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

Context: Nearly 40 Indian startups have joined forces to pledge support to the draft digital competition bill, describing its proposed 'ex-ante' regulations as potential 'game-changer' in tackling the anti-competitive practices of big tech companies.

Criticism of the Bill

• Opposition to the Bill: Resistance to the current draft comes from tech-funded industry bodies and consultancies.
• Concerns of Big Tech: An ex ante framework could burden tech giants with compliance, diverting focus from innovation.
• Preference for Strengthening Existing Laws: Tech giants advocate bolstering competition laws over adopting an ex ante framework.
• Impact on Apple: Implementation would require Apple to permit third-party app downloads, a move it opposes.

Key Proposals of the 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.

o Self-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).

o Quantitative 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

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

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

ü The 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.

o ADES would have the same obligations as SSDES, depending on the level of their involvement with the core digital service offered by the main company.