The recent statement by Minister of State for Corporate Affairs Harsh Malhotra, asserting that the Centre is in no hurry to enact the Digital Competition Bill (DCB), comes as a bit of a surprise. It raises concerns about the future competitive landscape and potential for innovation in India’s digital economy. The reasons for not treating DCB as a priority are less than clear.
However, delaying the introduction of a robust digital competition law could hurt domestic start-ups. It leaves our digital ecosystem vulnerable to monopolistic practices by global tech giants. An opportunity to empower our homegrown app developers — just as China has successfully done — should not be frittered away. In many countries, regulators are increasingly using ex-ante measures — rules to prevent anti-competitive behaviour, rather than reacting after the damage has been done. Without such proactive legal frameworks, the Competition Commission of India (CCI) may find itself ill-equipped to handle monopolistic practices. This is particularly because, as has been acknowledged by none other than the CCI, the dynamics of the digital marketplace could differ considerably from ‘brick and mortar’ spaces. They expand their influence exponentially with ‘network effects’, thereby eliminating competition.
The DCB seeks to regulate certain entities that it calls systemically significant digital enterprises (SSDEs). The SSDEs will be curbed from conducting nine specific anti-competitive practices. There is no single silver bullet that will give protection to start-ups. The proposed law intends to fasten obligations on SSDEs across several sections. To take a few examples, the provisions debar an SSDE from favouring its own products on its platform over those of third parties (self-preferencing) and restricting availability of third party applications and not allowing users to change default settings, among other aspects. SSDEs also cannot cross-utilise user data collected from the core digital service for another service. Non-public data of users cannot be used to give unfair advantage to the SSDE’s own service.
The government’s reluctance to expedite the DCB is disconcerting, considering the pressing need to create a level playing field. China, in contrast, has created a competitive environment where local tech companies pose a challenge to established global giants. India, with its vast pool of entrepreneurial talent and innovative spirit, stands to benefit from a similar proactive stance. In a rapidly evolving digital world, clarity and predictability in regulatory frameworks do count for a lot. It is believed that a delay in the digital competition framework could well serve as a bargaining chip with the Trump administration. This could prove to be a costly gambit — impairing the development of our home-bred apps and AI driven technologies. Now is the time for policymakers to establish a robust regulatory framework that supports innovation and fair-play among tech entrepreneurs.
