New Digital Competition Law: Startups Say IAMAI Parroting ‘Pro-Foreign Big Tech’ Views

Several Indian tech startups have hit out at the Internet and Mobile Association of India (IAMAI) for its draft on the need for new digital competition law, which it will submit to the Committee on Digital Competition Law (CDCL), and said that the industry body’s comments favour big tech companies.

Earlier this year, the Ministry of Corporate Affairs set up the CDCL to explore the need for a new digital competition law and also possibly draft the Digital Competition Act. The panel was formed after the Parliamentary Standing Committee on Finance last year called for a new digital competition law in its recommendations in a report titled ‘Anti competitive practices by Big Tech companies’.

In the recently circulated draft among its members, seen by Inc42, the IAMAI said that the parliamentary panel’s recommendations could stifle innovation and competition in the country. 

However, Indian startups are irked by the stand and this seems to have led to divisions within the industry body.

“Startups are strongly in favour of a strong anti-monopoly Digital Act. In fact, IAMAI is a failing lobby for BigTech propaganda & misinformation,” said People Group founder Anupam Mittal in a tweet on Sunday (April 30).

On Monday (May 1), MapmyIndia CEO Rohan Verma also criticised the IAMAI. “It’s distressing to know that IAMAI (Internet And Mobile Association of India) – @IAMAIForum – is parroting & promoting views that are Anti-Indian and Pro-Foreign Big Tech,” he said in a tweet.

Verma added, “Either IAMAI must change immediately to truly reflect the voice & aspirations of India – OR IAMAI must be given no credence.” 

The IAMAI represents India’s digital services industry and claims to have over 500 Indian and multinational corporations as its members. It counts big tech firms like Apple, Google, and Meta among its members, besides Indian startups like Paytm, Ola and PhonePe, among others.

The latest developments come days after it was widely reported that several tech startups were planning to oppose the IAMAI on its stance. 

Tussle Over Digital Competition Law 

At the centre of the debate is the draft note prepared by the IAMAI for submission to the CDCL. In it, the IAMAI claimed that the current regulatory framework provided ‘ample room’ for the Competition Commission of India (CCI) to intervene without ‘over-regulating’ the tech sector.

The industry body said that another regulatory regime was unnecessary and could cause significant harm.

Cautioning the committee against a pre-emptive standard under law, the IAMAI stated that the approach would be 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 said.

In essence, the IAMAI was lashing out at the ex-ante approach cited by the parliamentary panel in its December 2022 report. Ex-ante norms aim to prevent anti-competitive behaviour even before they happen

The industry body added that such size-based ex-ante legislative interventions could negatively impact startup investment and valuations, innovation, market diversity and consumer welfare.

However, it seems that the IAMAI’s stance on the parliamentary panel’s suggestion of identifying ‘market winners’ has irked tech startups the most. Noting that such a move lacked clarity and an ‘evidence-based approach’, the draft said that it would ultimately impact consumer interest and distort competition in favour of less efficient players.

“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 concluded.

This stand is being seen by Indian startups as favouring big tech firms. It must be noted that Indian tech startups are already taking on Google for monopolising certain aspects of the internet economy in India, including through its contentious user choice billing system.