From Google to Zomato: What the Digital Competition Bill means for firms
The Union government may raise thresholds under the proposed Digital Competition Bill. Here's what the law seeks to do, who may fall within its scope and why the changes matter
 "From Google to Zomato: What the Digital Competition Bill means for firms")
The Union government is expected to revise the proposed Digital Competition Bill (DCB) before introducing it in Parliament. The government is considering increasing the financial and user thresholds for identifying companies that will come under the law, while retaining its proposed ‘ex ante’ regulatory framework, The Financial Express reported, citing documents circulated amongst stakeholders.
According to the report, the proposed change follows concerns from several domestic digital businesses and industry groups that the thresholds in the 2024 draft Bill were broad enough to capture Indian technology companies alongside global Big Tech firms.
Why is India proposing a Digital Competition Bill?
The Committee on Digital Competition Law (CDCL), constituted by the Ministry of Corporate Affairs, said digital markets often move much faster than traditional markets because of network effects, economies of scale, data advantages and platform ecosystems. By the time lengthy investigations conclude, the market may already have tipped in favour of a dominant platform.
The Committee therefore proposed a separate law that would impose obligations on certain large digital platforms before harmful conduct occurs. According to the draft Bill, its objective is to “promote contestability, fairness and transparency, while fostering innovation and protecting users' interests”.
What does 'ex ante' regulation mean?
The proposed law introduces an ex ante regulatory framework. Simply put, ex post regulation investigates anti-competitive behaviour after it has occurred.
This is how the Competition Act largely operates today.
This regulation places obligations on designated companies in advance so that certain practices are prevented instead of being investigated years later.
The CDCL argued that preventive regulation is better suited to digital markets because a few large platforms can act as important gateways between businesses and consumers.
Research on the proposed law also said the Bill seeks to complement, rather than replace, India's existing Competition Act by adding preventive measures for digital markets.
Who is an SSDE?
The Bill introduces the concept of a Systemically Significant Digital Enterprise (SSDE).
These are companies that have a major presence in one or more Core Digital Services, which include online search engines, app stores, social networking services, operating systems, browsers, cloud services, online intermediation services and digital advertising services.
Under the 2024 draft Bill, a company could qualify if it crossed specified financial thresholds and user thresholds over the previous three financial years.
The draft proposed financial thresholds including:
- ₹4,000 crore turnover in India, or
- $30 billion global turnover, or
- ₹16,000 crore gross merchandise value in India, or
- $75 billion global market capitalisation.
It also proposed user thresholds of at least 10 million end users in India, or at least 10,000 business users in India.
The Competition Commission of India (CCI) would also have the power to designate companies based on qualitative factors such as network effects, user dependence, market structure and barriers to entry, even if they did not meet every quantitative threshold.
What is changing now?
According to recent media reports, the government is reviewing these thresholds after feedback from stakeholders.
The reported proposal is to raise the financial and user thresholds so that the law primarily applies to global technology companies such as Google, Meta, Apple and Amazon while reducing the likelihood that Indian digital companies including Zomato, Swiggy, Ola, Flipkart and Oyo are brought within the law immediately.
However, The Financial Express report indicated that the government is not reconsidering the broader ex ante framework itself. Instead, the review is focused on narrowing the law's coverage while retaining its preventive approach.
The review follows concerns that the original thresholds were broad enough to potentially capture several Indian digital businesses that were still expanding.
What obligations would designated companies face?
Once designated as an SSDE, companies would have to comply with a series of conduct requirements under the draft Bill.
Among other things, designated firms would have to:
- avoid self-preferencing their own products or services over rivals;
- avoid unfair tying and bundling of services unless such integration is integral;
- avoid unfair use of business-user data;
- avoid restricting business users from communicating directly with customers;
- comply with requirements relating to fair access, data portability and user choice, where applicable.
The Bill also allows the CCI to frame service-specific conduct requirements for different categories of core digital services.
Why did Indian companies raise concerns?
Several Indian digital businesses and industry associations have argued that the original thresholds could bring domestic companies under a compliance framework designed largely for global digital gatekeepers.
Their concerns centred on three issues: higher compliance costs; the possibility that rapidly growing startups would face regulatory obligations too early; and the risk that stricter regulation could affect innovation and expansion.
Academic commentary on the draft Bill has similarly observed that implementation would require balancing competition objectives with innovation, while ensuring the framework does not create unnecessary compliance burdens.
What to watch next
The Ministry of Corporate Affairs is reviewing the draft Bill before its introduction in Parliament. If the reported revisions are adopted, the Digital Competition Bill would continue to rely on an ex ante framework but with narrower thresholds aimed at ensuring it primarily regulates global technology gatekeepers rather than a wider group of Indian digital businesses.