By Rupin Chopra and Apalka Bareja
In the dynamic arena of global digital policy, the recent opposition by major US technology companies, including Google and Amazon, to India’s proposed Digital Competition Bill (“DCB”) highlights a significant clash of interests. This bill, designed to enhance competition and protect consumers in India’s burgeoning digital market, has raised concerns among these tech giants regarding its potential impact on their operations and market dominance.
The Digital Competition Bill: An Overview
The Digital Competition Bill aims to address anti-competitive practices and monopolistic behavior in India’s digital economy. It seeks to ensure a level playing field for all players, fostering innovation and protecting consumer interests. Key provisions of the bill include stricter regulations on data collection and sharing, increased scrutiny of mergers and acquisitions, and enhanced transparency requirements for digital platforms.[1]
US Tech Giants: Concerns and Criticisms
As per media reports, US tech companies have expressed significant concerns over the bill, arguing that it could stifle innovation and impose burdensome regulations. As per several media reports, in a letter to India’s Ministry of Corporate Affairs, the US lobby highlighted several specific issues:[2]
- Reduction in Investment: They argue that the bill could deter investment in India by creating an unpredictable and overly restrictive business environment. The fear is that increased regulatory scrutiny and compliance costs could make India a less attractive destination for both existing and potential investors.
- Reduced Range of Digital Services: The tech giants warn that the bill could lead to a reduction in the variety of digital services available to consumers. This is because stringent regulations and compliance requirements could limit the ability of companies to innovate and expand their service offerings.
- Increased Prices for Digital Services: Another significant concern is the potential for increased costs of compliance, which companies might pass on to consumers in the form of higher prices for digital services. This could impact the affordability and accessibility of digital services in India.
- Scope Compared to EU Law: The letter also points out that the scope of the Digital Competition Bill is much broader compared to similar laws in other regions, such as the European Union’s Digital Markets Act (DMA). The US lobby argues that this extensive scope could place an undue burden on companies, exceeding the regulatory requirements seen in other major markets.[3]
Indian Startups support the DCB
On the contrary, Indian startups have expressed their support towards the DCB, however, they have also cited some aspects that may require reconsideration as per some media houses. As per the bill companies would qualify as SSDEs “Systematically Significant Digital Enterprise (SSDE)” depending on various quantitative and qualitative parameters such as turnover, user base, market influence etc. The quantitative parameters for a company to be designated a SSDE are:
- If in the last 3 financial years, its turnover in India is not less than Rs 4,000 crore; or its global turnover is not less than $30 billion; or
- Its gross merchandise value in India is not less than Rs 16,000 crore; or
- Its global market capitalisation is not less than $75 billion; or
- The core digital service provided by these companies should also have at least 1 crore end users, or 10,000 business users.[4]
Internet and Mobile Association of India (IAMAI) has highlighted to the Ministry of Corporate Affairs that the end-user thresholds set by the bill currently of 1 crore (10 million) users would capture digital platforms used by around 1 in every 80 Indian users. Given that India has approximately 759 million internet users, the current DCB threshold represents a significantly smaller user base, it explains. Similarly, the thresholds for business users should also be revised since many startups already meet the threshold.
The thresholds should be revised to 10% of India’s population which would be approximately 75-80 million (7.5 – 8 crore) end-users. The threshold for business users should be increased to 100,000. It points to the competition legislation of the European Union, the Digital Markets Act (DMA), which also sets the threshold of 10% of the EU’s population.[5]
The Indian Government’s Perspective
From the Indian government’s standpoint, the Digital Competition Bill is a necessary step to curb the dominance of a few large players and promote a healthier digital ecosystem. The government argues that without such regulations, monopolistic practices could stifle competition and innovation in the long run. Key points from the government’s perspective include:[6]
- Consumer Protection: The bill aims to safeguard consumer interests by ensuring fair pricing, transparency, and data privacy. By regulating dominant players, the government seeks to prevent exploitative practices and ensure that consumers have access to a diverse range of services.
- Market Fairness: The government contends that the bill will level the playing field for all market participants, including small and medium-sized enterprises (SMEs). By preventing anti-competitive practices, the bill aims to foster a more vibrant and inclusive digital economy.
- Economic Sovereignty: Data localization and sharing requirements are seen as measures to protect national interests and ensure economic sovereignty. By keeping data within the country, the government believes it can better safeguard citizens’ privacy and security.[7]
Way Forward: Finding a Balance
The tug of war between US tech giants and the Indian government over the Digital Competition Bill underscores the complexity of regulating digital markets. Striking a balance between fostering innovation and ensuring fair competition is a challenging task that requires nuanced policy-making. Moving forward, several considerations will be crucial:[8]
- Stakeholder Engagement: Constructive dialogue between the government, tech companies, and other stakeholders is essential. Open channels of communication can help address concerns, refine regulations, and ensure that the bill achieves its intended objectives without unintended consequences.[9]
- Adaptive Regulations: The digital economy is dynamic and rapidly evolving. Regulatory frameworks need to be flexible and adaptive to keep pace with technological advancements and changing market conditions. Periodic reviews and updates of the regulations can help maintain their relevance and effectiveness.
- Global Cooperation: As digital markets are inherently global, international cooperation and harmonization of regulations can help address cross-border challenges. Sharing best practices and aligning regulatory approaches can create a more predictable and stable global digital economy.
- Focus on Innovation: Ensuring that regulations do not stifle innovation is critical. Policymakers need to find ways to protect consumer interests and promote competition without imposing excessive burdens on companies. Incentivizing innovation and supporting R&D can help achieve this balance.
Conclusion
The opposition by US tech giants to India’s Digital Competition Bill highlights the ongoing tension between regulation and innovation in the digital economy. In view of the concerns raised by companies like Google and Amazon, and the Indian government’s objectives of ensuring fair competition and protecting consumer, it becomes important to navigate forward with keeping the interest of every stakeholder in mind. Navigating this complex landscape requires careful, adaptive policy-making that fosters an inclusive and dynamic digital market. As digital economies continue to evolve, finding the right regulatory balance will be crucial to sustaining growth, innovation, and consumer welfare.
Kartikey Maithani , Trainee Associate at S.S. Rana & Co. has assisted in the research of this article.
[1] Available at: https://ssrana.in/articles/introduction-of-a-digital-competition-act-with-ex-ante-measures-key-features-of-dcb/
[2] Available at https://economictimes.indiatimes.com/tech/technology/us-tech-giants-oppose-indias-digital-competition-bill/articleshow/91373241.cms
[3] Available at https://www.reuters.com/technology/us-tech-companies-challenge-indias-new-digital-bill-2024-04-28/).
[4] Available at https://indianexpress.com/article/explained/explained-law/draft-digital-competition-bill-big-tech-opposes-9330370/
[5] Available at https://www.medianama.com/2024/05/223-40-indian-startups-sign-a-letter-supporting-the-draft-digital-competition-bill/
[6] Available at https://ssrana.in/articles/introduction-of-a-digital-competition-act-with-ex-ante-measures-key-features-of-dcb/
[7] Available at https://indianexpress.com/article/explained/explained-law/draft-digital-competition-bill-big-tech-opposes-9330370/.
[8] Available at https://indianexpress.com/article/explained/explained-law/draft-digital-competition-bill-big-tech-opposes-9330370/
[9] Available at: https://www.business-standard.com/article/economy-policy/google-amazon-oppose-indian-digital-competition-law-124050400923_1.html