Digital Balancing Act: India's Big Tech Bill

The Committee on Digital Competition Law released its report proposing a new Digital Competition Law for India alongside the draft Digital Competition Bill (DCCB). The draft law is called the Digital Competition Bill 2024. The committee has recommended enacting the Digital Competition Act to enable the Competition Commission of India (CCI) to regulate large enterprises in an ex-ante manner, i.e., taking action in advance for safety purposes.

Illustration by The Geostrata

The proposed legislation will regulate only enterprises with a sizable presence and capacity to influence the Indian market. 

THE NEED FOR REFORM

The Indian Digital market has seen an exponential increase in the growth rate from 4.5% of GDP to 12% of GDP since 2014.

However, concerns have emerged because of the dominance of a few giant technological companies in India, i.e., Google, Amazon, Apple, and Meta. Their established customer bases created a network effect that does not allow new competition to enter the market.

As the Indian market is quite fragile and still developing, these giants take advantage by targeting it. These companies exploit conflicts of interest, for example, Amazon potentially acted on self-interest by favouring its products or Meta’s strategic acquisition.

KEY PROPOSALS OF DIGITAL COMPETITION BILL 2024

Predictive Regulation: The government should take steps on a forward-looking basis towards acts that foresee potential harm, called the Ex-ante framework. Currently, India is following the Ex-post framework under the Competition Act 2002.

This is one of the biggest criticisms against this law, and it suggests taking action after any incident. Last year, Google was fined ₹1.337 crore by the CCI  for its anti-competitive conduct in the Android System. If the government had followed the ex-ante framework, then this wouldn’t have happened.

Significant Entities: CCI should designate enterprises having merchant value and global market capitalisation of not less than $30 billion and ₹16,000 crores respectively in India and turn over of ₹4,000 crore in its 3rd financial year, as Systematically Significant Digital Entreprises (SSDE), Entities which are designated as SSDEs, have been prohibited from engaging in parties such as self-preferencing, anti-steering, and restricting 3rd party application. And if they violate this regulation, then they will be fined 10% of their global turnover. Associated Digital Enterprises will also have the same obligations.

POTENTIAL IMPACT OF THE BILL

This Bill will help small Indian companies to have a fair chance to thrive in their own country, where they were struggling to get a place. It is a crucial step towards fostering innovation and safeguarding consumers' rights, and will be a turning point as it is long overdue for India to have a regulatory framework that levels the digital playing field. Digital Competition Bill 2024 should also impose obligations on entities to have meaningful and transparent consent-seeking mechanisms and prohibit the use of any deceptive practices.

OPPOSITION TOWARDS THE BILL

The Opposition showed resistance by saying that, an Ex-ante framework with its strict perspective norms could lead to a significant compliance burden, and shift focus from innovation and research to ensuring that companies refrain from preemptively engaging in anti-competition practice. They appeal to strengthen the existing competition law instead of bringing an Ex-ante framework. 

The same law has been brought by the EU (European Union) named the Digital Markets Act, which aims to make the European economy fair and contestable. Tech giants are recommending that the Ministry of Corporate Affairs wait and learn from the European Union instead of applying it directly.

The Internet and Mobile Association of India (IAMAI), a key industry body representing numerous digital bills, including big tech firms, said that this digital competition bill will hinder investment in tech startups. Their concern is that if the company can’t grow because of these rules, then they might be less willing to invest in it.

The proposed Digital Competition Bill 2024 has the potential to significantly reshape the Indian digital market system. This Bill will protect small tech companies from the ill practices of big tech giants and will ensure a competitive and fair environment. However, the road ahead will involve navigating different aspects of the balance between effective regulation and fostering a dynamic digital ecosystem. Successful implementation of it will shape the future of Indian-based small companies and their role in the global digital economy.

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BY JYOTIKA

TEAM GEOSTRATA

info@thegeostrata.com