Ola was the dominant player, which CCI had closed as Uber was a “stronger player”.</li></ul>India’s antitrust watchdog the <keyword id="97393" type="ORGANIZATION" weightage="20" keywordseo="Competition-Commission-of-India">Competition Commission of India</keyword> (CCI) has rejected radio taxi service Meru’s plea alleging that cab hailing app Uber abused its dominant position in the Indian ride hailing market. Meru had alleged that US-based Uber, owing to its dominant position, had adopted certain abusive practices to oust its competitors from the market. These practices included offering unreasonable discounts to the customers leading to low/predatory prices, employing incentive policies that were not economically justified. Meru noted that these incentive policies were aimed at exclusively engaging the drivers to its network so as to exclude its competitors from having access to such drivers. CCI, in its order dated July 14, 2021, has observed that Uber is not in the dominant position in the Indian ride hailing segment, as Bengaluru-based Ola too exists in the market. Back in 2015, Meru had alleged that Ola was the dominant player in the market, which CCI had closed as Uber was a “stronger player”. “And in the facts of that case [Meru’s plea against Ola in 2015], the <keyword id="6355822" type="ORGANIZATION" weightage="20" keywordseo="commission">Commission</keyword> was of the view that despite Ola having the largest network, the network effects were not strong enough to deter entry and rapid expansion of another big competitor ‘Uber’ who was competing fiercely with Ola in the relevant market of ‘radio taxi services in <keyword id="6354321" type="CITY" weightage="20" keywordseo="Bengaluru">Bengaluru</keyword>’,” CCI said, in its notice of July 14. The director general (DG) was looking into Meru’s plea against Uber’s dominance in the Indian market and has given a similar finding (submitted in February 2020). Though Meru has said this finding is contradictory to the earlier order on Ola, but CCI has found no such infirmity. The DG has found traces of predatory pricing structure in the case of Uber as evident through its losses between 2014-2018. However, it has also found similar trends in the case of both Ola and Meru. “This shows that the aggressive pricing strategy adopted by Uber was in order to compete aggressively for the market (just like its closest competitor Ola) and to build its network,” CCI has maintained. The investigation also revealed that the discounts and incentives have gradually declined over time with a positive per trip margin recorded by Uber since October 2017. Business Insider has reached out to both Meru and Uber seeking more details about the CCI’s latest ruling. The article will be updated if and when they respond to our queries. With respect to Meru’s allegation of Uber’s exclusive agreements with its drivers, the DG investigation has revealed that the drivers face no restriction in terms of getting attached to a competitor’s network. SEE ALSO <a href="https://www.businessinsider.in/cryptocurrency/news/wazirx-coindcx-and-coinswitch-kubers-advertising-roll-has-hit-a-roadblock-in-india/articleshow/84432645.cms">WazirX, CoinDCX and CoinSwitch Kuber have been asked to add ‘standardised disclaimers’ to their ads on television</a> <a href="https://www.businessinsider.in/business/corporates/news/just-dial-share-price-surge-as-mukesh-ambani-is-looking-to-buy-just-dial/articleshow/84432450.cms">As Mukesh Ambani reportedly dials in, Just Dial stocks surge 3%</a> <a href="https://www.businessinsider.in/business/startups/news/pubg-developer-krafton-is-going-to-help-indian-storytelling-platform-pratilipi-to-turn-a-few-stories-into-games/articleshow/84430517.cms">PUBG developer Krafton is going to help Indian storytelling platform Pratilipi to turn a few stories into games</a>

India’s antitrust watchdog rejects radio taxi Meru’s plea against Uber, says there is an 'ever-expanding pool of drivers' available

<ul><li>Indian ride-hailing unicorn Ola has expanded its operations in the UK. </li><li>Ola is now present in 7 cities in the UK. </li><li>The company is not launching auto-rickshaws in the UK, had only used them in Liverpool for a promotional campaign last week.</li></ul>Indian cab aggregator Ola has expanded its operations in the United Kingdom and has launched services in three new cities in the UK – Liverpool, Birmingham and Reading. This takes Ola’s presence to a total of seven cities in the UK. Local councils in the UK have granted the platform with Taxi and Private Hire licenses. The company said that Ola is the only app in the UK that offers both black cabs and Private Hire Vehicles while also giving drivers highest share of the revenue – charging just 10% commission to black cabs and 15% to PHVs. “Thanks to the positive word-of-mouth from both driver-partners and passengers who experienced our offerings in Cardiff, Bristol, Bath, and Exeter, we received requests from users across the UK to introduce the Ola platform in their cities,” said Ben Legg, Managing Director of <keyword id="6775956" type="UNKNOWN" weightage="20" keywordseo="Ola-UK">Ola UK</keyword>. Photos of Ola’s tuk tuks spotted Liverpool had become a talking point in social media. However, the company said that it has not launched auto rickshaws in the UK. The auto rickshaws were a part of the promotional campaign where it offered customers free rides on green tuk-tuks last week. Over the next seven months, Ola plans to expand its operations to North England and the Midlands. The Indian ride-hailing unicorn had already made its presence felt in Australia and New Zealand before moving to the European markets. See Also: <a href="https://www.businessinsider.in/ola-will-race-zoomcar-in-self-drive-car-rentals-with-a-500-million-bet/articleshow/68614269.cms">Ola will race Zoomcar in self-drive car rentals with a $500 million bet</a> <a href="https://www.businessinsider.in/ola-takes-on-mahindra-glyd-with-fresh-funds-wheres-uber/articleshow/68214440.cms">Ola gets fresh funds to take on Mahindra’s Glyd – where’s Uber?</a>

Ola onboards 3 more cities in the UK, uses tuk-tuks only for promotion

New Delhi, Dec 17 () Cab hailing platform Ola on Tuesday said over 10,000 drivers in London have signed up ahead of the launch of its services in the city.
In November, Ola had announced that it was entering the London market. The development came just days after rival, Uber was stripped of its London license.
"...in just three weeks, over 10,000 PHV drivers in London have registered to drive on the platform," Ola said in a statement.
It added that it will not charge commission from drivers for the first two months after the launch, allowing them to retain 100 per cent of their earnings from the platform.
"Going forward, Ola will continue to offer the best revenue share for drivers, allowing them to keep more of their earnings, in line with the company's unique driver-centric approach," it said.
The company said drivers in London have signed up both online and offline to drive with Ola, completing the required checks to drive on the platform.
Drivers' documents have been verified and mandatory training modules, created by Ola, will help ensure that drivers are ready to use the platform when it launches in the coming weeks, it added.
"Every interaction with drivers in the city has presented us with an opportunity to create a platform that best serves their needs, as well as those of consumers. We are also very excited that a large number of these registrations have occurred through referrals and word of mouth amongst drivers," Ola Head of International Simon Smith said.
In November, the transport regulator had stripped Uber of its licence following several breaches that placed passengers and their safety at risk. The US-based company has appealed against the decision.
Ola - which also operates in India, Australia and New Zealand - has expanded rapidly across the UK since its launch last year, operating in 27 local authorities.
Cities including Birmingham, Coventry and Warwick have seen more than double-digit growth in rides in the last quarter, the company said, adding that till date, Ola has provided around three million rides with over 11,000 drivers operating on the platform outside London.
All drivers on the Ola platform are private hire vehicles (PHV) license holders, authorised to drive and extend their services to consumers by Transport for London (TfL).
This includes mandatory verification of documents, an 'enhanced' criminal records check, Disclosure and Barring Service (DBS) training and medical examination amongst other TfL requirements.
Drivers will also have to go through a mandatory training module from Ola that familiarises them with customer service, app and platform usage, safety features, as well as various avenues of support available to them from the company, Ola said. SR BAL

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