Divergent views emerge within IAMAI on proposed digital competition bill

Four members of the Internet and Mobile Association of India (IAMAI) have expressed a divergent stance on the proposed Digital Competition Bill (DCB), and have written to the Ministry of Corporate Affairs (MCA) to quickly implement regulations that prevent anti-competitive practices.

The IAMAI has argued against the need for ex-ante regulations for digital markets in their submission on the draft Digital Competition Bill.

The companies -- Bharat Matrimony, Match Group, ShareChat, and Hoichoi -- said that IAMAI’s submission is not reflective of the entire digital startup ecosystem or IAMAI’s diverse membership of over 540 companies. 

“Only a miniscule percentage of these members have opposed the ex-ante provisions introduced by the DCB, yet the submission predominantly echoes this minority perspective,” read the letter. 

IAMAI is a key industry body that represents numerous digital entities, including big tech firms. The body made a submission to the MCA, arguing that the proposed ex-ante regulations might stifle venture investments in technology startups.

Ex-ante regulations are proactive measures designed to prevent certain practices before they occur.

The current Competition Act (2002) operates on an ex-post basis, where the regulator steps in only after anti-competitive actions have taken place.

The four startups in the letter have supported the ex-ante regulation.

“We believe that such opposition of ex-ante regulations and continuation of the ex-post regime, will lead to the status quo being maintained and allow entrenched players to continue exploiting regulatory gaps to stifle competition and innovation. We recognize the necessity of ex-ante regulation in the digital sector and believe that India and its digital users would benefit from the provisions outlined in the draft DCB to enhance competition in the digital economy,” said the companies in a letter addressed to Manoj Govil, Secretary, Ministry of Corporate Affairs.

The four companies, however, agreed with the rest of IAMAI members’ concerns on the thresholds for designation of Systemically Significant Digital Enterprise (SSDEs).

IAMAI had earlier said that the criteria for designating enterprises SSDEs can potentially include all of the Indian digital sector.

“The thresholds for designation of an SSDE may require revision, to ensure that only those entities which are sufficiently large and having substantial presence in digital markets in India, are subject to the ex-ante regulations proposed in the DCB. This ensures that financial strength and user spread thresholds outlined in the DCB, do not inadvertently encompass startups and other digital enterprises which are not true digital gatekeepers,” read the letter.

The companies argued that by revisiting thresholds, it can be ensured that only the largest digital gatekeepers (or ‘Big Tech’ companies), which have benefitted from network effects, fall within the DCB’s scope.

The firms have urged the Ministry of Corporate Affairs to move forward with the draft DCB at the earliest.

“As the rest of the world takes steps to tackle market distortions, India should not remain on the sidelines. We believe that any lingering apprehensions can be effectively addressed during the drafting of the regulations under the draft DCB, ensuring that the Indian digital ecosystem benefits from a clear regulatory framework that fosters fair competition and incentivizes innovation among startups and smaller businesses without fear of suppression by larger dominant gatekeepers,” said the companies.