Business: India’s draft Digital Competition Bill 2024 (DCB) proposes to identify systemically important digital enterprises and their affiliate digital enterprises and regulate their behaviour with respect to their core digital services. Its stated objectives are to “foster innovation, promote competition, protect the interests of users”. It is still in the making, yet to go to Parliament.
- Definition and scope:
Services covered: Almost all types of digital services, including search engines, online social networking services, video-sharing platform services, interpersonal communication services, operating systems, web browsers, cloud services and advertising services. Additionally, “online intermediation services” are also included, which are broadly defined as any other digital service not explicitly covered above.
Covered entities: Entities that meet the “financial strength test” (e.g. Indian turnover of over Rs 4000 crore) and “spread test” (e.g. 10 million end users in India) and their related group companies involved in core digital services in India.
- Obligations:
Obligation to be fair and transparent
Restrictions on self-preference
Restrictions on restricting third-party apps
Restrictions on anti-steering
Restrictions on tying and bundling, including encouraging bundle deals - Data governance and privacy provisions:
Restrictions on data use (e.g., prohibition of data intermixing across various core digital services).
A broad obligation to allow data portability.
This is in addition to the obligations that “critical data fiduciaries” will have under the Digital Personal Data Protection Act 2023. 4. Enforcement and Compliance:
Regulatory Authority: Empowers the CCI to draft specific rules of conduct (based on the obligations mentioned above) and empowers the CCI to ensure compliance with conduct requirements through inquiries and investigations, dawn raids, statements on oath, requests for information, imposing fines on companies and relevant officials, etc.
Importantly, apart from Big Tech, certain large Indian digital companies, public sector companies and large unicorns, are filtered out by definition, which may also be covered by the DCB.
Given the wide-reaching impact of the DCB on India’s growing digital economy, it may be worthwhile to review the functioning of other similar prior legislations globally, where enacted.
EU’s DMA
The Digital Markets Act (DMA) came into force on 1 November 2022 and came into force on 2 May 2023. However, obligations on gatekeepers only start to kick in from March 2024. Early evidence coming from Europe on the implementation of DMA raises some concerns for small and medium-sized businesses and may be relevant to take note of.
According to European hotel distribution technology provider D-Edge, due to DMA compliance, local hotels in Europe have seen an increased reliance on online travel aggregators (OTAs). Before DMA, Google placing its hotel comparison service and maps at the top of the search screen was a source of organic traffic for hotel websites, but this declined by 20% compared to pre-DMA levels and bookings through OTAs increased by 36%.
We need to figure out how our small hotels and other small and medium-sized businesses are being leveraged by Big Tech companies, other large platforms, online ads, social media platforms, etc. that will be covered by DCB and be careful in the regulatory design so that there are no unexpected impacts on them as in Europe.
