India has proposed a new digital competition bill inspired by European regulations, aiming to prevent tech giants like Google, Facebook, and Amazon from favoring their services or using data from one company to benefit another within the same group.
Named the Digital Competition Bill, of 2024, the draft law includes provisions to establish presumptive norms to prevent anti-competitive practices before they occur. It also promises to impose substantial penalties for violations, potentially amounting to billions of dollars. If enacted, this law could require major changes to the platforms of big tech companies.
The proposal resembles the EU’s Digital Markets Act (DMA), which took full effect earlier this year. The DMA requires large tech firms like Alphabet, Amazon, and Apple to open their services and refrain from favoring their products over competitors. The Indian Ministry of Corporate Affairs (MCA) oversees the draft and has requested comments, with the deadline of May 15 (Wednesday).
Key proposals of the draft Digital Competition Bill
- Predictive Regulation: The draft suggests a forward-looking, preventive, and presumptive approach to regulating digital markets, anticipating potential harms from antitrust issues and outlining pre-determined restrictions. Currently, India follows an ex-post antitrust framework, criticized for its delays in penalizing market abuses.
- Significant Entities: The Bill proposes designating certain “core digital services” providers, such as search engines and social media sites, as “Systematically Significant Digital Enterprises (SSDE).” This designation would be based on various quantitative and qualitative parameters, including turnover, user base, and market influence.
- Associate Digital Enterprises: The draft also introduces the concept of associate digital enterprises (ADEs), which would be subject to similar obligations as SSDEs based on their involvement with the core digital service offered by the main company. This aims to address the potential benefits derived from data sharing within major technology groups.
Criticism of the Draft
The proposed ex-ante framework with its strict prescriptive norms has faced resistance from big tech companies, industry bodies supported by tech firms, and consultancy firms hoping to attract tech clients. These entities argue that such a framework could increase compliance burdens and shift focus away from innovation and research. Companies are particularly concerned about the broad definition of significant platforms, fearing arbitrary decision-making by the Competition Commission of India (CCI).
They also worry that changes to their platforms and restrictions on data sharing could impact smaller businesses relying on their platforms to reach a wider audience.