House panel seeks to rein in Big Tech firms with digital competition law

The Parliamentary Standing Committee on Finance has presented a set of recommendations to rein in Big Tech companies through a digital competition law for regulating anti-competitive practices on their platforms.

The report underlined the need for ex-ante regulations — which are cautionary and based on anticipated changes or activity — and said the government must frame a definition for Systemically Important Digital Intermediaries (SIDIs) that need tighter regulations. The classification could be based on revenues, market capitalisation, and the number of active users.

Technology behemoths such as Alphabet (which owns Google), Meta (which owns Facebook), and Amazon are among those recognised the world over as Big Tech companies that act as crucial digital intermediaries. The panel said a top tech company must not "favour its own offers over the offers of its competitors" when acting as mediators.

“India must identify the small number of leading players or market winners that can negatively influence competitive conduct in the digital ecosystem,” said the panel, headed by former junior finance minister Jayant Sinha, in its report tabled in the Lok Sabha today.

The report comes amid a rising global scrutiny of Google, Apple, Facebook, Amazon, and others for allegedly abusing their market position using chunks of user data. Earlier this year, the Competition Commission of India (CCI) slapped Google, in two separate cases, with penalties of Rs 936.44 crore and Rs 1,337.76 crore.

The committee also recommended that India’s competition law need to be enhanced for which it is necessary to strengthen the Competition Commission of India to take on new responsibilities.  It suggested a specialized digital markets unit within the CCI, with “skilled experts,” academics, and attorneys, enabling the commission to closely monitor the SIDIs as well as emerging SIDIs.

The SIDIs would have to submit a report to the CCI every year describing the measures implemented to fulfill their obligations. They must also publish a summary of this report on their websites.

Google, Meta, Amazon, and Apple did not respond to Business Standard’s requests for comments. 

Parl panel’s key recommendations

• Separate Competition law for tech companies
• Specialised digital market unit within CCI
• Frame a definition for Systemically Important Digital Intermediaries
• Curbs on deep discounting, bundling/tying of services
• Strict regulation on data usage for advertising

Run-ins with CCI

• Google fined for “anti-competitive” practices related to Android devices
• Meta under probe over WhatsApp’s privacy policy
• Apple facing investigation for in-app purchase system

The committee’s report mentions that it interacted with Indian representatives of Amazon, Apple, Facebook, Google, Netflix, Twitter, and Uber, as well as representatives of domestic companies such as PayTM, MakeMyTrip, Zomato, Ola, Swiggy, Flipkart, and others to identify the competition concerns. Based on the submissions, the committee has identified 10 anti-competitive practices, some of which are anti-steering provisions, self-preferencing, bundling or tying of services, deep discounting, and search or ranking preferencing. The panel said the SIDIs should be stopped from processing users’ data by using services of third parties that make use of their core services.

Facebook India, in its discussions with the parliamentary panel, said: “By and large, data is not collected but actually generated by businesses as they build the ability to capture signals through their services and technologies. Any business is in a position to create its own data space in such a way.”

The supreme court of India recently greenlighted the CCI’s probe into WhatsApp’s privacy policy update, related to allegations that it shares user data with its parent company Facebook’s advertising business.

Salman Waris, managing partner at technology law firm TechLegis Advocates & Solicitors, said the recommendations by the committee were a welcome step.  “This demand (by the panel) is in keeping with the maturity of the Indian market. But… the regulations should not overburden the companies. India has been able to cushion the effects of the economic slowdown due to the digital ecosystem. Thus, the regulations should strike a balance between avoiding unnecessary hurdles and unfair market conditions.”