Lakshman Rekha likely for tech players

A committee on the Digital Competition Law is going to clear the air on any possible grey areas in the functioning of digital intermediaries by recommending “Dos and Don’ts” the thrust of which will be to minimise the ability of big tech firms to distort fair trade, The Economic Times has reported. A person who wished to stay anonymous told the newspaper that the high-powered panel is likely to define systemically significant digital intermediaries both Indian and foreign. The definition will be based on turnover, nature of business and user base.

The panel was formed in February this year and was mandated to examine the urgency to regulate the big tech players through a separate legislation. It was also asked to wade through the best global practices in this emerging area of regulation.

Though the immediate aim of the committee seems to be the big MNCs such as Google, Apple, Amazon, Meta and Twitter, it will lay down the rules for all players including future Indian entities that rise to such stature so as to bend the rules in its favour.

The committee has already completed consulting the stakeholders in the ecosystem. The body consists of 10 members including the chairman Manoj Govil, the corporate affairs secretary. The rest of the members are invitees from different government departments and the Centre’s thinktank Niti Aayog.

The immediate backdrop to this exercise seems to be the investigations that were launched by the competition regulator against Facebook, Google and Apple recently for probable bending of fair-play rules.

In fact, recently the European Union has said that as many as 19 platforms have to comply with its online content rules. These entities are five subsidiary units of Alphabet, two units of Meta, two Microsoft entities, the Appstore of Apple, Alibaba and Twitter.

Smaller digital firms will remain outside the periphery of the recommendations that the Indian panel will recommend.

The official the newspaper has spoken to said, “The committee could suggest ex-ante regulations for large players. Even the EU has adopted ex-ante structural limitations on the practice of large technology platforms.” The big tech firms are believed to have opposed the idea of en-ante regulations in this country.

Ex-ante regulations are pre-emptive in nature and attempt to detect issues beforehand and regulate stakeholder behaviour. Such recommendations tell the businesses what to do and what not to do.

This obviates the need to tackle anti-competitive behaviour through the Competition Commission of India which takes time. Moreover, a Competition Commission order can be challenged in a court of law and might go through a long-winding process of justice. By the time the matter is disposed of the victims of such unfair practices might be irreparably hurt and go out of business.

The eventual report of the committee will factor in all the views of the stakeholders and the opinion of the Parliamentary standing committee on finance that was placed in December last year. The standing committee had suggested drawing up a separate digital competition law.

Incidentally, in October 2022 the Competition Commission of India had slapped a fine of Rs 1,337 crore on Google for misusing its overwhelming dominance in the android platform. Google has challenged the verdict in the Supreme Court. The Competition Commission is also probing the app store and billing process of Apple. The allegation in this case is the absence of third-party payment options and the very high commission levied by the company.