Anti-Competitive Practices by Big Tech Companies

Anti-Competitive Practices: Some small startups have claimed that the IAMAI (Internet and Mobile Association of India) is showing favoritism towards big tech companies rather than supporting smaller ones. This brings attention to the problem of Big Tech companies engaging in anti-competitive practices. IAMAI, a non-profit organization registered under the Societies Act, 1896, is supposed to promote and improve the online and mobile value-added services sector. However, the accusation suggests that it may not be doing enough to ensure fair competition for smaller players in the industry.

Background

A finance committee in Parliament suggested new rules to keep big tech companies from unfair practices. These rules would make companies follow certain standards before doing certain things, and classify them as Systemically Important Digital Intermediaries (SIDIs) if they could harm competition based on their size.
The IAMAI disagreed, saying these rules might block innovation and competition. Big tech companies like Meta, Apple, Amazon, Twitter, and Google, who are part of IAMAI, shared similar concerns.
Some Indian startups criticized IAMAI, accusing them of favoring foreign big tech companies and influencing how competition works in the digital world.

Digital Competition Act

The Finance Committee highlighted that India should enhance its competition laws to suit the needs of the digital market.
To ensure a fair and open digital environment, the Committee suggested that the government should pass a Digital Competition Act.
The Committee expressed the need to broaden the functions of the Competition Commission of India (CCI) to effectively tackle anti-competitive practices in digital markets.
To address digital market challenges, the Committee proposed the establishment of a dedicated digital markets division within the CCI. This division would:
a. Oversee both existing and emerging Significant Digital Influencers (SIDIs).
b. Provide recommendations to the central government regarding SIDI designation.
c. Evaluate compliance with regulations.
d. Adjudicate disputes involving digital marketplaces.

How does Big techs Influence the Competitive Conduct in the Digital Ecosystem?

Acquisitions and Mergers:

Big companies snapping up popular startups without facing strict merger rules is a concern in the digital market.
The Committee pointed out that the Competition Commission of India (CCI) might miss some mergers and acquisitions because they don’t meet the necessary benchmarks for assets and turnover.

Self-Preferencing:

Self-preferencing is when a company promotes its own stuff or its subsidiaries on its platform.
Imagine a company running an app store. They might give extra attention to their own apps, making them show up first in searches or rankings.
This isn’t fair to other businesses on the platform. It means those other businesses might lose out on customers and money.

Data Usage:

Digital companies gather tons of customer information, giving them a leg up and making it tough for new businesses to enter the scene.
Unfortunately, this data can be misused, leading to the tracking and profiling of customers.

Restricting Third-Party Applications:

Limiting Choices: Some companies restrict users from using third-party apps on their platforms, limiting the options available to users.
Operating System Restrictions: For example, when it comes to iPhones, Apple doesn’t allow users to install any apps from outside sources, sticking exclusively to their own applications.

Adjacency:

Sometimes, when you buy something online, the company makes you get extra services along with the main thing you wanted. This makes it harder for other companies to compete, and prices can end up being not so fair for customers

Anti-Steering:

Anti-steering provisions are used by entities to prevent business users from using other alternatives, thereby reducing competition.
For example, application stores mandating the use of their own payment systems. These practices result in anti-competitive exclusionary practices.

India’s Current Approach to Regulate Big Tech

Competition Act, 2002:

In India, we have a law called the Competition Act, 2002. This law is in place to make sure that businesses don’t engage in unfair practices that harm healthy competition.
The watchdog for this is the Competition Commission of India (CCI), which keeps an eye on companies to prevent them from becoming too powerful and dominating markets.

Google’s Penalty in 2022:

In 2022, Google got into trouble with the CCI. They were fined a whopping Rs 1,337.76 crore because they were found to be abusing their dominant position in various markets through unfair practices.

Competition Amendment Bill, 2022:

The government decided to update the competition law through a new bill in 2022, known as the Competition Amendment Bill.
This bill got the green light from the President in April 2023.

Changes in the Competition Amendment Bill:

One significant change is that the CCI will now set rules to figure out if a company has a substantial business presence in India. This is important to make sure that even international companies play fair on our turf.
The amendments also focus on making the CCI more effective in reviewing actions, especially in the digital and infrastructure sectors. Many cases weren’t reported before because they didn’t meet the required values, but now the rules are changing to catch more potential issues.

Conclusion

India has been making big moves to create and enforce laws that control how data is collected and to break up the dominance of large tech companies. It’s interesting to see how these tech giants will react to accusations of unfair competition and what actions they’ll take. While it might take some time for the Committee’s suggestions to become official, the steps taken so far are looking positive.