India's Proposed EU-like Antitrust Law Impact on Tech Firms

Navigating the new compliance frontier: India's antitrust reforms
India's Proposed EU-like Antitrust Law Impact on Tech Firms

India, the largest democratic country and a digital market powerhouse in the world, is on the verge of implementing a new antitrust law that seems to have pulled its cues from the Digital Markets Act of the European Union. The act is under the government's consideration as a move against the dominance of big tech companies toward a more equal digital ecosystem. So, how is the law likely to directly or indirectly impact the operations of tech firms in this country?

Whom Does It Affect?

It will apply to "systemically important digital intermediaries"—in other words, big digital platforms that have a worldwide turnover of at least $30 billion and a minimum of 10 million users in the country. Leading companies such as Google, Apple, Meta (Facebook holding), Amazon, and others would come under this definition.

Key Provisions and Their Implications:

Fairness and Non-discrimination: The obligation to treat tech giants fairly and without discrimination could prevent some practices that are part of the existing repertoire of many of them, such as favoring their own services over their competitors in such matters as preferred placement in search results or app stores.

Data protection: The legislation may prevent firms from exploiting the non-public data of their users for their own benefit. This may restrain the functioning of targeted advertising, which is entirely based on user profiling, and increase user privacy in the long term.

Interoperability and Openness: The legislation may require tech companies to permit users to install/uninstall pre-installed apps, to download third-party apps from outside their app stores, and to opt for third-party defaults. This may undermine the garden-walled ecosystems developed by some tech firms, increase user choice and innovation, and add to the fairness noted in the previous section.

Sanctions and Fines for Violations: The envisaged penalties for violations are quite severe. They may reach up to 10% of the total turnover of a company and are supposed to be quite a significant discouraging factor from entering the realm of non-competitive behavior.

Expected Outcomes:

Augmented Competition: The new law is expected to ensure that there is a level playing field for all the smaller players—no dominance by the big tech. This seems practical and might sanction a much more vibrant tech industry in India, rich with innovation and new offerings for the consumer.

User Empowerment: It possibly makes users feel more empowered regarding data privacy and open platforms. More in control of their data and choices within the digital ecosystem.

Compliance Costs: Compliance under the new regulations would increase, right from business model changes to app store policies and changes in data practices.

Legal Challenges: As is indeed the case with any new law, there likely will be legal challenges against certain provisions or arguments on the entire framework that tech companies might want to contest.

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