Two Competitors Don’t Mean Real Competition

Two Competitors Don’t Mean Real Competition – OpEd

We mistake convenience for choice. Our phones overflow with apps promising freedom—order anything, go anywhere, pay anyone, buy everything. Tap, swipe, done. It feels like abundance, like we live in the most competitive economy in history. But pause and look at the names behind these transactions. Whether you are flying home for Diwali, ordering dinner on a tired evening, or investing your first salary, you are almost certainly choosing between the same two companies everyone else is choosing between. This is not coincidence. It is the end state of what looked like competition but was really a war of attrition. Across nearly every major sector of India’s digital economy, the crowd has thinned to just two survivors. IndiGo and Air India now carry nine out of every ten domestic passengers. Zomato and Swiggy deliver nineteen out of every twenty food orders. PhonePe and Google Pay process roughly eighty-five percent of digital payments. Jio and Airtel connect most of the country’s phone calls. Amazon and Flipkart dominate everything from books to bed sheets. CDSL and NSDL are the only two places you can hold your shares—there is literally no third option. Two feels competitive. Two companies means advertisements attacking each other, app notifications about discounts, promises that one is faster or cheaper or better. But here is what happens when a market narrows to just two giants: the fight stops being about winning you over and starts being about not disturbing each other’s profits. Imagine five companies competing for your business. Each knows that if they slack off for even a quarter, customers will drift elsewhere. Prices stay reasonable. Service stays sharp. Innovation is constant because standing still means falling behind. Now imagine just two. Both realize that fighting too viciously hurts them both. If one drops prices dramatically, the other must follow, and soon neither is making money. But if both keep prices high, customers have nowhere else to turn. The incentive shifts from competing to coordinating—not through illegal backroom deals, but through careful observation and quiet alignment. They still criticize each other in advertisements. They still launch features on the same day and claim superiority. But when it comes to the numbers that hit your wallet, they move in lockstep. Look at what happened to flying. When Jet Airways died in 2019 and Vistara folded into Air India, the market became a two-horse race. Last festive season, fares on popular routes doubled compared to normal days. Both airlines blamed surging demand and fuel costs. Both charged nearly identical amounts. Now think: if four or five healthy airlines existed, would all of them resist the temptation to undercut competitors and fill their planes? Someone would break ranks. When there are only two, breaking ranks is foolish. Better to fly half-full at high fares than full at low ones—especially when your only competitor is doing exactly the same thing. The fragility of this duopoly became painfully visible just this week. IndiGo, which carries roughly half of all domestic passengers, collapsed into operational chaos. Over two days in early December, the airline cancelled around 550 flights—about seven percent of its schedule—and delayed hundreds more by up to twelve hours. Thousands of passengers were stranded across major cities. Bengaluru saw 62 cancellations, Mumbai 85, Hyderabad 68. On-time performance, usually IndiGo’s pride, plunged from comfortable highs to barely 35 percent. Frustrated travelers staged protests at airports, social media filled with complaints about lost baggage and missed connections, and the government was forced to intervene. The proximate cause was a pilot shortage worsened by new flight duty time rules that IndiGo apparently failed to plan for adequately. But the deeper issue is what happens when one company controls half a market. When IndiGo stumbles, there is no safety net. Air India cannot simply absorb tens of thousands of displaced passengers. Other smaller airlines have neither the aircraft nor the capacity. Passengers had no real alternatives—they either waited for IndiGo to fix itself or simply did not fly. In a market with five or six substantial carriers, this crisis would have been painful for IndiGo but manageable for passengers. In a duopoly, it became a national disruption that reached Parliament. And here is the uncomfortable truth: when the chaos settles and schedules normalize by February, both IndiGo and Air India will likely raise fares to recover losses, and passengers will pay them because where else can we go? Food delivery reveals the same script. Zomato and Swiggy spent years burning investor billions to kill competitors. Tiny Foodpanda vanished. TinyOwl shut down. Uber Eats gave up and sold out. Once only two remained, the discounts that attracted us began extracting costs elsewhere. Restaurants now routinely pay twenty-five to thirty percent commissions, sometimes more. A small restaurant owner cannot refuse—saying no to one platform means losing half his online orders; saying no to both means shutting down. Delivery partners earn less per trip than they did five years ago despite inflation. The platforms can squeeze both sides because neither side has options. We still see discounts on our app screens, but someone is paying for them, and it is rarely Zomato or Swiggy. Even in digital payments, where the government built a beautiful public railway called UPI, private companies have built private coaches. PhonePe and Google Pay control most transactions not because they own UPI but because they have the marketing muscle that only Walmart and Reliance can fund indefinitely. They offer cashbacks new players cannot match, loan products new players cannot provide, and brand recognition new players cannot buy. A startup trying to challenge them needs hundreds of crores just to be visible. Most look at this mountain and walk away. Telecom is perhaps the clearest example of how duopolies evolve over time. When Jio entered in 2016, Indians celebrated. Data became absurdly cheap. Video calling became normal. The entire digital economy accelerated. But once Vodafone Idea was crippled, something shifted. Prices began climbing. A recharge that cost four hundred rupees in 2019 now approaches a thousand. Jio raises tariffs; Airtel follows within days. Their plans differ by tiny margins. The unspoken pact is obvious: neither will trigger another price war. The consumer who once cheered Jio’s disruption now pays more per gigabyte than before disruption arrived. Then there is the invisible duopoly most of us never think about. CDSL and NSDL hold every share and mutual fund unit owned by every Indian investor. You cannot choose a third depository because none exists. This is a pure tollbooth with no alternate road, and the toll stays high because what choice do we have? Industry observers note that India’s depository charges rank among the world’s highest—a direct consequence of zero alternatives. The pattern repeats everywhere. Initial chaos with many players. Brutal competition funded by venture capital. Consolidation as weaker companies die or get bought. Then the duopoly settles in, and competition transforms into performance—dramatic enough to look real, controlled enough to preserve profits. This quietly murders innovation. Why would Zomato invest heavily to cut delivery from ten minutes to seven if Swiggy is not doing it? Why would airlines add flights and drop fares during peak season when both can fill planes at premium prices? Why would telecom companies rush fiber to smaller towns when customers have no meaningful alternative? The incentive to genuinely improve weakens because the punishment for not improving—losing customers—barely exists. Entrepreneurs get crushed before they start. Building something that can challenge a duopoly requires not just a better product but enough money to survive years of predatory pricing and marketing wars. Most founders look at this reality and either abandon the idea or build with the explicit goal of getting acquired by one of the two giants. The economy shifts from creating alternatives to creating acquisition targets. Disruption becomes rare because the cost of attempting it is prohibitive. We adapt. We tell ourselves two choices is plenty. We brag about our world-class apps and affordable data, forgetting to ask what prices might be, what service might be, what innovation might be possible if four or five strong players genuinely feared losing us. Breaking out of this requires uncomfortable choices. Regulators must intervene before duopolies harden into monopolies—scrutinizing mergers more carefully, investigating parallel pricing, potentially forcing structural separations when concentration chokes competition. The Air India-Vistara merger passed with barely a murmur. Consumers must be willing to punish coordinated behavior even when inconvenient, because nothing scares duopolies like vanishing demand. Investors and entrepreneurs need the courage to fund challengers for five grinding years instead of selling to the giants at the first decent offer. Until that happens, we should at least be clear-eyed about what we experience daily. When you tap Zomato or Swiggy, you are not really comparing service—you are choosing which half of the duopoly handles your order. When you book IndiGo or Air India, you are not evaluating competitive prices—you are accepting whatever the duopoly decided is appropriate today. When you pay through PhonePe or Google Pay, you are using one of two gates controlling access to public infrastructure. Real choice is not variety on a screen. Real choice is when four or five strong companies genuinely fear losing you, when they must innovate and price fairly because someone else is always one good offer away from stealing their customers. Until we rebuild that kind of competition, every time we pick between two options, we should remember what we are actually doing: deciding which half of the duopoly takes our money today. The illusion of choice is not the same as having it.