Panel recommends law to regulate Big Tech firms
The Committee on Digital Competition Law, formed by the Corporate Affairs Ministry last February, released its report on Tuesday, recommending legislation to regulate the market power of Big Tech firms like Google and Meta.
The Competition Act of 2002 “intervenes after the occurrence of an anticompetitive conduct”, the committee said.
“Such a framework was designed at a time when the extent and pace of digitalisation as is witnessed today could not be foreseen.”
The recommendations, if implemented, would better equip the Competition Commission of India (CCI) to rule on competition matters for tech firms.
‘Network effects’
The report raises alarm on the market power of these Big Tech firms, owing to their “network effects”, through which they are able to rapidly increase their user base and establish market power that is difficult for a new entrant in the industry to dislodge.
“As such, digital markets bear the risk of becoming irreversibly polarised in favour of the incumbent,” the report says
It recommends the creation of a new law, the Digital Competition Act, to “introduce an exante legislation specifically applicable to large digital enterprises, to supplement the Competition Act”.
‘Self determination’
A draft prepared by the panel targets firms with a “significant presence” in the market for a “Core Digital Service,” terming them “Systemically Significant Digital Enterprises (SSDEs)”. The draft would compel firms to determine whether they are Systemically Significant Digital Enterprises.
If a firm does not selfdesignate, the penalty recommended by the committee would be derived from not the company’s domestic revenues, but from the entire corporate group’s global turnover.
As for what rules would actually apply to such Systemically Significant Digital Enterprises would be notified after public consultations are held, the report says.
“This will have a major impact on the Big Tech enterprises like Google, Apple, Amazon etc., as they will now also be subject to a separate regulatory regime,” Vaibhav Choukse, a partner at JSA Advocates & Solicitors, said. “Such exante regulation could potentially stifle innovation by imposing burdensome regulations on tech companies,” Mr. Choukse said.