India: Decoding India's Digital Competition Bill 2024: Navigating Market Regulation In Comparison To The EU's Digital Markets Act

1. Background of Digital Competition Bill 2024 :

In the month of December 2022, the Parliamentary Standing Committee on Finance proposed the introduction of a new ex-ante legislation known as the Digital Competition Act (DCA). Following this, the Ministry of Corporate Affairs (MCA) established the Committee on Digital Competition Law (CDCL Committee) to evaluate the necessity and practicality of an ex-ante regulatory framework and to formulate a draft DCA. This gave rise to the report ('the Report') by the Committee advocating for an ex-ante framework to govern digital markets, alongside the Draft Digital Competition Bill 2024 ('DCB/the Bill'), that aimed specifically at regulating large digital enterprises termed as Systemically Significant Digital Enterprises (SSDEs).

The Committee initially reviewed the existing competition framework and its inadequacies in addressing the unique aspects of the digital economy. Subsequently, the Committee evaluated the suitability of the following instruments for addressing Anti-Competitive Practices (ACPs) by digital enterprises:

1. Foreign Direct Investment Policy and Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (FDI Policy);
2. Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (IT Rules) and Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 (SPDI Rules);
3. Consumer Protection Act, 2019 (CPA 2019), Consumer Protection (E-Commerce) Rules, 2020 and Consumer Protection (Direct Selling) Rules, 2021;
4. Proposed Digital India Act (DIA);
5. Digital Personal Data Protection Act, 2023 (DPDP Act);
6. Draft National Data Governance Framework Policy (Draft NDGFP);
7. Draft E-Commerce Policy, 2019 (Draft E-Commerce Policy);
8. Reserve Bank of India Master Directions on Prepaid Payment Instruments, 2021 (RBI PPI Master Direction);
9. Guidelines on volume cap for Third Party App Providers (TPAPs) in UPI issued by the National Payments Corporation of India (NPCI UPI Guidelines).

The Standing Committee Report essentially identified Ten Anti-Competitive Practices ("the ACPs") undertaken by large digital enterprises to abuse and consolidate their position in digital markets mentioned below : ¹

TABLE 1 : Defining the Anti-Competitive Practices -

Sr. No.	Anti-Competitive Practices	Explanation
1.	Anti-steering	Exclusionary behaviour that hinders business users and consumers from switching to third party service providers.
2.	Platform neutrality / Self preferencing	A digital enterprise providing favourable treatment to its own products on its own platform, thus creating a conflict of interest.
3.	Bundling and tying	Combining or bundling core or essential services with complementary apps, thus forcing users to buy related services.
4.	Data usage (use of non-public data)	Using personal data for consumer prerference to offer targeted online services and products, thus raising data privacy concerns.
5.	Pricing / Deep discounting	Predatory pricing strategies, or intentionally setting prices below cost price to exclude competitors.
6.	Exclusive tie-ups	Exclusive agreements with business users or sellers, thus preventing them from dealing with other enterprises.
7.	Search and ranking preferencing	Controlling search ranking to prioritise sponsored or own products and reducing the visibility of other products..
8.	Restricting third party applications	Restricting users from accessing or utilising third-party applications.
9.	Advertising Policies	There appears to be increasing market concentration, consolidation, and integration across many levels in the ad-tech supply chain which gives the incumbent platform an unfair edge over the market.

In response to concerns about anti-competitive practices by major tech companies, the Parliamentary Standing Committee on Finance released a report on December 22, 2022, outlining ten prevalent anti-competitive behaviours in the digital sector. This report prompted the formation of the Committee on Digital Competition Law (CDCL), charged with assessing the adequacy of existing legislation and proposing solutions tailored to the challenges of the digital economy. As part of its mandate, the CDCL drafted the Digital Competition Bill, 2024 (DCB), which was made available for public feedback until April 15, 2024.

2. Introduction to the Digital Competition Bill:

Amidst the dynamic currents of Corporate India, a conversation is brewing that is capturing the attention of the business world: the preliminary draft Digital Competition Bill, 2024, proposed by the government. This legislative initiative, which is still in its early stages following the report from the inter-ministerial committee, holds the potential to significantly alter India's digital landscape. The ramifications of this bill are immense, as it seeks to redefine the future of digital dominance and competition within India's market. It is said that by 2025-26, the projected digital economy in India is anticipated to reach a staggering $1 trillion.²

The recently published report by the Committee on Digital Competition Law ³ in India suggests that India should adopt ex-ante regulations, which refer to proactive measures implemented pre-emptively to prevent potential issues, particularly in digital competition for fair competition, data protection, fostering innovation and ensuring a level playing field, similar to those in the European Union, to address major digital competition issues. Aligned with global regulatory trends in tackling antitrust practices in digital markets, the Committee also introduced the draft Digital Competition Bill, 2024. However, it has been observed that India's approach appears to lean more towards favouring platforms over individual customers in terms of data perspective.

The rationale behind this proposed bill stems from the fact that existing competition enforcement is purportedly slow and inadequate for the rapidly evolving digital landscape of today. The core of this proposed legislation lies in its proactive approach, utilizing ex-ante measures to anticipate and prevent anti-competitive behaviour before it emerges. This sets a precedent for promoting fairness in the digital landscape.

3. Insights into India's Digital Competition Report and Bill:

3.1 Scope and Applicability:

The Committee proposes that the Draft Digital Competition Bill (DCB) should pertain to a pre-determined list of Core Digital Services, with the Central Government having the authority to update the list periodically. The proposed list encompasses online search engines, online social networking services, video-sharing platforms, interpersonal communications services, operating systems, web browsers, cloud services, advertising services, and online intermediation services.

3.2 Regulation of Digital Enterprises with significant presence:

The Committee suggests regulating the enterprises showcasing a 'significant presence' in providing a Core Digital Service in India and influencing the Indian digital market. These enterprises would be designated as 'Systemically Significant Digital Enterprises' (SSDEs). The measures relate to both Qualitative criteria which may include factors such as market dominance, network effects, and impact on competition, while quantitative criteria may involve metrics like turnover, market capitalization, and user base size.

3.3 Thresholds and Criteria for SSDEs:

A dual test for demonstrating "significant presence" is proposed: ⁴

1. The "significant financial strength" test comprising quantitative proxies of economic power, including the India-specific turnover, global turnover, global market capitalization, and gross merchandise value;
2. The "significant spread" test evaluating the extent of presence of enterprise in providing a Core Digital Service in India based on the number of end-users and business users. Enterprises are proposed to self-assess their fulfilment of the above thresholds and report to the Competition Commission India (CCI). Additionally, the CCI may designate certain enterprises as SSDEs based on qualitative criteria, even if they do not meet quantitative thresholds, but have the potential to significantly influence the market.

3.4 Associate Digital Enterprises:

Designation may extend beyond one enterprise in the group. The Committee envisions scenarios where:

1. The holding enterprise is designated as an SSDE, and other group enterprises involved in providing the same Core Digital Services, directly or indirectly involved, are designated as Associate Digital Enterprises (ADEs) to the SSDE.
2. A non-holding enterprise primarily involved in providing the Core Digital Service is designated as an SSDE, with its holding enterprise and other group entities involved in providing the same Core Digital Services designated as its ADEs. The CCI is recommended to have flexibility in identifying appropriate enterprises for SSDE and ADE designations.

3.5 Obligations:

Specific obligations applicable to each Core Digital Service would be outlined through regulations drafted by the CCI. Regulations may provide for differential obligations depending on factors such as business models and size of user base of SSDEs and ADEs.

3.6 Exemptions:

Grounds for exemption from ex-ante obligations should be provided in the statute itself, with features specified through CCI-framed regulations considering particular Core Digital Service and related business models of SSDEs and ADEs. The Committee recommends the power to exempt certain classes of enterprises from applicability of the statute.

3.7 Enforcement:

CCI would be responsible to enforce the provisions. Strengthening the capacity of its Digital Markets and Data Unit with technology experts is advised by the Committee. Additionally, constituting a separate bench within the National Company Law Appellate Tribunal for timely disposal of appeals against CCI orders, particularly those relating to digital markets, is recommended.

3.8 Remedies:

Monetary penalties for non-compliance with ex-ante obligations may extend up to 10% of the SSDE's global turnover, calculated in relation to the turnover of the entire group. The precise penalty quantum is to be determined by the CCI, considering penalty guidelines under the Draft DCB. Separate penalties are provided for incorrect reporting contraventions and liability of key managerial persons.

The proposed legislation grants authority to the CCI to conduct inquiries, issue orders, and impose penalties for non-compliance. Additionally, it enables aggrieved parties to seek compensation. The draft legislation prohibits evading the designation criteria and provides the government powers to exempt certain enterprises, modify the list of regulated services, and issue directions to the CCI.⁵

4. The Role and need for Ex Ante Rules in Shaping Digital Competition:

The Committee noted that the current ex-post framework (intervening after an event occurs) under the Competition Act, 2002, lacks the capacity for prompt resolution of anti-competitive practices by digital enterprises. It was observed that the framework may not effectively address the irreversible market shifts favouring large digital enterprises, leading to their permanent dominance in relevant markets. The Committee proposed the enactment of the Digital Competition Act to empower the Competition Commission of India (CCI) to selectively regulate large digital enterprises in an ex-ante manner (intervening before an event occurs).⁶

Ex-ante regulations are so designed to prevent anti-competitive behaviour from occurring, as opposed to the current ex-post framework under the Competition Act, 2002, wherein the CCI intervenes after the occurrence of anti-competitive conduct. The proposed legislation aims to regulate only those enterprises with substantial presence and influence in the Indian digital market. This could alter the market dynamics, ultimately resulting in consumer benefits.

TABLE 2 : Key inputs and recommendations of the stakeholders with regards to the need to introduce ex-ante competition framework for digital markets:⁷

Sr. No.	Name of Stakeholder	Submission of Stakeholders	Observations for need of New Digital Competition Law
1.	All India Gaming Federation	They contend that large digital enterprises engage in the following practices such as: issuing arbitrary app distribution policies; imposing unfair and discriminatory terms on app developers through arbitrary app review guidelines; mandating the use of billing systems for in-app purchases; imposing high commission fees; enforcing advertising restrictions; and enabling search engines to bid on relevant keywords, thereby infringing on intellectual property.	In favour of ex ante regulation.
2.	Make My Trip	The criteria applied in other jurisdictions to justify ex-ante regulation cannot be directly transferred to Indian markets due to unique economic and market conditions. Any suggested thresholds for identifying gatekeepers must be set at or above EU levels. This is essential to safeguard domestic players who must contend with global industry leaders in the Indian market, ensuring they have a fair opportunity to compete.	In favour of ex ante regulation only to the extent that they are made applicable to select large horizontal platforms who have created economy-wide ecosystems.
3.	National Restaurant Association of India	Dominant food service aggregators are engaged in various malpractices, including offering preferential treatment to select sellers through better commission rates, targeted discounts, and minimum business guarantees. They also lack transparency in search rankings, practice deep discounting, enforce unfair contract terms, and enter exclusivity agreements with restaurants. Moreover, they engage in data masking to understand market and consumer preferences without sharing such insights with restaurant partners. Legislation to regulate such practices and ensure timely checks is vital, as investigations can be time-consuming. Additionally, some unfair practices cannot be adequately addressed by market regulators alone. Therefore, appropriate legislative measures are needed to address these issues in detail.	In favour of ex ante regulation.
4.	Indian Council for Research on International Economic Relations	The existing competition regime only steps in after harm has already occurred, which is often too late for digital markets where dynamics evolve rapidly. The fines and remedies currently in place are deemed insufficient as deterrents. Competition authorities face several constraints, including challenges in establishing dominance and anti-competitive activities using traditional theories of deterrents. They also struggle with enforcing effective remedies for markets that change rapidly and thus face constraints. These factors collectively impede the ability of competition authorities to effectively regulate digital markets and address anti-competitive behaviour in a timely manner.	In favour of ex ante regulation but only if it is introduced with caution. There must be tailored gatekeeping and flexibility for sector-specific business models.

5. Evaluating the EU's Digital Market Act alongside India's Digital Competition Bill 2024:

5.1 Decoding the The Digital Markets Act (DMA) ⁸ :

In Europe, The Digital Markets Act (DMA) is a landmark that aims to rein in the dominance of tech companies that "gatekeep" access to their users, and diversify access to their platforms.

As per the definition outlined in Article 2(1) of the DMA ⁹, a gatekeeper is an entity that offers core platform services and has been formally designated under Article 3 of the DMA. Therefore, the central concept emphasized throughout the regulation is inherently tied to the provision of Core Platform Services (CPS). The existence of a gatekeeper is contingent upon its involvement in delivering a core platform service.

In addition to offering a CPS, which serves as an important gateway for business users to reach end users, it also must have "a significant impact on the internal market" and "enjoy an entrenched and durable position, in its operations or it is foreseeable that it will enjoy such a position in the near future according to Article 3(1) of the DMA".¹⁰

The "gatekeepers" - Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft are told to comply with the rules by March 6 2024. ¹¹

TABLE 3 - Gatekeepers and their core platforms: ¹²

Undertaking	Core platform services
Alphabet	1- Google Search: online search engine (VLSE in DSA). 2- YouTube: video-sharing platform service. 3- Android: operating system. 4- Google Chrome: web browser. 5- Google Ads: online advertising service. 6- Google Play: online intermediation service. 7- Google Shopping: online intermediation service. 8- Google Maps: online intermediation service.
Amazon	1- Amazon Marketplace: online intermediation service. 2- Advertising services: online advertising service.
Apple	1- iOS: operating system. 2- App Store: online intermediation service. 3- Safari: web browser.
ByteDance	1- TikTok: online social networking service.
Meta	1- Facebook: online social networking service. 2- Instagram: online social networking service. 3- WhatsApp: number-independent interpersonal communications service. 4- Meta Ads: online advertising service. 5- Messenger: number-independent interpersonal communications service. 6- Facebook Marketplace: online intermediation service.
Microsoft	1- Windows PC OS: operating system. 2- Ads: online advertising service. 3- LinkedIn: online social networking service.

As of today, businesses operating within the EU and relying on services provided by the six gatekeepers will encounter fresh opportunities. For instance:

1. They will benefit from equitable treatment and equal chances when competing with gatekeeper services on their platforms.
2. They can request interoperability with gatekeepers' services to introduce innovative offerings.
3. They have the option to distribute their apps through channels other than the gatekeeper's app stores.
4. They can access data generated by their activities on gatekeepers' platforms.
5. They can promote deals and finalize agreements with customers outside of the gatekeeper's platform.

Furthermore, end-users will encounter increased options and innovation in the European digital landscape. They will be empowered to:

1. Regain the freedom to choose independently and avoid being limited to gatekeepers' default options, such as selecting alternative app stores and services.
2. Exercise enhanced control over their data by determining whether the gatekeepers can link their accounts and aggregate personal data across various services.
3. Seamlessly acquire, transfer, and utilize data from one service or app to another, facilitating smooth data backups and transitions between different services.
4. Utilize alternative electronic identification or in-app payment services.

Gatekeepers failing to comply may encounter penalties of up to 20% of their total worldwide annual turnover, or even structural measures like divesting certain business segments. Additionally, the European Commission has the authority to impose periodic penalty payments of up to 5% of the company's total worldwide daily turnover in the previous financial year. Repeated violations could result in temporary prohibitions of business mergers.¹³

5.2 Updates on Big Tech Firms' Post DMA 2024 :

5.2.1 Google has introduced various changes to its products and services, including:

1. Requesting user consent to share personalized data across its platforms and providing the option to unlink services in their Google Account.
2. Allowing users to choose their default search engine or browser when setting up a new device.
3. Testing a new Data Portability API to facilitate easy data transfer from Google platforms.
4. Strengthening measures to combat misinformation about politics.

5.2.2 YouTube will implement changes such as content labels for "altered or synthetic content" generated using AI.¹⁴

5.2.3 Apple is granting access to non-Apple payment processing, app stores, and web browsers for its users. Merchants will need to evaluate the cost-effectiveness of these changes on a case-by-case basis due to varying fees based on download volume and payment processing choice.

Merchants with apps have the option to adhere to the new rules or retain the old ones. Apple device users in the EU will gain access to third-party technology, including non-Apple apps and payment options, through the iOS 17.4 software update.

As of March 2024, merchants can opt for an external payment service provider (PSP) for app payments on Apple devices. Apple's commission on in-app transactions for digital goods and services is reduced to 17% (or 10% for apps earning under $1 million per year). Alternatively, using Apple's App Store payment processing incurs a 3% fee.

Apple device owners can select a different contactless payment app or third-party app marketplace as their default. Third-party mobile wallet apps can now function for payments in physical stores outside the European Economic Area (EEA).¹⁵

5.2.4 Microsoft has announced updates to its Windows 10 and Windows 11 operating systems to comply with DMA regulation deadlines. It has clarified the labelling of operating system components separate from system apps.

Microsoft has added the option to uninstall certain programs from its Windows PC operating system, including Camera, Photos, Edge (browser) in the EEA, Bing (search engine) in the EEA, and Cortana (discontinued voice assistant).

EEA users of Windows Search can now utilize alternative search engines like Yahoo or DuckDuckGo instead of Microsoft Bing Search.¹⁶

5.2.5 After being designated as a gatekeeper, Meta introduced an ad-free paid subscription offer for European Facebook and Instagram users. While Meta supports an ad-supported internet, it provides user controls for opting into or out of data sharing for personalized ads.

Meta offered Instagram and Facebook users in the EU, EEA, and Switzerland the option to unlink data sharing across Meta platforms in early 2024.¹⁷

Both India and Europe address concerns related to data dominance in digital markets through legislative measures. In contrast to the EU's Digital Markets Act (DMA), India's proposed legislation includes provisions outlining specific circumstances in which digital firms, particularly Big Tech companies, may be exempted from compliance of such laws. These exemptions include economic viability, prevention of fraud, cybersecurity risks, protection against unlawful infringement of Intellectual Property Rights, and other related factors.

While India's approach focuses on restricting SSDEs' actions to prevent unfair competition, Europe's Digital Markets Act places obligations on gatekeepers to ensure fairer data practices, including transparency and access for business users. Despite differences in implementation, both regions aim to foster competition and protect consumer interests in the digital realm.

6. Impact and review of the Bill on Large Corporations and MSMEs:

Major corporations such as Apple, Google, Amazon, Meta, Uber, and Flipkart have criticized the draft bill, citing a dearth of successful global precedents for ex-ante regulations.

Indian companies hold a dominant position in digital sectors such as food delivery, ticket booking, and travel aggregation. Many of these firms may fall under the purview of the draft bill as providers of online intermediary services. However, certain obligations outlined in the bill pose significant challenges to their business models. For instance, one provision prohibits SSDEs from preventing businesses on their platforms by directing users to their own services. This shall mean that a restaurant listed on a food delivery platform can redirect customers to its own website for transactions, bypassing the platform's fees. However, food delivery platforms heavily rely on these fees for their sustenance. Allowing restaurants to access consumers through the platforms for free is not only unfair but also jeopardizes the platforms' viability. Although the draft bill includes a provision allowing platforms to restrict such bypassing if it's crucial to their operations, the final decision on what qualifies as 'integral' lies with the Competition Commission of India. This leaves the fate of many major Indian platforms uncertain.¹⁸

Another provision with negative implications for consumers and companies involves the limitation on SSDEs promoting bundled products. This regulation may restrict SSDEs from offering consumers a package of applications akin to those included with mobile or computer operating systems. Essentially, users would need to download basic apps separately, potentially complicating the process and reducing accessibility to online services for a significant segment of India's internet users, especially those less proficient with technology.

Micro, Small, and Medium Enterprises (MSMEs) often face resource constraints, posing challenges for their entry and competitiveness across various markets. Hence, digital platforms are known to significantly alleviate these market entry barriers for MSMEs, enabling them to optimize resources by providing access to order fulfilment through their infrastructure or targeted advertising. Any restriction imposed on SSDE regarding targeted advertising is bound to create challenges for those who heavily rely on this to generate revenue to attract customers. Consequently, the prospective law may dampen the competition in various sectors where MSMEs previously flourished due to their access to such SSDEs.¹⁹

The Bill is expected to trigger a surge in cases of Cyber fraud, as platforms shall lose control over its business and consumer interactions. This will transform India's formidable 800 million-strong internet user base into 800 million individual vulnerabilities for malicious fraudsters of exploitation. Moreover, the bill might create hurdles for MSMEs to penetrate and compete across various markets, despite being the backbone of the Indian economy.

The Bill may also inadvertently create opportunities for fraud and cybercrimes through various channels such as:

1. Data Accessibility: The bill may necessitate increased sharing of data among companies or government agencies, potentially enlarging the pool of data vulnerable to breaches and unauthorized access by cybercriminals.
2. Complex Regulatory Framework: The intricate regulations introduced by the bill could introduce loopholes that cybercriminals could exploit for fraudulent activities or to circumvent compliance measures.
3. Resource Diversion: Companies may need to divert resources away from cybersecurity measures to ensure compliance with the bill, potentially leaving them more prone to cyberattacks and data breaches.
4. Ambiguous Responsibilities: Unclear delineation of responsibilities and obligations among different stakeholders under the bill could create confusion and offer opportunities for fraudulent activities to go undetected.
5. Interconnected Systems: The interconnected nature of digital platforms and services could amplify the impact of security vulnerabilities, enabling cybercriminals to exploit weaknesses in one system to gain access to others.
6. Enforcement Challenges: Insufficient enforcement mechanisms or inadequate resources allocated for overseeing compliance with the bill could lead to a lack of accountability and lead to fraudulent behaviour.²⁰

7. Challenges and Perspectives of Big Firms :

Domestic companies such as Oyo, Zomato, and Swiggy have expressed reservations about the ex-ante framework, with Zomato advocating for provisions to align with the Indian context. Paytm and MakeMyTrip have shown greater support for such regulations.²¹

According to Nasscom, the designation of enterprises for ex-ante obligations should be considered a blend of quantitative and qualitative factors. These obligations should not be mutually exclusive or have overriding effects. It also emphasized on the statutory obligation for the Competition Commission of India (CCI) to conduct market studies before identifying core digital services or specific obligations.

Several industry entities, including the All India Gaming Federation, Asia Travel Technology Industry Association, and Confederation of All India Traders, have endorsed the framework for Systemically Significant Digital Enterprises.

Microblogging platform X (formerly Twitter) supported the ex-ante regulations but suggested a careful consideration of the definition of Systemically Significant Digital Enterprises.

Apple India opposed ex-ante regulations, advocating instead for a light-touch regime that fosters innovation.

Meta, the owner of Facebook, expressed a preference for observing and conducting further research before rushing to adopt variations of the European Union's Digital Markets Act or other ex-ante frameworks currently under consideration.²²

In recent years, Indian internet companies, along with global counterparts, have contested the alleged monopoly imposed by major US players like Google and Apple. A notable development in this ongoing saga is the dispute between Google and several apps developed by ten Indian developers, including Bharat Matrimony and Shaadi.com, resulting in the temporary removal of these apps from the Play Store followed by their reinstatement.

Some large technology players such as Google, Apple and Meta are already facing probes by India's competition regulator for alleged abuse of fair-trade rules.

Google has said that it was not in favour of ex-ante regulation "except under certain conditions the new regime should promote competition and innovation, provide for evidence-based justifications (pro-competitive) for conduct under scrutiny, provide for separation of powers between rule-making bodies in charge of designation of SSDEs and bodies in charge of enforcement, etc.," it said in its suggestions.

Amazon claims that the ex-ante regulation for the e commerce sector "may be untimely and excessive" and may lead to "over-regulation".

Among Indian companies, Zomato has said if ex-ante regulation is sought to be introduced, it should be conducive to the growth of startups and should not stifle innovation or consumer interest.

Paytm has said that it had observed practices wherein large digital enterprises abused their dominance in the market. It claimed that bundling services of app store operators creates asymmetric pricing and binds app developers into only using their services. Further, app stores charged high commissions which affected business viability and increased customer costs. App stores use anti-steering provisions that restrict choices for developers and also have control over the app reviews and search algorithms, which could provide avenues for self-preference of their own apps at the expense of others, it added.²³

8. Balancing Act - Analysing Pros and Cons of the Bill:

Business growth often stems from various factors such as intellectual property rights (IPR), strategic initiatives, technological advancements, and more. However, companies may hesitate to disclose such sensitive information to the Competition Commission of India (CCI) due to potential risks and threats it could pose to their business operations.

If a company demonstrates that adhering to the law would result in economic losses, it's not bound to follow the law. Consumers choose to engage with a specific company due to its distinct qualities and if CCI's actions compromise these unique selling points, companies would bypass these regulations.

While the draft bill draws heavily from the Digital Markets Act of 2022, a regulation within the European Union, consideration shall be given to how it can be effectively applied to the Indian economy. This economy is notably more fragmented and serves a much larger target market as a whole.

It's noteworthy that the draft bill excludes these aspects, relying on the provisions of the Competition Act, which were considered sufficient. Apart from assessing the necessity of an ex-ante framework based on evidence and market impact, defining SSDEs becomes crucial. This entails deciding whether broad qualitative parameters should subjectively determine SSDEs or if quantitative measures should be prioritized. In terms of quantitative thresholds, drawing parallels with laws from developed jurisdictions may require appropriate indices for mapping volumes and user base in the Indian context. Introducing such a legislation in India would necessitate significant streamlining to avoid overlaps with existing laws. Additionally, it's important to evaluate the potential consumers and other benefits this law could bring to the Indian market and whether it would aid in ensuring fairness for startups and MSMEs.

At first glance, the incorporation of this provision in the Draft Digital Competition Bill seems to align with a similar objective. Nevertheless, it is imperative that this provision is not invoked to further protectionist sentiments by exempting government enterprises and local Indian enterprises eligible for designation as SSDEs. Such an exemption could result in the creation of uneven playing field. Currently, the government operates several digital platforms, including the Open Network for Digital Commerce, IRCTC, and E-NAM (National Agriculture Market).

Section 40 of the bill ²⁴ outlines the government's authority to override decisions made by the CCI under extraordinary circumstances such as, if it finds out that the regulator is unable to discharge its functions etc. If by notification, the government decides to supersede the CCI, then the chairperson and members of CCI will have to vacate their offices. The government can supersede the CCI only upto a period of 6 months.

It is settled under law that the Executive cannot have unbridled power. The same was held by Supreme Court in Satwant Singh Sawhney vs D Ramarathnam ²⁵.On the face of it, the provision appears to promote ease of doing business and would have a positive impact. While the provision in question may seem to promote ease of conducting business and potentially yield positive outcomes, its judicious application is crucial to prevent excessive governmental intervention. Governmental powers, even those related to regulation and control, are subject to constitutional scrutiny and limitations.

9. Recommendations by the Committee:

TABLE 4: Recommendations of the Standing Committee and similar provisions in the other legislations ²⁶

S. No.	Anti-competitive practice	Recommendations given by the Committee	Similar provisions in other legislations
1.	Anti-Steering	A SIDI should not condition access to the platform or preferred status or placement on the platform on the purchase or use of other products or services offered by the platform that are not part of or intrinsic to the platform.	Section 3 (5), American Innovation and Choice Online Act
2.	Platform Neutrality/Self- Preferencing	A SIDI must not favour its own offers over the offers of its competitors when mediating access to supply and sales markets, in particular, when presenting its own alters in a more favourable manner and when exclusively pre-installing its own offers on devices or integrating them in any other way in offers provided by the platform.	Section 19(a)(2) , German Competition Act
3.	Bundling and tying	SIDI should not force business users or end users to subscribe to, or register with, any further services as a condition for being able to use, access, sign up for or registering with any of that platform's core platform service.	Article 5 (8), DMU
4.	Data usage	The Committee recommends that a SIDI should not: process, for the purpose of providing online advertising services, personal data of end users using services of third parties that make use of core services of the platform; combine personal data from the relevant core service of the platform with personal data from any further core services or from any other services provided by the platform or with personal data from third- party services; cross-use personal data from the relevant core service in other services provided separately by the platform, including other core services of the platform, and vice-versa; and sign in end users to other services of the platform in order to combine personal data, unless the end user has been presented with the specific choice and has given consent.	Article 5 (2), DMU
5.	Acquisitions and mergers	The CCI must be informed of an intended concentration concerning services or collection of data in the digital sector, irrespective of whether it is notifiable to the Commission. A SIDI should also provide such information prior to its implementation, following the conclusion of the agreement, the announcement of the public bid or acquisition of a controlling interest".	Article 14(1), DMU
6.	Pricing/Deep discounting	A SIDI should not limit business users from differentiating commercial conditions on its platform and must not prevent business users from offering same products and services through third-party online intermediation services or through their own direct channel at varying prices.	Article 5 (3), DMU
7.	Exclusive Tie-ups	A SIDI should not prevent business users from offering same products and services through third-party or direct channels at a different price for fair market conditions to prevail.	Article 5 (3), DMU
8.	Search and ranking preferencing	A SIDI must provide third-party undertaking with access to fair, reasonable and non-discriminatory terms to search-engine related operations such as ranking, click, query and others. Further, SIDI should not treat businesses favourably.	Article 6 (11), DMU
9.	Third-party applications	A SIDI should enable installation of third-party software applications or stores using or interoperating with its operating system. Only exception may be made in case of preventing data from the SIDI or another business user from being transferred to government of a foreign adversary.	Article 6 (4), DMU
10.	Advertising policies:	A SIDI should not process users' personal data for online advertising services using third-party services. It must provide advertisers with information on price paid by the advertiser remuneration received by the publisher on a daily basis. Advertisers and publishers must be able to carry out their independent verification of the advertisements inventory of aggregated and non-aggregated data.	Article 5 (2)(a) & Article 6(8)

10. Conclusion: Moving Forward with the Digital Competition Bill

Considering the profound implications of enactment of this law on the development of Indian digital markets and economy, it is imperative to achieve a harmonious balance between the need for regulation and the realities of the Indian economy to avoid unintended consequences, so that the Indian consumers do not end up with a medicine that is worse than the disease.

The digital platforms in India are still in a developmental phase compared to those in the EU, and simply adopting regulations like the DMA may not be suitable for India's unique market characteristics. Despite India's significant economic growth in recent years, its access to advanced consumer and business technologies lags behind that of Europe and North America. Therefore, the focus should be on attracting and fostering investment rather than implementing regulations that could hinder the deployment of crucial infrastructure.

While the DMA aims to ensure fair distribution of benefits among platform users, such an approach could stifle innovation and reduce consumer benefits, especially in a market like India where the priority should be on introducing and maintaining innovative technology. Adopting a DMA-like approach could threaten domestic innovation, which has been central to initiatives like Digital India and Startup India. Such a regime would discourage growing companies and burden the government with extensive regulatory requirements. Moreover, implementing pre-emptive constraints without considering potential consumer benefits may hinder economic growth, technological progress, and investment in India's digital markets.²⁷

To ensure sustainable growth without unnecessary compliance burdens, India needs a nuanced approach to digital market regulation. It should avoid overly restrictive measures that could impede progress and instead focus on fostering an environment conducive to innovation and investment.

To mitigate cyber crime risks, policymakers must ensure that robust cybersecurity measures are integrated into the implementation of the Digital Competition Bill. This includes prioritizing data security, establishing clear guidelines for compliance and enhancing oversight mechanisms. Fostering a delicate equilibrium between innovation and safeguarding consumer welfare is paramount and only with the passage of time these measures would increase the consumer welfare or prove to be counter-intuitive by inadvertently chilling innovation and competition in the digital economy.

Overall, while the bill represents a bold attempt to regulate digital markets through ex-ante measures, its effectiveness and impact shall be evaluated. The success of such regulations may vary depending on various factors, including enforcement, adaptation by companies, and evolving market dynamics.

Footnotes

1. Ministry of Corporate Affairs, "Report of the Committee on Digital Competition Law" Feb. 27, 2024, available at: https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open.

2. Press Information Bureau, "Report on India's Trillion Dollar Digital Opportunity Release" Feb. 20, 2019, available at: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1565669.

3. Ministry of Corporate Affairs, "Report of the Committee on Digital Competition Law" Feb. 27, 2024, available at: https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open.

4. Sudipto, "Call For Inputs On Draft Digital Competition Bill, 2024, Mar. 26, 2024, available at: https://community.nasscom.in/communities/public-policy/call-inputs-draft-digital-competition-bill-2024.

5. "CCI's Powers To Penalise On Global Turnover Basis To Deter Anti-Competitive Ways", The Economic Times, Mar. 10, 2024, available at: https://economictimes.indiatimes.com/news/economy/policy/ccis-powers-to-penalise-on-global-turnover-basis-to-deter-anti-competitive-ways/articleshow/108365906.cms?from=mdr.

6. Ministry of Corporate Affairs, "Report of the Committee on Digital Competition Law", Feb. 27, 2024, available at: https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open.

7. Ibid.

8. European Commission, Digital Markets Act, available at: https://digital-markets-act.ec.europa.eu/index_en.

9. Article 2, Digital Markets Act, https://www.eu-digital-markets-act.com/Digital_Markets_Act_Article_2.html.

10. Ibid.

11. Associated Press, "Europe's Digital Markets Act Is Forcing Tech Giants To Make Changes. Here's What That Will Look Like", The Financial Express, Mar. 6, 2024, available at https://www.financialexpress.com/business/digital-transformation-europes-digital-markets-act-is-forcing-tech-giants-to-make-changes-heres-what-that-will-look-like-3415298/.

12. Alba Ribera Martínez, Kluwer Competition Law Blog, Sep. 11, 2023, https://competitionlawblog.kluwercompetitionlaw.com/2023/09/11/22-core-platform-services-for-6-gateekepers-the-european-commission-issues-its-preliminary-view-on-the-dmas-designation-process/.

13. IANS, "EU Designates Six Big Tech Gatekeepers Under DMA, Introduces Provisions For Fines", The Economic Times, Sep. 06, 2023, available at: https://economictimes.indiatimes.com/tech/technology/eu-designates-six-big-tech-gatekeepers-under-dma-introduces-provisions-for-fines/articleshow/103431188.cms?from=mdr.

14. Banerjee, Ritarshi, "Youtube Unveils A New Tool For Disclosure Of Synthetic Media Usage By Creators", The Financial Express, available at: https://www.financialexpress.com/business/digital-transformation-youtube-unveils-a-new-tool-for-disclosure-of-synthetic-media-usage-by-creators-3431305/.

15. Reuters, "Apple To Let Developers Distribute Apps Directly From Their Sites", The Economic Times, Mar. 12, 2024, available at: https://economictimes.indiatimes.com/tech/technology/apple-to-let-developers-distribute-apps-directly-from-their-sites/articleshow/108436930.cms?from=mdr.

16. Dougall, Sabrina, "EU Digital Markets Act Explained", Checkout.com Blog, Mar. 8 2024, available at: https://www.checkout.com/blog/checkout-com-explains-the-eu-digital-markets-act.

17. Meta, "Facebook and Instagram to Offer Subscription for No Ads in Europe", Facebook Newsroom, Oct. 30, 2023, available at: https://about.fb.com/news/2023/10/facebook-and-instagram-to-offer-subscription-for-no-ads-in-europe/.

18. Bal, Meghana, "The Draft Digital Competition Bill 2024 Wields A Sledgehammer Where A Scalpel Is Required", The Print, 18 Mar. 2024, available at: https://theprint.in/opinion/the-draft-digital-competition-bill-2024-wields-a-sledgehammer-where-a-scalpel-is-required/2004444/.

19. Ibid.

20. Mathi, Sarvesh, "Summary: India's Draft Digital Competition Bill, 2024", Medianama, Mar. 14, 2024, available at: https://www.medianama.com/2024/03/223-summary-draft-digital-competition-bill-2024/.

21. Ibid.

22. Sudipto, "Call For Inputs On Draft Digital Competition Bill, 2024", Mar. 26, 2024, available at: https://community.nasscom.in/communities/public-policy/call-inputs-draft-digital-competition-bill-2024.

23. ET Bureau, " Big Tech, Few Indian Entities Oppose Ex-Ante Regulation Under New Law; Others Lend Their Support", The Economic Times, Mar. 13, 2024, available at: https://economictimes.indiatimes.com/news/economy/policy/big-tech-few-indian-entities-opposed-ex-ante-regulation-under-new-law-others-lend-their-support/articleshow/108447933.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst.

24. Ministry of Corporate Affairs, "Report of the Committee on Digital Competition Law", Feb. 27 2024, available at: https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open.

25. Satwant Singh Sawhney v. D. Ramarathnam, 1967 AIR 1836.

26. Ministry of Corporate Affairs, "Report of the Committee on Digital Competition Law" (Feb. 27 2024), available at: https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open.

27. Geoffrey A Manne, "European Union's Digital Markets Act not suitable for developing economies, including India", The Times of India , Feb. 14, 2023, available at: https://timesofindia.indiatimes.com/blogs/voices/european-unions-digital-markets-act-not-suitable-for-developing-economies-including-india/.

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