Australia’s antitrust regulator has demanded more powers to check Google’s use of its dominant position to sell ads to the extent of hurting publishers, advertisers and consumers. This move is similar to what Europe and Britain have sought. The US, earlier this year, introduced the Open App Markets Act to promote competition and reduce gatekeeper power in the app economy.
The EU leads the pushback. The Digital Markets Act, in force since November 1, 2022, limits the power of big online platforms and tries to ensure fair competition. The European Commission has reminded Elon Musk that he must follow EU rules following the confirmation that he has taken control of Twitter. Earlier this year, the European Court of Justice confirmed the $4 billion penalty imposed on Google by the EU’s competition watchdog in 2018. The European court also confirmed most of the anti-competitive practices identified by the probe.
The CCI’s edict also points to almost identical exploitation of the Android ecosystem by Google as the EU identified. Its calibrated approach makes its interventions effective and targeted, making it possible to strike a balance between innovation and fair market practices. India’s actions are drawing global attention. The competition regulators in Germany and Australia are reportedly monitoring the enforcement action. It is expected that many other countries may take a similar path as India’s. India’s regulatory capacity is being strengthened with the proposed amendments to the Competition Act 2002. The Competition (Amendment) Bill 2022 is currently being deliberated upon by the concerned parliamentary standing committee. With its enabling clauses to expand its purview to deals valued more than Rs 2,000 crore, to accelerate timelines and to decriminalise offences, CCI will be more in tune with the current economic environment.
These are welcome changes and will contribute to making India’s economy fundamentally stronger, disrupting the app store market by launching India’s own open and almost cost-free app store. Leaders of India’s fintech industry have also expressed the need for local developers to have their own app store.
Competition laws are designed to penalize anti-competitive behavior after it has occurred. This may be too late, given the pace at which digital markets move. These ex post enforcement actions of CCI should be supplemented by ex ante regulations. To achieve a robust regulatory ecosystem for the tech giants, ex ante regulations, like setting ground rules on what is acceptable behavior and what is not, should be set in place.
Inter-regulatory consultation should be institutionalized within the country. CCI could be included in the Financial Stability and Development Council for its role of inter-regulatory coordination. In the face of the arguments offered by Google and its obstructionist attitude, there is widespread consternation across governments. The Netherlands’ example shows that these cash-rich companies may prefer to pay fines rather than correct course. Hence, there is a need for a multilateral effort to carry out a comprehensive review of the business practices followed by the tech giants.
Regulators should work together to develop appropriate thumb rules to guard against monopolistic tendencies. It will also be apt for CCI to engage with counterparts in other countries to evolve a robust regulatory system. India should leverage its G20 presidency in 2023 towards this end. Increased competition and fair play can see the emergence of new world leaders from emerging markets like India.
(The writer is BJP MP and former deputy chief minister, Bihar)
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