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What is duopoly? Top 6 duopolies in India

Created on 26 May 2022

Wraps up in 6 Min

Read by 4.1k people

Updated on 10 Sep 2022

Isn't it better for the private companies to monopolize sectors or businesses before the government intervenes and takes over the party?

In November 2021, the telecom companies increased their tariff by around 20-25%. It’s a massive rise, right? 🤔

So today, we will understand that there has been a sudden rise in monopolistic behaviours of companies in India. 

A company becomes a monopoly with a significant market share & is trying to beat other players & in some way also trying to curb new entrants in their industry.

In the USA, the trend is of monopoly. Only one major company has a significant market share, like Meta owns Facebook, Instagram, Whatsapp & Alphabet, which owns Google, Youtube, Android Operating system & Microsoft, which owns Windows & many more monopolistic players exist.

But if you will see in India, there is a trend of duopoly, not a single monopoly. A duopoly is when only two companies in the market own significant market share & curb new entrants that operate in their industry or category.

Let us understand why the trend of duopolistic behaviour is rising in India.

Why do companies want to control the market?

All happy companies are different: Each one earns a monopoly by solving a unique problem. All failed companies are the same: They were unable to escape competition.- Zero to One by Peter Theil.

A duopoly is good for the companies as they own the market & these companies can operate the way they want & can increase prices whenever they want.

Competition in any industry or category is good for the customers as the companies try to give more & more benefits to the customers.

We all know only those companies win that give the most benefits to their customers. Companies give discounts, cashback, and special offers to capture the whole market.

If they are not successful in attracting the customers, they offer more convenience, products & services for free or at reasonable prices. Mainly there will be a bloodbath to acquire & retain the customers.

The rise of Duopolies

Duopolies are very common in this world as there are many duopoly companies in various sectors.

Some notable duopolies are Visa/Mastercard in the payment card industry, Coca-cola/Pepsi in soft drinks, Mac/Windows in Laptop operating systems, etc.

The same trends have now continued to emerge in India, especially in tech-driven industries.

Food delivery (Swiggy vs Zomato):

In India, if someone wants to order food online, only these two companies deliver food & it isn’t other companies that don’t exist. 

Many other companies were operating in this segment, but they were acquired or merged with one of the companies. Some notable companies were Foodpanda, Uber Eats, and Dineout.

In July 2021, NRAI(National Restaurants Association of India), an association of 5,00,000 restaurants in India, had moved to CCI(Competition Commission of India) over unfair business practices.

Both companies are being criticised for charging hefty commissions from restaurants & regarding platform neutrality which means giving more priority to their favoured sellers/partners.

As only two companies operate in the food delivery space, the customers now have limited options. 

Taxi services (Ola vs Uber):

Taxi service via tech app is only provided by ola & uber in India. Earlier, there were private cab operators, and few local players had to shut down or were acquired by these companies.

Both companies had enormous funds, so it became a compulsion for many other players to shut down or sell their cab businesses to them.

Due to their duopoly, customers & even their partners such as drivers are suffering a lot. Customers are getting issues like switched off ACs, cancelled rides, surge pricing, long wait times, etc.

Some customers are so frustrated that they are taking the issues on social media, which is harming their company. It is not that just drivers are to be blamed in this matter as it is due to some of these aggregators policies & rising fuel costs are the main reasons.

Telecom sector (Jio vs Airtel):

“Vodafone is in losses, Airtel is in losses, and BSNL is in losses. There is one competitor who has unlimited access to finances”- Sunil Mittal (Chairman of Airtel).

In 2016, Reliance Jio launched the Jio sim card for free for one year. There were many different companies in the telecom sector, but due to Reliance Jio’s price war, the other companies merged with some strong players.

Airtel reported its first-ever loss in 14 years in the April-June quarter of 2019 (currently in profits). Vodafone & Idea, two separate telecom operators, merged for survival in 2018 & it is operating in losses even today.

As both Jio & Airtel are growing & also they are on their way to launching 5G technology in India. Due to these firms having their duopoly, they are controlling the prices. In November 2021, the tariff hikes were about 20-25% from the telecom operators.

Due to these duopolies, customers now have limited choices & have to pay more prices for their services.

Ecommerce (Amazon vs Flipkart):

In the Ecommerce segment, only these two American giants, Amazon & Flipkart(owned by Walmart), are ruling this space. The main focus of these companies is to provide products at the lowest prices possible.

They have billions of dollars of capital with them & other companies such as Jabong, Shopclues, Myntra, and Snapdeal tried to compete with them but were not able to succeed.

As selling at the lowest pricing is the best way to attract Indian customers, most Indians who shop online belong to the Middle-class income category. 

Both these giants are alleged to rank priority to some sellers, using the data & selling their own branded products, which leads to the loss of revenue of other sellers who are their partners. As for now, these allegations are being investigated & probed by CCI.

They are the biggest threat to the small Indian retail shops as these e-commerce giants directly sell products to customers at the lowest prices so competing with them is hard.

Edtech Industry(Byju’s vs Unacademy):

Due to Covid-19, Edtech Industry has seen a boom as there was a lockdown, so students failed to attend physical classes.

Everything in education had to shift rapidly towards technology. The students who had never attended an online lecture had to join online classes as there was no other option.

Some Edtech companies saw this opportunity & they were aggressively on acquiring spree. In 2020 & 2021, Byju bought a total of 12 Edtech companies. Some notable companies are Akash Coaching institute, Great learning, Toppr, WhiteHa tJr, Gradeup, etc.

Unacademy has so far acquired a total of 9 companies. Some notable companies are WifiStudy, Prepladder, Mastree, Codechef, etc.

Only a few big players & independent teachers are now operating in the Edtech space as they have acquired the most Edtech companies.

Supermarkets (Dmart vs Reliance Retail):

Supermarkets operate on a low margin, high volume basis as customers make high ticket purchases. 

Earlier the mid-size stores were operated by independent small stores & Kirana stores in cities & even in rural areas. But now, with more capital, the giants like Dmart & Reliance retail are eating the business of these small business owners.

They sell products at the cheapest rates & due to low rates, people purchase more products which raises their ticket size. The Indian retail industry will be worth around 1.8 trillion dollars by 2030.

So these giants are expanding rapidly to capture this one of the fastest-growing markets. Reliance retail also tried to acquire the loss-making retailer Big bazaar, but the deal didn’t happen. Now Big Bazaar is on the brink of bankruptcy.

Conclusion

The trend of duopolistic behaviour in companies is rising due to few companies becoming more & more efficient. These companies have more access to capital that can help them acquire or bankrupt their competitors.

But in a developing country like India, healthy competition between companies will be a good thing as it can further open up the options for people to buy the products & services. 

As in China, their government took action against the companies which were owning the market & this policy can harm their people in a short period. In the long term, level-playing competition & fair practices can open up opportunities for all.

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Harsh Hingu

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Blind follower of his curiosity and loves revolving around startups, businesses, economics, and finance.

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