Digital Competition Bill Faces Pushback Over Impact on Indian Startups

Startups Urge Caution on Digital Competition Bill to Safeguard Innovation

Concerns Rise Over Regulatory Burden as India Drafts Law to Curb Big Tech Dominance

Indian startups and digital product companies have called on lawmakers to reassess the threshold criteria proposed under the Digital Competition Bill (DCB) to ensure the regulation does not stifle domestic innovation and entrepreneurship.

Parliamentary Review in Progress

According to a Business Standard report, a parliamentary panel is currently reviewing inputs from Indian startups and has sought further suggestions from the Ministry of Corporate Affairs (MCA).

• The draft Digital Competition Bill, released for public comment in March 2024, was developed by a panel led by former MCA secretary Monoj Govil.
• Modeled on the European Union’s digital regulation framework, the bill aims to rein in anti-competitive practices by large digital enterprises operating in India.

Defining ‘Systemically Significant’ Enterprises

The bill introduces the term Systemically Significant Digital Enterprises (SSDE) for entities that could wield market-distorting influence.

• A digital entity will be classified as an SSDE if it has:
  • A turnover of at least INR 4,000 Cr in India over the past three years, or
  • A GMV of INR 16,000 Cr within the country
  • Over 1 Cr users or more than 10,000 business clients served through its core digital services

Tensions with Global and Domestic Stakeholders

The draft bill’s resurgence comes amid ongoing India-US trade negotiations, with the final version expected to be tabled once discussions conclude.

• Several US tech giants—represented by the US-India Business Council, including Google, Amazon, Apple, and Meta—opposed the bill last year, claiming it goes beyond the EU’s regulatory scope.
• Domestically, around 40 startups, including Matrimony.com, Hoichoi, Magicbricks, and others, have supported the bill, citing the need to level the playing field.
• On the other hand, the Internet and Mobile Association of India (IAMAI) warned the bill may deter investment in India’s burgeoning tech sector.

Regulatory Necessity Rooted in Recent Cases

The push for the DCB has gained urgency due to multiple anti-competitive investigations involving large tech players.

• Flipkart and Walmart are currently under CCI scrutiny for allegedly favoring select sellers.
• Earlier this year, Google settled an antitrust case related to its smart TV operations by paying INR 20.24 Cr, following accusations of pre-installation restrictions that stifled alternative platforms.

The proposed framework thus reflects the Indian government’s broader ambition to ensure fair competition, though many believe careful calibration is needed to balance oversight with support for domestic growth.