India Proposes Digital Competition Bill, 2024 Against Tech Giants

May 16, 2024

The government has proposed the Digital Competition Bill, 2024 taking a clue from European regulatory frameworks This draft law aims to regulate the operations of major technology firms such as Google, Facebook, and Amazon, ensuring they do not misuse their dominant positions.

Akin to the European Union’s Digital Markets Act (DMA), this proposal seeks to prevent these corporations from favouring their services over competitors’ and misusing data to benefit their various business segments.

Key Proposals of the Digital Competition Bill

The key proposals of the bill are as follows:

Predictive Regulation: The Bill introduces a proactive regulatory approach (ex-ante), which anticipates and prevents anti-competitive practices before they occur, unlike the reactive (ex post) framework under the current Competition Act, 2002.
Significant Entities: The Bill proposes identifying Systematically Significant Digital Enterprises (SSDEs) based on criteria like turnover, user base, and market influence. These SSDEs will be restricted from certain practices such as self-preferencing and anti-steering.
Associate Digital Enterprises (ADEs): The legislation also plans to regulate ADEs which benefit from data shared within their group companies, ensuring that their operations do not undermine competitive practices.

Criticism and Industry Concerns

The proposed Bill has faced criticism primarily from large tech corporations, arguing that the stringent rules could impose heavy compliance burdens and stifle innovation. Concerns about arbitrary decision-making by the Competition Commission of India (CCI) and potential impacts on platform-based small businesses have also been highlighted.

Fostering Digital Competition

Government officials advocate for the Bill by pointing to a history of anti-competitive behaviour by big tech firms and the need for a framework that can more effectively manage the digital market’s dynamics.

The goal is to ensure a fairer playing field for new entrants and smaller companies, which could lead to broader innovation and healthier competition within the digital ecosystem.

More About Digital Markets Act (DMA)

The Digital Markets Act (DMA) is a significant legislative framework adopted by the European Union designed to promote competition in the digital market. Established in 2022, it specifically targets large online platforms, termed as “gatekeepers,” which include companies like Google, Apple, and Facebook.

The DMA restricts self-preferencing practices and mandates interoperability of messaging services. It also enforces data portability, making it easier for users to take their data to other services. Critically, the DMA imposes fines up to 10% of global turnover for non-compliance, displaying its stringent regulatory approach. This Act aims to enhance consumer choices and foster a fair, transparent digital economy.

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