There are concerns that the current state of competition law is unable to respond to the challenges posed by the expansion of the scope of technology as well as the rise of digital economy. A dated report submitted by the European Commission to the European Parliament suggests that the basic framework of competition law continues to provide a sound and sufficiently flexible basis for the protection of competition in this era. However, this line of reasoning was quickly abandoned, with the passing of the EU Digital Markets Act (DMA), which aims to “make markets in the digital sector fairer and more contestable”. From a layman’s perspective the DMA was passed to identify and regulate the ‘Gatekeepers’ i.e., Google, Apple, Facebook, Amazon, Microsoft (also commonly known as “GAFAM” in European parlance). Under DMA, GAFAM is now required to “ensure equitable access to data and promote interoperability among their various platforms”. Following EU’s footsteps, a Committee on Digital Competition Law was setup to evaluate the ex-ante competition framework for the digital markets in India. As part of the annexure to the report, a draft Digital Competition Bill, 2024 was also published to give effect to the Committee’s report. This article does not seek to give any analysis of the Bill itself since it is more important to understand the necessity of such an ambitious Bill in the first place, which forms the essence of this article.
The necessity of the Bill stems from the fact that the laws pertaining to data have been a subject of long drawn scrutiny in Indian jurisprudence since time immemorial. Although the Digital Personal Data Protection Act (DPDP Act) has been enacted, it is yet to be enforced given that the rules to give effect to DPDP Act are yet to be tabled in the Parliament. Currently as it stands, markets including digital markets can take full advantage of the lack of comprehensive data laws in India which are currently governed under the Information Technology Act, 2000. Businesses in India collect personal data as well as sensitive personal data from their consumers to understand prevailing market trends to surpass their competitors and satisfy their customers. This is done without any significant downside in relation to non-compliance with data standards around the world, especially in regions like EU or countries like US which have comprehensive data protection standards. This issue is further exasperated by the fact that with digitalization and expansion of the digital markets, certain digital media and social media platforms are able to take full advantage of the lack of regulations to get a significant advantage over their competitors in the Indian market economy. These platforms have started significantly investing in the collection of user data through active and passive means in India. Platforms monitor consumers behaviour and trends through automated means which helps them make effective strategies while keeping a tab on their competitors (this would typically not be allowed under EU/UK General Data Protection Regulation without explicit consent of the data subjects).
The irresponsible access and use of data by these digital media platforms can lead to them enjoying a position of strength or dominant position in their relevant marketspace. The access and use of consumer data by such dominant platforms can lead to issues such foreclosure of market, data acting as a deterrent, predatory pricing, reduction of output to deflate supply and inflate demand, harm to consumers due to privacy concerns etc, which stifles a free and fairly competitive digital market. This is not an isolated problem, given that even in EU, the European Commission has taken action against gatekeepers for their irresponsible access and usage of data. For instance, in the case of Microsoft Corp. v Commission of the European Communities, it was held that the practice of Microsoft of not sharing vital data was an abuse of dominant position and hindered free and fair competition. Similarly, in India, the Competition Commission of India in the case of National Restaurant Association of India v. Zomato India Ltd while assessing allegations of abuse of dominance provided that not sharing of essential customer data by Zomato could potentially contravene the Competition Act, 2002 and ordered an investigation of the same. Evidence suggests that the Competition Commission of India is quite cautious and vigilant when dealing with the intersection of competition and data protection laws, given that the Competition Commission of India has also fined Meta for abusing its power by implementing the infamous ‘WhatsApp’s 2021 Privacy Policy’ which allowed Meta to collect and share user data with other Meta companies for purposes other than providing WhatsApp’s service.
This highlights the stance of the Competition Commission on the importance and misuse of data, however the assessment of abuse of dominant position in the digital market space under the current regulatory framework of the Competition Act, 2002 through traditional tests poses various challenges such as defining the relevant market, assessing dominance with various market players etc. With the publication of the Bill, it seems that proactive steps are being taken in the right direction to address the issue with digital markets which have a significant influence in the Indian digital market economy due to lack of regulations. If and when the Bill is passed, it will give Competition Commission of India more power to make effective decisions and regulate the digital market space which is insanely data driven.
Authors: Amartya Mody & Tvisha Ojha