Digital Competition Bill: Startups Call For Protecting Domestic Innovation

Indian online startups and tech product companies have reportedly urged a parliamentary panel working on the draft Digital Competition Bill (DCB) to increase the threshold for ex ante (preventive) regulations in a manner that it does not hamper domestic startups and innovation. 

A Business Standard report said that the panel has asked suggestions from the ministry of corporate affairs (MCA) on the views presented by Indian online players on the bill. The ministry had released the draft bill for public comments in March last year. 

The draft bill was prepared by the experts led by the then secretary of corporate affair ministry Monoj Govil last year. It is inspired from the European Union framework and aims to regulate large digital companies to curb anti-competitive practices in the online business ecosystem. 

It also aims to classify the role of competition commission of India (CCI) in the evolving digital landscape. 

The current prepared draft bill classifies some digital entities as systematically significant digital enterprises (SSDE). 

The threshold for categorising digital companies as a SSDE includes 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. 

The bill further says that if a digital entity’s core service serves more than 1 Cr users or more than 10,000 enterprises, it will be termed as a SSDE. 

Discussions around the DCB bill have re-surfaced a couple of months after it was said that the Centre would table the bill after reaching a conclusion with the US on the ongoing bilateral trade deal. It is pertinent to note that some of the members of the US-India Business Council, which counts tech giants Google, Amazon, Apple, and Meta among others opposed the bill last year saying it is “much further in scope” than the EU’s law.

Why is there a need for the Digital Competition Bill In India

In the last few years, a number of big tech giants and homegrown ecommerce majors have come under the scanner of CCI for getting themselves involved in anti competitive practices in the country. These instances have called for regulating these entities to ensure fair competition in India’s growing digital landscape. 

For instance, ecommerce giants Flipkart and its parent Walmart are being probed by the fair trade regulator. Last year, it was found that they were violating the laws by giving preference to select sellers on their platforms. 

Earlier this year, Google agreed to settle its smart TV antitrust case with the CCI by paying a settlement amount of INR 20.24 Cr. The tech giant was alleged of using its dominant position in the smart TC market by forcing manufacturers to pre-install Google Play Store restricting the use of competitive operating systems. 

But the startup ecosystem is divided on the proposed draft bill. While 40 startups which include the likes of Matrimony.com, Innov8, Magicbricks, Hoichoi, among others have extended their support to the bill, the Internet and Mobile Association of India (IAMAI) said that it could dry up investments for tech startups.