BusinessLine (Delhi)

Big tech blues

Digital markets law needed to curb monopolist­ic excesses

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The digital revolution presents a complex challenge for regulators — fostering a vibrant digital economy while preventing dominant players from stifling competitio­n. Google’s recent decision to delist start-ups from the Playstore for non-compliance with its rules exemplifie­s this challenge. The reach of Google’s online products and services grants it immense power, allowing the tech giant to shape consumer behaviour and influence political landscapes globally.

In India, Google’s Android operating system controls nearly 85 per cent of the smartphone market. Google leverages the reach of its Playstore by creating entry barriers, such as high fees for Indian app developers that are dependent on the platform to reach customers. The delisting of apps is a case of Google flexing its monopolist­ic muscle. Despite complaints by startups, the Competitio­n Commission of India (CCI) has been slow to respond. It has been nearly two years since the problem was brought to light. In contrast, the European Commission has set a precedent by acting against tech giants like Google and Apple for anticompet­itive practices on their respective app stores. India too must hold companies accountabl­e to protect the interests of startups and consumers. India’s burgeoning startup ecosystem needs a fair marketplac­e, without unfair barriers to entry.

India needs to adopt a multiprong­ed approach. Firstly, regulating the fees that Google can charge startups is essential to prevent monopolist­ic practices. While market forces ideally dictate commercial terms, interventi­on becomes necessary when monopoly power is at play. While Google wants 1126 per cent commission which may be high for a number of new startups, the fact is that app developers owe over 4050 per cent of their sales to Playstore’s massive reach. The ongoing efforts led by the IT Ministry to find a longterm solution should focus on arriving at the optimum fee which Google can charge for its service. Secondly, the Centre should develop an Indiacentr­ic alternativ­e to the Playstore, and make it mandatory for it to be accessible on all devices regardless of operating systems or hardware brands. This would promote local innovation and spur Google to adopt fair practices. Products from India Stack, including UPI and ONDC, have democratis­ed digital payments and ecommerce to a large extent. The same model can be deployed for developing an Indian app store.

Thirdly, the government should consider recommenda­tions by the Parliament­ary Standing Committee on Finance, headed by Jayant Sinha, to formulate a law similar to the EU’s Digital Markets Act (DMA) which establishe­s a framework to curb the dominance of Big Tech companies. The Ministry of Corporate Affairs had even set up a Committee on Digital Competitio­n Law in February 2023 to look into the need for a separate digital competitio­n law, but the panel is yet to submit its report. In the absence of a legal framework, it will be hard to move against unfair market practices.

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