Members of the Internet and Mobile Association of India (IAMAI) have expressed dissent regarding the industry body's submission of the draft Digital Competition Bill and have urged the Ministry of Corporate Affairs to implement ex-ante regulations as soon as possible.
In a letter to the Ministry, four digital companies—Bharat Matrimony, Match Group, ShareChat, and Hoichoi—voiced their differing views from those of IAMAI. They stressed the need for ex-ante regulations to curb the anti-competitive practices of Big Tech companies, addressing long-standing concerns of Indian startups. These companies argue that such regulations are necessary to prevent practices that stifle innovation, limit consumer choice, and hinder the growth of young businesses.
The letter also highlights the need to reconsider the criteria for designating Systematically Significant Digital Enterprises (SSDEs) under the Bill, focusing on its impact on Indian startups. It suggests raising the thresholds to ensure that emerging digital products and services are protected, targeting only the major gatekeepers of the internet under the Bill.
The letter contends that by carefully targeting these regulations, the government can mitigate monopolistic practices while allowing Indian startups the freedom to thrive both domestically and internationally.
In March this year, the Committee on Digital Competition Law (CDCL) released a report detailing the challenges posed by anti-competitive practices of digital enterprises, such as anti-steering, self-preferencing, and tying and bundling in India's digital markets. The report recommended a Digital Competition Bill that includes ex-ante regulations to address these issues. The report was made available for public consultation, with a deadline for comments set for 15 May, 2024. IAMAI submitted its comments on the report, opposing the proposed ex-ante regulations in the Bill.
Excerpts from the letter:
"The below signatories, all members of the Internet and Mobile Association of India (IAMAI), write to express our diverging views to IAMAI’s recent submission on the Draft Digital Competition Bill (‘DCB’) and the Report of the Committee on Digital Competition Law. We state that IAMAI’s submission is not reflective of the entire digital startup ecosystem or IAMAI’s diverse membership of over 540 companies as only a miniscule percentage of these members have opposed the ex-ante provisions introduced by the DCB, yet the submission predominantly echoes this minority perspective.
We believe that such opposition of ex ante regulations and continuation of the ex post regime, will lead to status quo being maintained and allow entrenched players to continue exploiting regulatory gaps to stifle competition and innovation. The invocation of 'Minimum Government, Maximum Governance' conveniently ignores the reality of market distortions and abuses that necessitate targeted regulatory interventions. While we share similar concerns over the thresholds for designation of Systemically Significant Digital Enterprise (SSDEs), IAMAI’s submission on the rest of the draft DCB seems to present obtuse concerns which go against the broader imperative of fostering fair competition across all core digital services in India, supporting the growth of startups and protecting consumer welfare in India's digital economy.
The thresholds for designation of an SSDE may require revision, to ensure that only those entities which are sufficiently large and having substantial presence in digital markets in India, are subject to the ex-ante regulations proposed in the DCB. This ensures that financial strength and user spread thresholds outlined in the DCB, do not inadvertently encompass startups and other digital enterprises which are not true digital gatekeepers. This issue can also be effectively addressed by advocating for higher thresholds, so nascent digital services / products remain protected. By revisiting thresholds, it can be ensured that only the largest digital gatekeepers (or ‘Big Tech’ companies), which have benefitted from network effects, fall within the DCB’s scope. It is worth noting here that the predecessor to the Report of the Committee on Digital Competition Law (which contains the draft DCB) was the 53rd Report of the Parliamentary Standing Committee on Finance Report titled ‘Anti- Competitive Practices by Big Tech Companies’ and presented to the Lok Sabha. The Standing Committee’s report explicitly recommended an ex-ante framework for regulating the conduct of ‘Big Tech’ or large digital gatekeeper companies only.
Similar apprehensions from smaller companies in the European Union were mitigated when the Digital Markets Act (DMA) designated only six of the largest companies under its purview. As such, submissions made during this consultation process that the thresholds for designating enterprises as SSDE could potentially cover the entirety of India’s digital sector are alarmist since the intention of the draft DCB is to only to regulate the large digital gatekeepers. Viewed in this light therefore, a re-assessment of the financial and user thresholds for designation of an SSDE may be considered by the Hon’ble Ministry.
Further, statements that imply that DMA has failed to resolve the issue of app developers being charged excessive service fees by online mobile application stores is premature and fails to present the complete picture. The DMA, which mandated compliance by March 7, 2024, compelled designated companies (i.e., gatekeepers) to swiftly implement significant changes to their practices.1 Moreover, within the same month, the European Commission initiated non-compliance investigations into, amongst others, Alphabet's rules on steering in Google Play and self-preferencing on Google Search, Apple's rules on steering in the App Store and the choice screen for Safari, and Meta's “pay or consent model”.2 These investigations are ongoing, with results expected as soon as September 2024.
These actions underscore how the DMA empowered the European Commission to promptly address concerns, demonstrating the efficacy of ex-ante regulations in providing antitrust bodies with the necessary tools to act decisively and promote competitive digital ecosystems in the EU."
