Google's Rajan Anandan says India will have 650 million Internet users by 2020. Google's mission in India is to get every Indian on to the Internet and the company will focus on improving access, affordability and its products to thrive in the Indian ecosystem. BOOM's Govindraj Ethiraj spoke to Rajan Anandan, Vice President, South East Asia, at the NASSCOM summit in Hyderabad on Tuesday.

Govind: So, the first question. I know that the 100 million is over, even until about 18 months ago, a country like Thailand was almost neck on neck with India in terms of consumption and usage, I am talking about Internet (usage). What changed so suddenly?

Rajan Anandan: Yeah, so first of all 400 million Internet users, there are 300 million on smartphones and what has really changed is as affordable broadband has become much more widely available with 4G and 3G becoming more affordable. You know the large scale products across categories whether it's videos, whether it's search, whether it's messaging, whether it's social, have really exploded. So, the consumption is more now...through the roof for platforms like YouTube. We have 225 million monthly active users and even in the month of January, we had a hundred percent growth in watch time year-on -year. So this is what we got 15-16 months after the launch of Jio. So as say data prices have got from 4G, data rates have gone from 250 rupees per giga byte to now ten rupees a giga byte. I mean today the kind of growth we are seeing across products across every genre, every segment of the Internet from a consumption stand point is extraordinary. We have not seen anything like this in the history of the Internet.

Govind: And lot of this is driven by video? First time video users particularly in India

Rajan Anandan: Yeah so what we have seen is very interesting over the last I'd say 6-8 months is you know India if we look at 2016 for instance, there was no question. Every new user started off with messaging then. They went to social then they watched a little bit of video. They didn’t watch a lot of videos because it was expensive but then they started doing things like search. That’s completely flipped now. India has become a video first Internet market because think about it - 750 million – 800 million Indians watch television so they get video, they get entertainment and now with mobile broadband becoming so affordable, that becomes a reality. So, they can watch hours of video which is a product they understand. So, we have actually become a video first, we are probably the world’s first, video first emerging market and it's all driven by, its all enabled by affordable mobile broadband.

Govind: Right and so how is this converting into revenue, how is this converting into monetisation for the people who are spending all this money either on the infrastructure or the stuff over it?

Rajan Anandan: Yeah look so I think India for a long time is going to be about the users and usage and consumption where monetisation is going to lag. Monetisation is happening but clearly not happening at anywhere close to the pace of growth of users and usage and the reason is...

Govind- (interrupts) Like the example you quoted?

Anandan: And the reason is simple - it's GDP per capita. India's GDP per capita is $1800 until you get to $2,000 you barely have any disposable income. And if you look at a market like China, e-commerce really took off when GDP per capita hit $4,000. So our view is, look, the next five to ten years in India is really going to be a continuous story about user growth. Users will grow from 400 million to 600 million to a billion. Usage will quadruple, double quadruple, triple you know go up 10X.

Govind: You're saying 600 million by 2020?

Rajan Anandan: 650 million. So last month India added 10 million new active smartphone users. The month of December, 10 million new. The month of November, 10 million new. So, we are now at a 10 million new smartphone users rate of addition, and what you will see over the next several months is affordability of many. There are two affordability constraints in India, one is data; the second one is smartphones. Data is solved right, 10 rupees giga byte is extremely affordable. The other constraint we need to solve is affordable smartphones. So, in the next several months you will start seeing smartphones, very high quality smartphones that will become, that will be in the market at 2500 rupees, 2000 rupees and that will really open up. And it is quite likely, we are definitely going to have 100 million new smartphone users. So we end at 2017, with 300 million active smartphone users in India, we gonna add at least a 100 million and there is a possibility that that pace would accelerate right because it's all about affordability. India is a country which is all about...you hit the right product at the right price and boom! the whole thing takes off.

Govind: So people will consume, I think maybe it looks like...

Rajan Anandan: No. People are consuming, consumption is going to go up. Monetisation will lag, primarily because of incomes per capita. At the end of the day, its about affordability. People are today paying for data, so they are paying for data 10 rupees giga byte. They are paying 100 rupees, 200 rupees. But when it comes to say buying products online or when you look at the digital advertising market, these are all very very small markets today.

Govind: So what else can grow? For instance the general feeling and maybe backed with some data is that we overstated the e-commerce market. And at least in the time period that we have looked at or talked about. What else can grow apart from e-commerce? You’ve talked about the next 300 million or the India 2 and India 3.

Rajan Anandan: I think in many ways we will I’m pretty sure invent new business models right because if you look at Unilever is a great example. They’ve got a 6 billion euro business that is worth 40 billion in market value by not selling shampoo bottles of this size. They sell must have products for personal care and so and so forth. But they sell it in very very small sachets. I think Indian entrepreneurs are going to start innovating on different business models. So at the end of the day you have to provide a very useful product or service at an extremely affordable price point. That is going to be what it is right so if you look at sectors like healthcare and education and so on and so forth; we are now seeing early stage start-ups that are beginning to experiment very rapidly with offering unique and valuable services at very different price points. If you think about consumer Internet businesses you make money three ways right, e-commerce, you sell products, you sell stuff. Second is advertising and the third is consumer-paid subscriptions; so think gaming and things like that right. Ecommerce, last year was about 17 billion, you get to 40-50 billion by 2020 that’s nothing to sneeze at 50 billion is 300,000 crores of ecommerce. Digital advertising is about 1.8 billion it’s growing at about 30 percent…so that will continue to grow. And then gaming and consumer paid subscription services whether its Netflix movies or Amazon Prime or gaming has been quite nascent. And we think that is going to take off primarily driven by micro payments. Paying has been very difficult so if you want to ten rupees it used to be very difficult but today with PayTM and so on and so forth…

Govind: You didn’t mention WhatsApp

Rajan Anandan: Yeah, it just launched.

Govind: If I were to ask you to take a step back; what is Google’s strategy? Just walk us through or revisit for us in this system of fast-paced Internet growth; new product being launched; the next 600 million tantalizing subscribers or consumers out there.

Rajan Anandan: Google’s mission in India is Internet for every Indian; so 1.3 billion Indians and every one of our Indians should be on the Internet. We are very very focused on figuring out how to get every Indian online and make the Internet useful to them. So what we have done over the last three or four years is really try to address each of the major challenges of what needs to be done to getting people online. So affordable devices. When I joined Google 7 years ago we had less than 10 million active smart-phone users. India went from 10 million to 100 million when smartphones became less than 10,000 rupees. Then we went from 100 million to 300 million when we crossed the 6000 rupee barrier. The next big barrier is 2500 rupees that we are going to cross in the next few months. So affordable devices, affordable access. Before Jio, access was not affordable; broadband access. So that’s where we partnered with Rail Tel we are at 250 stations we will be at 400 stations soon. And now we’re actually taking WiFi, which we think is going to be a very important part of India’s connectivity story to a large number of destinations. So you’ll hear a lot more about that. Local languages, right. Only 200 million Indians are proficient in English so we have huge focus on local languages. Keyboards, dozens of Indian languages; voice recognition and so on and so forth. And using AI and ML (machine language) for things like translation. So local language is a big focus. We have actually focussed on a number of other enablers. For instance we have an initiative called Internet Saathi where we are going into villages and we recruit women, we train them how to get other women online. And finally we have had a huge focus on making sure our products work in an Indian environment. A lot of the new users, they have affordable smartphones, which means they don’t have a lot of memory on this device, so your apps have to be super light. So we actually re-engineered all our core apps so that they work on this device. Huge amount of effort around products, around access, around ecosystem.

Govind: And lighter apps…

Rajan Anandan: Lighter apps, offline, all these things.

Govind: These are announcements we will obviously look out for. Last question Rajan. The whole problem of fake news; I mean platforms like yours, Facebook, are obviously where it all emanates or it comes together; what are you doing about it? I know you have taken some steps but what are you doing about it. We are focused a lot on fake news as far as BOOM is concerned.

Rajan Anandan: Look we take it very seriously. So what we are trying to do is a whole set of things. At the end of the day you have to make sure that a lot of it is algorithmic based. How do you make sure you are working on your algorithm so you can identify fake versus real news etc. How do you make sure that when users actually point it out you have a system in place you are able to evaluate and take action. So whole set of things that we are trying to do but it’s an ecosystem right. It’s an ecosystem problem and we have been very excited about working with BOOM and many others to solve this problem.