Digital Competition Bill may hinder investments in tech startups: IAMAI

The Digital Competition Bill seeks to further regulate large digital enterprises, including news aggregators, as part of efforts to ensure a fair competition in the digital spaces

The Internet and Mobile Association of India (IAMAI) has expressed apprehensions about the draft Digital Competition Bill, suggesting it could have adverse effects on Indian startups and other digital enterprises, Moneycontrol reported on Thursday.

IAMAI is a key industry body that represents numerous digital entities, including big tech firms. The body made a submission on the subject, arguing that the proposed regulations stifle venture investments in technology startups.

"The proposed ex-ante regulations can dry up venture investments in tech startups, as the thresholds under the draft bill would act as a ceiling to the potential scalability of businesses," it said.

The report was sent to the Centre on May 15, the last day to submit comments on the bill.

Experts want extension on consultations

Notably, this deadline is extended a month from the earlier date of April 15. However, Business Standard had earlier reported that several Industry associations believed that the consultations on the contentious bill should not be pushed through during the ongoing Lok Sabha elections.

They argued for further deadline extension, suggesting the consultations should only begin after a new government is formed in July. Their suggestion is a reference to the fact that India is undergoing an extensive phase-wise process to elect the 18th Lok Sabha. The results of the election will be out on June 4.

What is the Digital Competition Bill

The bill, proposed in March, seeks to further regulate large digital enterprises, including news aggregators, as part of efforts to ensure a level-playing field and fair competition in the digital space.

The bill proposes ex-ante competition regulations for big tech players such as Amazon and Meta. The draft bill also imposes several obligations on Systemically Significant Digital Enterprises (SSDEs) in "core digital services (CDS)" to operate in a fair manner with end users and business users. CDS will cover online intermediation services, including news aggregators.

The bill is based on the Digital Markets Act (DMA) of the European Union (EU), which became law in March this year after a four-year-long consultation process.

The Centre formed the committee to draft the report in February last year.