An urgency has been created in India to regulate Big Tech or digital giant platforms of a prescribed size on an ex-ante basis, following a global trend. To go or not go ex-ante way as proposed in the new Digital Competition bill ( DCB ) or to wait and watch the outcome of Digital Markets Act (DMA) enforced by EU, is the debate in India during this open consultation process that ends on 15th May, 2024.The Bill outlines quantitative and qualitative criteria for identifying Systemically Significant Digital Enterprises (SSDEs) and their Associate Digital Enterprises (ADEs). These Enterprises exceeding specified turnover and user base, will be subject to the scrutiny of the Competition Commission of India (CCI). The SSDEs are mandated to adhere to stringent obligations that restrict their business models from engaging in ten anti-competitive practices ( ACP) identified by the committee ( for eg. self-preferencing, restricting third-party apps, imposing anti-steering policies, misusing the data of business users, bundling products and services). However, the causal link between these anti-competitive practices and the theory of harm is not clear. Before blindly following any approach, should the Indian stakeholders not be involved in impact cum gap analysis of the competition regulatory approach so far?. The designation process that focuses on structure of enterprises as opposed to market distortion, challenges the paradigm – competition law protects competitive processes in markets not competitors. In this article, I answer the question why the cut and paste of DMA ( in the form of proposed DCB) is premature before an extensive digital market study by CCI. The purpose is to suggest an approach that condemns real harm. Market distortions can be corrected by removing behavioral artificial barriers created dynamically, not by obligating structural changes permanently.Regulatory and policy approaches that fear the intent of AI enabled apps, are usually not evidence based, contribute to ambiguity around rules around various digital platforms. Due to lack of capacity for instance, can market regulators identify and regulate real harms to the competition process and separate the harms that are due to unethical and unfair practices – are not antitrust issues per se. Far from solutions, blanket rules will only burden all stakeholders, chilling ideas, innovation and freedom to express.Without a statement of purpose – some obvious questions that remain unanswered in the Report of the Committee for digital competition law ( CDCL ) are -How will Ex-Ante rules be a viable value proposition which has measurable benefits with efficient enforcement or systemic change for a level playing field that can be expected by all stakeholders?
How do the rules incentivise competitive conduct alongwith innovation and compliance, especially by the entities impacted? And,
Without a clear theory of harm will the new rules accelerate enforcement – can the recently amended competition act not serve the purpose?.
It would be crucial to weigh the regulatory barriers due to restrictive frameworks that may result in serious harm to an emerging competitive market space by untimely hurdles, especially those creating value for customers. An area of regulatory gap is between tipped markets and emerging business models – an exhaustive list of nine core services, presently does not cover new disruptive tech models like GenAI – ChatGPT is conspicuously missing in the regulatory discourse in the Report.The Risks and RewardsThe ten loosely defined ACPs attack product design and consumer experience that are meant to fiercely compete in a dynamic market – with price and non-price benefits. Applying a ‘rule of reason’ test they can arguably be ‘competition on merits’. When pro-competitive business justifications are supported with ample evidence, why are they seen as harmful?. Do dominant businesses not have a right to promote their own products and services – What is the test of harm to distinguish the anti-competitive (preferencing to drive out rivals) from the benign (promoting based on consumer preferences). By coding a law that applies to all ( good and bad business practices ) would result in a presumptuous and flawed regulatory approach. The rules must distinguish between factors like tech innovation ( that are competitive ) from artificial barriers ( exclusionary behaviour that are anticompetitive).For instance, can a finding against Amazon (not sharing data with rival sellers on platform) to drive competitors out be a reason to restrict all platforms from using algorithmic visibility and promotional campaigns?. Jo dikhta hai woh bikta hai ( say marketing gurus ). Even In the case of Amazon, there is no conclusive finding since the European Commission resolved it by accepting commitments that expire in a few years. Such amnesty schemes are positively fast track, albeit creating a cliffhanger, with no jurisprudence ( on exclusionary conduct ). It is also possible that at a later stage, CAs may require commitments that do not expire. Can the regulators second guess business strategies of entities and provide mandatory obligations to change business structures pandering to the requests of the rivals ( protecting competitors not market competition)?.As per first principles of law, process is keyAccording to first principles of administrative law, process is crucial for fair justice and is the cornerstone of the democratic edifice. The initial decisions of CCI were challenged in courts for not following due process, requiring tremendous efforts over a decade to be made by CCI to pass reasoned orders.Thus, setting balanced legal principles that inspire compliance would work better than anti-circumvention provision ( Section 5 of DCB ). In such an emerging landscape, How to overcome regulatory blindness, which the antitrust decisions display in the significant gaps from established principles of evidence, rule of reason and standard of proof?.A Techno-Legal principles framework that collaborates with technology developers is proposed, so that the parameters for ‘fairness’ and‘Contestability’ can be standardized.The downside of relying on rulesIn the ocean of tech policies, the tide of rules has been rising. Rules destroy the capacity to adapt and learn from mistakes. At this stage, when CCI has been navigating with its own skills, learning and also building capacity, handing over an elite GPS ( clone of DMA ) would halt it’s potential improvisation.Thanks to innovation in neuroscience, the ‘one drug for one disorder’ dogma is over. Organisational structures are getting flat and collaborative satisfying the need for speedy, economically viable solutions There is a need for diversity of views from different stakeholders – greater diversity of decision makers expands the playing field by making it more representative thereby reducing the power of entrenched mindsets. Above all, removing process unfairness is key. Else, The quest to remove unfairness of one kind will result in unfairness of another.Disclaimer : Above mentioned article is a Consumer connect initiative, This article is a paid publication and does not have journalistic/editorial involvement of IDPL, and IDPL claims no responsibility whatsoever.
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Why blindly emulate digital competition regulations and what are the risks, rewards
