IAMAI to flag house panel views on digital competition to antitrust law committee; startups not on board

In a draft note circulated among its members, the IAMAI flagged several observations made in a December 2022 report of the Parliamentary Standing Committee on Finance on anticompetitive practices by tech majors. It plans to write to the Committee on Digital Competition Law (CDCL) to raise these issues.

The association, which represents Big Tech platforms as well as Indian startups, has asked its members to respond with their comments by May 1.
This comes at a time when Indian startups have been accusing the big Internet firms, especially Google, of anti-competitive practices. The Competition Commission of India (CCI) is hearing a petition against Google’s in-app purchase policy, filed by an alliance of Indian startups. The Madras High Court is also hearing a similar case filed by matchmaking platform operator Matrimony.com.

The CDCL was constituted by the government in February this year to examine the need for, and also draft, a Digital Competition Act.

“The views on digital competition law prepared by the IAMAI seem to be favouring Big Tech companies, and not the interest of startups in India,” the founder of an Indian tech startup told ET. “Some of the startups are planning to meet over the next few days to prepare a communication opposing IAMAI’s views,” the founder said, on the condition of anonymity since the discussions are private.

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ET has seen a copy of the draft IAMAI note. An email and text messages sent to IAMAI seeking comment did not elicit a response till press time Friday.IAMAI’s members include companies such as Google, Meta and Microsoft, in addition to Indian tech firms such as Paytm, Ola, PhonePe, Unacademy and Byju’s.

In the note, the IAMAI has flagged that the house panel’s recommendation of designating systemically important digital intermediaries (SIDIs), or a small number of players that can negatively influence competitive conduct in the digital ecosystem, lacks clarity, makes underlying assumptions and has “absence of an evidence-based approach”.

Big tech competition

The industry body has said in its note that by requiring designated SIDIs to not give preference to their own products over that of competitors, the house panel report aims to protect every single competitor, whether efficient or not, and not the competitive process.

“This will ultimately affect consumer interest and distort competition in favour of less efficient players,” it said.

“Lack of a well-articulated policy objective, failure to adopt an evidence-based approach to identify the need for the regulation, has led to ambiguous, broad recommendations which will stifle innovation, competition and the benefit that accrues to markets and users,” the IAMAI mentioned in its draft note.

It pointed out that the current regulatory framework provided “ample room for CCI to intervene swiftly as and when necessary, without over-regulating the sector”. “An additional competition regulatory regime, which departs from the well-tested foundation of competition law, is unnecessary and could lead to significant harm,” it said.

“The committee must be cautious of creating a pre-emptive standard under law since such an (action) is prone to errors given the uncertainty associated with the occurrence and stability of a market “tipping point”. Pre-emptive standards coupled with rigid and size-based designation mechanisms risk having an adverse impact on investments, innovation, consumer choice and welfare, it added.