Consumer groups to govt: Prescriptive digital competition bill to affect small firms, innovation

Financial Express, June 27, 2023

As the government is finalising the proposed Digital Competition Bill, a group of 58 think tanks and consumer advocacy organisations on Monday said that the prescriptive nature of the bill would affect consumers as well as small businesses.

In a letter to secretary of ministry of corporate affairs (MCA) Manoj Govil, organisations including the Cyber Cafe Association of India (CCAOI), India Internet Foundation, Consumer Unity & Trust Society (CUTS), and DeepStrat have expressed concern over digital inclusivity, user experience, data protection and security, foreign investment, cost of doing digital business for small businesses, etc, with regard to the bill.

“We urge the MCA to institute a transparent and open consultative public engagement process for the Draft Digital Competition Bill and take into consideration the concerns around impact of the Draft Digital Competition Bill on end consumers and small businesses which rely on ICT (information and communications technology) tools,” the letter said.

“Only 2-3 legal systems have adopted ex-ante laws globally. If India also introduces a prescriptive ex ante law then India may no longer be the “first market” for newer technologies (equivalent of Digital Competition Act does not exist in most of the other jurisdictions),” the letter said, adding that the bill is likely to recommend 10 obligations to be followed by gatekeepers.

Gatekeepers mean big tech companies like Google, Amazon etc, e-commerce companies, cab aggregators, among others. According to the finance committee, there should be classification of Big Tech companies as Systemically Important Digital Intermediaries (SIDIs), based on their revenues, market capitalisation, and user base. The report further urged these tech firms to provide advertisers and publishers with access to performance-measuring tools and data, allowing for independent verification of advertisements.

In 2022, the Parliamentary Standing Committee on Finance recommended a Digital Competition Act to regulate the big tech companies with regard to the issue of anti-competitive practices by them. In its report, the committee said the act should consist of set rules based on recent antitrust cases in relation to the digital markets.

In February 2023, the Ministry of Corporate Affairs (MCA) formed a committee on digital competition law (CDCL) to evaluate the proposal for a digital competition law in India and recommend a draft Digital Competition Bill.

The consumer groups in their letter said various Civil Society Organisations (CSOs) were not invited by the Finance Committee to present their views.

With regard to the small businesses, the consumer groups said, “an ex ante law which limits data will naturally drive costs for advertising and digital marketing as particularly the larger brands will continue to spend even without precise targeting.”

Further, there would be inadvertently an increase in customer acquisition costs for small businesses and it would eventually decrease their global market footprint. Small businesses do not have the runway to undergo this type of change, the letter said.

The groups have also urged the government to publish comments received by them on the bill and also provide an opportunity to all stakeholders to submit counter-comments.

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