Digital Competition Bill: What Lies Ahead?

Dear Readers,?

As you might already know, the Digital Competition Bill 2024 ("DCB") made its debut in March 2024 on the official Ministry of Corporate Affairs ("MCA") website, inviting feedback until May 15, 2024.The Bill has the potential to transform India's digital economy for better or for worse.?

Reuters reports that, a U.S. lobby group representing Google, Amazon, and Apple has urged India to reconsider its EU-like competition law, claiming it could hike user costs. Meanwhile, an Indian panel (formed by the government) insists the law is needed to curb the market dominance of big tech, proposing hefty fines for violations. Contrarily, 40 Indian startups back the law, arguing it will combat monopolistic practices, ostensibly anticipating the law impacts only the US Big Tech!?!

At TechBridge, thought-leaders have considered perspectives of different stakeholders: those with academic research, think tanks and? practitioners. The top concerns that are common amongst all are, the proposed ex-ante rules are not workable for Indian markets, as more adequately discussed in this article here. Other concerns include -?

• They have potentially high administrative costs,?
• They would hamper innovation/ investments due by overdosing regulation,?
• They disregard consumer welfare,?
• There would be unclear regulatory overlaps with other regulators??

TB Thought-leader Anupam Sanghi , in her comments submitted to MCA, proposed a new regulatory framework based on mandatory Techno-legal? obligations to develop trust, and to reduce the time and cost of investigation. A Technology cum Regulatory (Tech-Reg) approach allows for pro-innovation technology design that follows a principle based - Governance Framework to complement evidence based ex-post regulation. Unlike conventional approaches that focus solely on regulating AI / ML / NE powered digital platforms, this approach concentrates on setting mandatory obligations to maintain standards, facilitating compliance and governance measures, as well as proactive reporting.?

?Tech-Reg Gap Analysis:

• Regulatory Gaps: Current regulations do not cover new disruptive technologies like GenAI and ChatGPT.
• Core Services List: Existing list of nine core services misses emerging tech models.

The Techno-Legal Governance Framework aims to create a benign environment through technology and legal principles, guided by a Digital Stakeholders Governance Unit (DGU) to support safe AI deployment and encourage ecosystem participation. The key points are summarised here:

• Bridging Gaps: Addresses the gap between goals of technology players and regulators.
• Collaborative Solutions: Stakeholder consultation to avoid knee-jerk regulatory changes.
• Improved Governance: Co-creates techno-legal solutions for better governance.
• Rational Policy Measures: Technology companies proactive role in shaping future regulatory measures.

Prof. Shilpi Bhattacharya along with her class at Jindal Global Law School also submitted their own report, where they supported ex-ante regulations as it? makes digital markets more contestable, along with certain refinements to ensure that this Indian law reaches its objectives. Among other things, their report suggests that obligations such as interoperability and price parity should be included in the DCB, exemptions from obligations should be based on the principles of necessity and proportionality and a separate wing of the? Competition Commission of India’s (CCI) should created to enforce DCB along with coming up with an effective compliance mechanism for India and Indian markets.?

The need for a regulatory framework tailored to India's unique market conditions is emphasised, with calls for enhanced capacity and expertise of regulatory bodies. At TechBridge, we have reviewed the public comments from the International Center for Law & Economics (ICLE), Computer & Communications Industry Association (CCIA), All India Gaming Federation (AIGF) , Internet Freedom Foundation (IFF), Centre for Internet and Society (CIS) and Access Now . Here is a short summary of their feedback:

1. High Administrative Costs and Over-Regulation:

• ICLE : Emphasises that strict ex-ante rules could impose high administrative costs and may capture pro-competitive conduct.
• CCIA : Warns that heavy-handed regulations could stifle innovation and growth, potentially leading to high compliance costs and hindering job creation.

2. Consumer Welfare and Innovation:

• ICLE: Suggests that the Digital Competition Act (DCA) might be more focused on aiding rivals than benefiting consumers, potentially harming innovation and consumer interests.
• CCIA: Emphasises the importance of fostering competition and innovation, cautioning against regulations that do not prioritise consumer welfare.
• AIGF : Crafting thresholds in the ex-ante law must prioritize protecting small players for effectiveness and should consider the country's population and digital market growth rate when setting thresholds. Thresholds should consider market reality to foster competition and innovation without hindering smaller businesses.?

3. India's Unique Market Conditions:

• ICLE: Argues that India’s digital market conditions differ from the EU, making the DMA an inappropriate model, which could stifle domestic innovation and deter investment.
• CCIA: Suggests that separate regulations for digital and physical businesses may be inconsistent and unfair, advocating for a principle-based, general regulatory approach.
• AIGF: Digital Markets require an agile and responsive regulatory framework, therefore Digital Competition law needs to be implemented on a stricter timeline. .?

4. Regulatory Overlap and Uncertainty:

• IFF : Highlights potential overlap with other regulations like the forthcoming Digital India Bill, causing regulatory uncertainty.
• CCIA: Recommends waiting to see the outcomes of international regulations before adopting similar frameworks to avoid untested measures and over-enforcement.
• AIGF: Ex-post regulation is insufficient for large-scale market regulation because it is applied on a case-by-case, market-specific basis. It addresses the behavior of platforms only in the specific market under scrutiny, requiring separate challenges for their conduct in other markets.

5. Capacity and Expertise of Regulatory Bodies:

• IFF: Notes challenges due to the CCI current capacity and expertise limitations.
• CIS : Stresses the need to enhance the CCI’s capacity through frequent, high-quality recruitment and interdisciplinary coordination.

On the other hand, benefits highlighted include promoting competition, addressing monopolistic practices, enhancing user control through data portability, ensuring transparency and public trust, and strengthening the regulatory framework.?

1. Promoting Competition and Addressing Monopolistic Practices:

• IFF: Believes the draft DCB can address monopolistic practices and create a level playing field for smaller companies.
• CIS: Supports the shift to ex-ante regulation for its efficiency in digital markets and its potential to address anti-competitive practices effectively.

2. Enhanced User Control and Data Portability:

• Access Now : Supports the obligation for SSDEs to ensure data portability, enhancing user control over data and promoting fair competition through interoperability.
• CIS: Highlights the need for meaningful consent mechanisms and the prohibition of deceptive practices to protect consumer interests.

3. International Consistency and Cooperation:

• CIS: Emphasises the importance of international consistency and cooperation in competition regulation, advocating for a principles-based approach that allows sector-specific adaptations.

4. Transparency and Public Trust:

• Access Now : Appreciates the draft Bill’s emphasis on expert assistance and transparency in regulation-making, recommending the publication of received comments to enhance public trust.
• CIS : Recommends the inclusion of public comments and inputs from stakeholders to ensure comprehensive evaluation and transparent decision-making processes.
• AIGF : Looking forward to supporting MCA’s approach of fostering an open and transparent market.?

5. Strengthened Regulatory Framework:

• CIS : Advocates for the enhancement of the CCI’s capacity with technical experts to handle enforcement and keep up with technological developments.
• IFF : Suggests additional deterrents or incentives beyond monetary penalties to ensure compliance and effectively address anti-competitive practices.

These comments are detailed on our blog here.?

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