Digital Competition Bill 2024

The Internet and Mobile Association of India (IAMAI) has expressed concern over the draft Digital Competition Bill 2024. It stated that this bill could hurt Indian startups and other digital businesses. IAMAI is a major industry organization that represents a wide range of digital entities, including large technology companies.

Digital Competition Bill

The law proposes to better regulate significant digital firms, such as news aggregators, to provide a level playing field and fair competition in the digital realm. It was proposed in March of 2024. The new law might restrict major tech giants like Google, Facebook, and Amazon from favoring their services or utilizing data obtained from one of their businesses to benefit another. It includes provisions to establish presumption rules to prevent anti-competitive behavior before it occurs. It vows to levy severe penalties potentially billions of dollars for infractions.

Key proposals in the draft Digital Competition Bill

• List of core digital services (CDS): The list of fundamental digital services is included in Schedule I of the bill. The online ecosystem includes search engines, social networking services, video-sharing platforms, personal communications, operating systems, web browsers, cloud services, advertising, and online intermediation services (e.g. web-hosting, service providers, payment sites, auction sites, app stores, e-commerce marketplaces, aggregators).
• Significant entities: The Bill proposes classifying certain businesses as Systemically Significant Digital Enterprises (SSDEs). SSDEs are businesses that provide fundamental digital services in India and have a substantial presence and financial strength in the country.
• Parameters to assess if the enterprise can be labeled as SSDE: If an entity participates in a CDS, the Bill offers two criteria to evaluate if the enterprise can be labeled as SSDE: the financial strength test and the spread test (user base test). To be designated as an SSDE, a company must have a turnover of at least Rs 4,000 crore in India, a global turnover of at least $30 billion, a gross merchandise value of at least Rs 16,000 crore in India, and a global market capitalization of at least $75 billion in the previous three years. These companies’ key digital services should also serve at least one crore end consumers or 10,000 business users. Entities who do not fit into these categories may nonetheless be designated as SSDEs if the CCI feels they have a strong presence in any given key digital service.
• Obligations imposed on SSDE: SSDE entities are forbidden from engaging in self-preferencing, anti-steering, and blocking third-party apps. If they violate these standards, they may face a fine of up to 10% of their global sales.
• Associate Digital Enterprises: The Bill proposes designating associate digital businesses (ADEs) to better understand how data acquired by one company in a significant technology group might benefit other organizations. If an entity inside a group is determined to be an associate entity, it will be subject to the same requirements as SSDE. However, this will be determined by the amount of interaction with the primary digital service provided by the main corporation. Google Maps, for example, might be considered an associate entity because Google Search directs users there. The same is true for YouTube, where the amount of data shared between Google Search and YouTube influences the video suggestions sent to consumers.

Criticism of the bill

• Significant compliance burden: An ex-ante framework with tight prescriptive principles may result in a huge compliance burden for large technology enterprises. It may result in a change in attention away from innovation and research and towards ensuring that corporations do not participate in anti-competitive practices.
• Stringent criteria of the EU’s DMA and accompanying impact: Experts have pointed out that the severe standards of the EU’s DMA have resulted in a 4,000 percent increase in the time it takes to find goods using Google search.
• A broad description of who an important platform might be: Companies are concerned about the broad definition — both quantitative and qualitative — of who an important platform may be. Unlike the EU’s DMA, which specifies ‘gatekeeper’ institutions, India’s draft law leaves that option to the CCI’s discretion. Companies worry this will lead to arbitrary decision-making, which could have an impact on start-ups.
• Small enterprises may be affected: Companies believe that the bill will force them to make improvements to their platform and reduce data sharing. It could also have an impact on smaller firms that rely on platforms to reach a large audience.

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