The Parliamentary Standing Committee on Finance has unveiled a set of recommendations to rein in big tech companies through the Digital Competition Act to regulate anti-competitive practices on their platforms. The report highlighted the need for ex-ante regulations – which are pre-emptive and based on expected changes or activity – and said the government must create a definition for systemically important digital intermediaries (SIDIs) that need stricter regulation.
The classification could be based on revenue, market capitalization and number of active users. Tech giants such as Alphabet (which owns Google), Meta (which owns Facebook) and Amazon are among those recognized globally as major technology companies that act as key digital intermediaries. The panel said a high-tech company must not “favor its own offerings over those of its competitors” when acting as intermediaries. “India needs to identify a small number of leading players or market winners who can negatively impact competitive behavior in the digital ecosystem,” the panel led by former junior finance minister Jayant Sinha said in its report tabled in the Lok Sabha today.
The report comes amid growing global scrutiny of Google, Apple, Facebook, Amazon and others for allegedly abusing their market position with chunks of user data. Earlier this year, the Competition Commission of India (CCI) fined Google Rs 936.44 crore and Rs 1,337.76 crore in two separate cases. The committee also recommended that the Indian Competition Act be strengthened, for which the Competition Commission of India needs to be strengthened to take on new responsibilities. It has proposed a dedicated Digital Markets Unit within the CCI with “qualified experts”, academics and lawyers, which will enable the Commission to closely monitor SIDIs as well as emerging SIDIs.
SIDIs would have to submit an annual report to the CCI describing the measures taken to fulfill their obligations. They must also publish a summary of this report on their website. The committee’s report mentions that it has interacted with Indian representatives of Amazon, Apple, Facebook, Google, Netflix, Twitter and Uber, as well as representatives of domestic companies such as PayTM, MakeMyTrip, Zomato, Ola, Swiggy, Flipkart and others. identify competition concerns.
Based on the submissions, the committee identified 10 anti-competitive practices, some of which are provisions against steering, self-preference, bundling or tying of services, deep discounting and search or rating favoritism. The panel said SIDI should be stopped from processing user data using third-party services that use their core services. In its discussions with a parliamentary panel, Facebook India said, “Essentially, data is not collected but actually generated by businesses as they develop the ability to pick up signals through their services and technologies. Every business is able to create its own data space in such a way.”
India’s Supreme Court recently allowed a CCI probe into updating WhatsApp’s privacy policy over allegations that it shares user data with its parent company Facebook’s advertising business. Salman Waris, managing partner of technology law firm TechLegis Advocates & Solicitors, said the committee’s recommendations were a welcome step. “This demand (from the panel) is in line with the maturity of the Indian market. But… regulations should not overburden companies. India has been able to mitigate the effects of the economic slowdown due to the digital ecosystem. Regulations should therefore strike a balance between avoiding unnecessary barriers and unfair market conditions.’
