ADIF (Alliance of Digital India Foundation), a policy think-tank of Indian Digital startups, has called for an introduction of digital competition laws in the country that are specifically designed to break the monopoly of big tech companies.
ADIF feels that the call for digital competition laws in India is not just about the Indian economy, it is about democracy, about free markets, and about the rule of law.
Big Tech's Monopolistic Practices?
“The unchecked power of Big Tech companies threatens these values, which is why it is important to take action to protect them. It is crucial to ensure that the digital marketplace is open to competition and innovation, and that all players are held accountable for their actions. India needs strong digital competition laws in India to break the monopoly of Big Tech companies and ensure a level playing field for local startups. We must take action now, before it is too late,” ADIF Spokesperson told TICE News in a Press Note.
Why Is India Considering Introduction of a Digital Competition Act?
With policymakers growing increasingly concerned about the power and dominance of tech giants in the digital economy, India is considering the introduction of a Digital Competition Act.
The proposed legislation aims to ensure a level playing field for all players in the market, promoting competition, innovation, and consumer protection in India's rapidly growing digital economy, which is projected to reach USD 1 trillion by 2025-26.
In December, the Parliamentary Standing Committee on Finance released a report that, apart from the formation of a Digital Competition Law, recommended defining Big Tech companies as Systemically Important Digital Intermediaries (SIDIs) on the basis of their revenues, market capitalization and end users.
ADIF, which represents the startups in the digital sector, notes that the Indian economy has been growing at an unprecedented pace over the past few years, with the digital economy being one of the fastest-growing sectors.
However, this growth has been impeded by the monopolistic practices of Big Tech companies. These companies have established themselves as dominant players in the Indian digital marketplace, leaving little room for competition and innovation, the industry body cried.
Do Big Tech Companies Enjoy Alleged "Unchecked Power" in India?
“The dominance that Big Tech companies enjoy today, has only been achieved through a range of anti-competitive practices, including predatory pricing, data hoarding, and exclusive tie-ups. The app store market in India is a duopoly of these two companies, which allows them to regulate all app activities and impose extractive policies. These practices have resulted in the stifling of competition and innovation, leaving Indian startups struggling to compete on a level playing field,” ADIF believes.
Citing the example of tech giant Google, ADIF says, “Google has repeatedly faced scrutiny over using its dominant position in the search engine market to promote its own products and services, which adversely affects competitors. It has also been accused of using its control over the Android operating system to force device manufacturers to pre-install Google's suite of apps, thereby stifling competition. The App Stores have been accused of charging exorbitant fees to developers and limiting their ability to distribute apps outside of the App Store.
They also misuse their power to force the Original Equipment Manufacturers (OEMs) to pre-install their apps to block out competition (e.g. Google Maps is pre-installed in many smartphones obliterating its competing apps like MapmyIndia). Moreover, they invoke arbitrary and vague policy violations to remove competing apps from their stores. For instance, Paytm was taken down from the Google Play Store for violation of its complex rules regarding gambling related violations,” the industry body adds.
What Are the Challenges Faced by Indian Startups in Challenging Big Tech Monopolies?
ADIF opined that any challenge to this monopoly of Big Tech firms is extremely difficult as the stakes are too high for the start-ups and they cannot risk triggering retaliatory action by the BigTechs. As a result, it is not only the app developers but also the competitors and consumers, or end users, who suffer. Consumers often end up paying more for apps, in-app purchases and subscriptions. Ultimately, it is the foreign tech giants that take away large amounts in the form of commissions from the Indian app developers. It is not merely an economic burden on the consumers and a drain of the country’s money, but higher commission rates also pushapp-developers to use business models which monetize user data (as commission is not levied on revenue from such models), thus creating privacy risks for consumers.
Is It Time for Stringent Regulations in India to Safeguard Tech Startups?
The industry body called for more stringent regulations in India which should be up to date with market dynamics to thwart the large-scale malpractices adopted by Big Tech firms.
Giving an example, ADIF says, “Indian IT Act, 2000, was enacted at a time when internet penetration in India was at its infancy. It predates the smartphone revolution, mobile internet and growth of social media platforms. Moreover, Competition Act, 2002, owing to its structure, is reactionary in nature.
What Lessons Can India Learn From West To Tackle Digital Competition?
Several nations across the globe have already taken cognizance of this issue and implemented necessary measures to create a sustainable and conducive environment for businesses, adds the industry body.
The European Union has a Digital Markets Act in place, Australia has the News Media and Digital Platforms Mandatory Bargaining Code which was introduced in March 2021, and the South Korea National Assembly amended the Telecommunications Business Act in August 2021.
“India must take a cue from these nations and formulate robust digital competition laws that focus on a range of anti-competitive practices, including predatory pricing, data hoarding, and exclusive tie-ups. We need to create a level playing field for all players in the digital marketplace, which will ultimately benefit consumers. By introducing digital competition laws, we can ensure that Big Tech companies are held accountable for their actions and that Indian startups have the opportunity to thrive,” ADIF Spokesperson says.
IAMAI Not In Favour of Digital Competition Law
Meanwhile, on the other hand the big tech companies have criticized the Parliamentary committee report that urges the government to introduce a new law to tackle Big Tech firms' anti-competitive practices, stating that it would stifle innovation, competition, and affect investments in startups, among others.
The Internet and Mobile Associations of India (IAMAI) which comprises over 550 members, including Indian arms of Big Tech companies, such as Meta India, Google India, Microsoft India, Twitter India and Apple, has submitted a draft to Committee on Digital Competition Law (CDCL).
IAMAI has said "IAMAI is concerned that the recommendations in the Report (of the Parliamentary Standing Committee of Finance) are neither targeted nor proportionate."
"Lack of a well-articulated policy objective, (and) failure to adopt an evidence-based approach to identify the need for the regulation, have led to ambiguous, broad recommendations (in the report), which will stifle innovation, competition and the benefit that accrues to markets and users," the draft submission of IAMAI said.