The Digital Competition Bill: Onus on Big Tech to declare fair deal

The proposed Digital Competition Bill is expected to put a self-reporting obligation on online entities to declare their dealings are fair and transparent, not restrictive towards third-party applications, according to sources in the know.

The digital entities who qualify as gatekeeper platforms or  systemically important digital intermediaries (SIDIs) would have to provide this declaration to the Competition Commission of India (CCI), according to the proposed Bill. 

The CCI will have the power to levy a fine of up to 1 per cent of the global turnover of the online entity in case it fails to make this declaration, sources said. 

Such online firms would have six months to submit this declaration from the time they cross the threshold set for SIDIs, it is learnt. These thresholds, according to sources, are based on the India and global turnover of online platforms, their gross merchandise value in India, average global market capitalisation, and the number of end users.

As part of the self-reporting obligation, SIDIs would have to declare that they are not inter-mixing or cross-mixing personal data of end users without their consent and have kept anti-steering provisions, which stop users from going out to other platforms, in check. 

The proposed bill is expected to regulate the activities of SIDIs across certain core digital services through these ex-ante regulations. This would cover companies  such as Amazon, Flipkart, WhatsApp and Signal. Big Tech firms including search engines, social networking platforms, web browsers and online advertising firms are expected to come under the regulation. Ex-ante regulations are precautionary steps designed to prevent anti-competitive practices in digital markets.

On all other aspects related to competition regulation such as penalty, settlement and commitment, the bill would draw from the parent Competition Act. The Competition Act has ex-post regulations for digital markets, which means action is taken after an entity has flouted a law such as abusing its dominant position.

The Ministry of Corporate Affairs would share the proposed bill with the Finance Ministry for inputs. 

A parliamentary committee on finance in its report tabled in December 2022 had suggested the need to have a digital competition law. The panel had said the government needed to come up with a reasonable definition of SIDIs, which need tighter regulations. The classification could be done based on revenue, market capitalisation, and the number of active users, it had suggested.

Thereafter, a committee led by Manoj Govil, secretary, Corporate Affairs Ministry, was formed in February 2023 to suggest ex-ante regulations for digital entities including the Big Tech players. 

A draft of the bill was recently circulated among the members of the committee.