CIO Insider

CIOInsider India Magazine


Why Big Techs Suggested India to Revise its EU-like Antitrust Law


Being the fifth largest economy globally, India has adopted EU-like regulations to ensure fair business practices in digital markets through its antitrust legislation. These ex-ante laws aim to prevent anticompetitive actions from happening. But big techs like Google, Amazon, and Apple did not find India’s antitrust law in their favor and proposed a reconsideration. Their concern is that these regulations could disable partners' preferential treatment and perhaps increase the expenses for users.

When it comes to facing future consequences caused by today’s actions from the big techs, Europe's new Digital Markets Act is the first antitrust law to attempt to prevent that from happening. It differs from only leaving it up to the enforcers to hold those companies accountable for the actions they have already committed, which is what makes it stand out from the rest of the deal.

This is a result of regulators’ discontent with having to digest the sector's move-fast-and-break-things mentality to develop a method that targets potential miscreants and sets clear ground rules with prompt consequences when those rules are not followed. Now, owing to a recently proposed government bill, India’s antitrust law is largely based on that strategy.

Why Big Techs Find the Antitrust Law Distasteful
The latest rules added by the Indian government in the Digital Competition Bill are a response to a few large digital companies’ dominance that blew out of proportion.

India’s Digital Markets Act of 2022 is a replica of the European Union that serves as the model for the planned competition law in India. Its targets are large companies, especially in the tech sector, with a global revenue of over $30 billion and at least 10 million local customers. The main features of this Bill take away companies’ access to using private user information for profit and from favoring their own services over rivals' offerings. While it’s at it, it also aims to remove limitations on downloading third-party applications. Also, this plan offers penalties charging up to 10 percent of a company's annual global turnover for infringements, which is equivalent to those in the EU.

Government Has Heard the Pleas of Homegrown Companies
Home to a growing population of over 1.4 billion residents with a developing middle class, India appears as a favorable spot for companies to sell and grow their ideas. For example, this month, Tim Cook, the CEO of Apple, claimed that during the March quarter, when its total revenue fell by four percent globally, the business set a ‘revenue record’ in India.

But several domestic companies and entrepreneurs struggled due to the better bargaining power that large tech companies offer. Even an Indian commission claims that a new regulation is required in response to concerns about a small number of powerful digital companies controlling a significant portion of the market. As a result, homegrown companies and civil society hoarded the CCI multiple complaints and lawsuits, citing instances of app store billing methods, exclusive and preferred listing on e-commerce platforms, and self-preferencing in search results.

Homegrown Firms in Support of the Law
A group of forty Indian startups are all in for the new law, believing that it will tie up the acts of big techs from exercising monopolistic behavior and encourage fair competition for smaller businesses.
These startups, which include TrulyMadly, Innov8, QuackQuack, Magicbricks, Hoichoi, Medibuddy, and, among others, have written to the Ministry of Corporate Affairs expressing their belief that the Bill is a positive move that will solve long-standing issues to curtail practices that stagnate innovation, restrict consumer choice, and impede the expansion of fledgling companies.

The community is asking the government to quickly pass the Bill to prevent delaying tactics. Also, they contend that the Bill should only target the companies that are actually in charge of controlling the internet like those that have long held powerful positions, amassed substantial wealth, and used their clout to sway regulations governing the digital landscape.

Reactions from Companies
While already heavily regulated by the foreign direct investment policy, Amazon stated that it can only act as an online marketplace and not as a seller and should provide fair terms to all sellers. At the same time, it highlighted that ex-ante regulation for the e-commerce sector may be untimely, excessive, and may lead to over-regulation.

Right now, there is no deadline set, but the Indian government intends to consider input on the proposal before attempting to get legislative approval—either with or without amendments

Apple India suggested the CCI (Competition Commission of India) to evaluate setting up a regional office in Bangalore to allow quick access to the nation’s tech scenario in its advocacy for a fair policy that fosters creativity.

Flipkart also declared that India's current ex-post system is effective enough to regulate the country's digital markets. It was also reported that Flipkart recommended a one-size-fits-all approach similar to the DMA model, which would be unsuitable for effective regulation of digital markets since it remains untested.
MakeMyTrip expressed support for the ex-ante regulations as long as they were applied to a limited number of major horizontal platforms that had established ecosystems spanning the whole economy.

Right now, there is no deadline set, but the Indian government intends to consider input on the proposal before attempting to get legislative approval—either with or without amendments.

Now that the results of its consultation have been received, it is unclear what the Indian government will do next, but if it moves forward with the law, it will be a significant endorsement of the new European strategy for Big Tech regulation.

Hence, a new era in Indian competition law is set to flourish by the Committee's crucial recommendations. The Draft DCB, which is expected to be par with international regulatory frameworks for digital markets, holds a principle-based framework for ex-ante duties that will be further detailed in rules drafted by the CCI. The CCI is making a deliberate effort to match India's regulatory technical know-how with international standards by strengthening its technical capability under the DMDU.

Current Issue
Ace Micromatic : Pioneering Excellence in Comprehensive Manufacturing Solutions