What food delivery apps teach us about tariff wars

What if we changed the way we looked at America?

- SHANKAR SHARMA & AMIT BHARTIA

Namakkal doesn’t conjure up any vision of an uprising site, a la Meerut, where the Revolt of 1857 began.

But in July this year, I came across a news item about a bunch of restauranteurs in Namakkal getting together to protest against Zomato and Swiggy’s practices that were hurting them.

Zomato and Swiggy are platforms. Platforms are a business that connect a large number of buyers with a large number of sellers.

The question is what comes first: ‘The buyers or the sellers?

This is an interesting question. Our answer: If you are selling goods, the sellers come first. Think Amazon. If you are selling services (say, advertising), the buyers come first. Think Facebook.

But for food delivery, which is a service delivering manufactured goods (food), Zomato, etc created (probably) both, kind of simultaneously: Its initial business of making restaurants list menus on its platform, created a large body of interested potential buyers. And then, when it got into food delivery, it sold this edge to the restaurants: “We have a massive bank of consumers.”

That’s what has created the problem today for restauranteurs. They have been baited like a small deer baits the Komodo dragon for a Discovery shoot.

You are right in asking: What on earth does food delivery have to do with tariff wars?

Everything, actually.

For a minute, forget that America is a country. Just think of it as a giant platform.

But first, let's go back in time. America has actually had a very protectionist beginning. Starting from the Tariff Act of 1789 (made to generate revenue for the government since there were no income taxes then, and also to protect domestic industry from Britain), right till the (disastrous) Smoot-Hawley Act of 1930.