The Internet and Mobile Association of India (IAMAI), a non-profit industry body, has recently been accused by some start-ups of displaying favoritism towards ‘Big Tech’ companies. This highlights concerns regarding anti-competitive practices occurring within the broader tech industry. Big Tech is a term often used to describe a select group of highly influential global technology companies, such as Google, Facebook, Amazon, Apple, and Microsoft.
Backdrop of the Accusation
The Parliamentary Standing Committee on Finance has proposed new preventive regulations against such anti-competitive practices by Big Tech companies. These include setting behavior standards and designating large tech companies as Systemically Important Digital Intermediaries (SIDIs), identified by their revenue, market capitalization, and user base. However, IAMAI, with other Big Tech members like Meta, Apple, Amazon, Twitter, and Google, argues these regulations could potentially suppress innovation and competition, inviting criticism from numerous Indian startups.
Big Tech’s Influence in India’s Digital Space
Big Tech companies play a significant role in India’s digital economy, impacting various sectors in the following ways:
1. Revenue Source: Big Tech companies substantially contribute to the fintech market due to low per-user ad revenues in India.
2. Overcoming Literacy Barriers: They provide voice-based and regional language interfaces to cater to a diverse user base.
3. Bridging Infrastructural and Employment Gaps: By introducing new business modules that offer warehousing, delivery facilities, and job opportunities, Big Tech is aiding in addressing infrastructural and employment issues in India.
4. Social and Political Progress: A significant number of Indian internet users rely on one or more Big Tech platforms for information sharing, communication, and participation in political and social life.
Anti-Competitive Conducts in the Digital Ecosystem
Big tech companies can potentially influence competitive conduct in the digital ecosystem. Some of the practices include:
1. Acquisitions and Mergers: Purchase of highly-valued start-ups without subjecting to merge control rules is a recurring issue in these markets.
2. Self-Preferencing: Instances where a company promotes its own services on its platform, which also hosts other competing service providers can harm businesses.
3. Data Usage: The vast amount of customer data collected by digital companies can create an unfair advantage and obstruct new companies from competing.
4. Restricting Third-Party Applications: Some Big Tech companies limit the use of third-party applications, which might limit user choice.
5. Adjacency: Some enterprises compel customers to purchase additional services linked to their main product.
6. Anti-Steering: Anti-steering provisions are implemented by some entities to prevent business users from exploring alternative options.
India’s Current Regulatory Approach to Big Tech
In India, anti-trust issues are regulated by the Competition Act of 2002, with the Competition Commission of India (CCI) monitoring monopolistic behavior. Recently, the government proposed amendments to the competition law in the Competition Amendment Bill, 2022, which received Presidential Assent in April 2023. This will increase regulatory scrutiny on enterprise operations significantly in India’s digital and infrastructural space.
Suggested Way Forward
The Parliamentary Standing Committee on Finance recommends a system that evaluates deals based on value to regulate unique features of digital markets. They insist that such changes need to be reported to the CCI even if they do not meet the notification threshold. Additionally, the government should take measures to promote internet awareness, such as verifying website authenticity before initiating transactions and avoiding unauthorized application access.
