DRAFT DIGITAL COMPETITION BILL (Syllabus: GS Paper 3 – Economy)

Context: A U.S. lobby group representing tech giants Google, Amazon, and Apple has recently urged India to reconsider its proposed EU-like digital competition law, citing concerns that regulations targeting data use and partner preferences could potentially escalate user costs.

Draft Digital Competition Bill

• Predictive regulation: The bill aims to establish a regulatory framework to ensure fair competition, protect consumer interests, and prevent market monopolization by large digital enterprises.
• Designation of Systematically Significant Digital Enterprises (SSDEs):  The proposed legislation suggests the Competition Commission of India (CCI) designate certain companies as "Systematically Significant Digital Enterprises (SSDEs)" based on specific criteria such as turnover, size, user base, and market power.

oSelf-Reporting Regime: The bill introduces a self-reporting mechanism for companies engaged in "core digital services" to determine their designation as Systematically Significant Digital Enterprises (SSDEs).

oQuantitative Criteria: If in the last 3 financial years, its turnover in India is not less than Rs 4,000 crore; or its global turnover is not less than $30 billion; or

üIts gross merchandise value in India is not less than Rs 16,000 crore; or

üIts global market capitalisation is not less than $75 billion; or

üThe core digital service provided by these companies should also have at least 1 crore end users, or 10,000 business users.

• Associate Digital Enterprises: SSDEs will be prohibited from engaging in practices like self-preferencing, anti-steering, and restricting third-party applications for identified services.
• Violations could lead to penalties of up to 10% of their global turnover.

EU’s Digital Markets Act 2022

• About: It was proposed by the European Commission in December 2020 and entered into force on November 1, 2022.
• Objective: The DMA aims to create a level playing field for businesses operating in the digital sector and to prevent large platforms from abusing their market power.
• Definition of "Gatekeepers": The term “gatekeepers” in the DMA refers to large tech firms that are required to comply with the legislation in the EU.
• Pre-loaded apps: It cracks down on pre-installed apps, common in Apple, Google, and others.