Digital Competition Bill May Compromise Seamlessness Of Digital Apps, Says Report

Data restrictions proposed under the draft Digital Competition Bill may “compromise” the user interface (UI) of major digital apps in the country, a report by think tank CUTS Institute for Regulation and Competition (CUTS CIRC) said.

“Data use restrictions may compromise the seamlessness of consumers. Thus, it may enhance the effort and time while using the digital services,” said the report. 

The comments were part of a report that surveyed the plausible impact of the modified UI on account of the changes proposed by the draft Bill. 

CUTS CIRC also said that the Bill may mandate systematically significant digital enterprises (SSDE)-designated companies to undertake “changes” in the product architecture. 

As per the draft Bill, large digital platforms will be designated as SSDEs if they meet certain financial and user base criteria. Some of the thresholds include a turnover of not less than INR 4,000 Cr in India in the preceding three financial years or a gross merchandise value (GMV) of not less than INR 16,000 Cr in the country. 

Citing unbundling requirements under the draft law, the think tank said that the upcoming norms may force users to access these services individually, which are otherwise currently available in a single app.

Flagging another issue, the organisation said that the user consent requirements under the draft digital competition rules may increase the time and effort for end-consumers without “yielding commensurate benefits in privacy and consumer welfare”.

The report also noted that 13 Indian startups and digital companies, including foodtech majors Zomato and Swiggy, fintech giant Paytm, ecommerce major Flipkart, traveltech startup MakeMyTrip, could come under the purview of the draft Bill and the SSDE designation. 

It is pertinent to note that a parliamentary panel, in December 2022, recommended the implementation of ex-ante regulation for digital markets in India. A few months later in February 2023, the Ministry of Corporate Affairs (MCA) set up and tasked the Committee on Digital Competition Law to prepare a draft Digital Competition Bill. 

Eventually, in February this year, the CDCL released its report and examined the effects of designating a significant digital platform as an SSDE on consumer choice. In its report then, the committee defined SSDEs as platforms that “wield significant influence over various aspects of digital services”. 

It also flagged concerns regarding fair competition, data privacy, and consumer choice, and sought an overarching ex-ante law to regulate these players and curb anti-competitive practices. 

Alongside the report, a draft Digital Competition Bill was also opened for public feedback. In their comments, industry bodies panned the draft law and sought its overhaul. 

At the time, CUTS CIRC had said that Indian startups’ ability to build a cost-effective customer acquisition strategy may be adversely impacted due to excessive restrictions and may create additional hurdles to scale up their operations. 

The US-India Business Council (USIBC) had also claimed that some of the restrictions proposed in the draft Bill for tech players will raise costs for the end users.