India’s proposed impact of EU-style antitrust law on technology companies

India, the world’s largest democratic country and digital market powerhouse, is on the verge of implementing a new antitrust law that appears to draw inspiration from the EU’s Digital Markets Act. The bill is being considered by the government as a step against the dominance of big tech companies towards a more equal digital ecosystem. So how might the law directly or indirectly impact the operations of tech companies in the country?

Who does this affect?

It will apply to “systemically important digital intermediaries”, i.e. large digital platforms that have a global turnover of at least USD 30 billion and have at least 10 million users in the country. This definition includes leading companies such as Google, Apple, Meta (Facebook’s holding company), Amazon and others.

Key provisions and their implications: :

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

Data protection: Regulations can prevent companies from using their users’ non-public data for their own benefit. This may limit the functioning of targeted advertising, which is entirely based on user profiling, and in the long run increase user privacy.

Interoperability and openness: Regulations may require tech companies to allow users to install/uninstall pre-installed apps, download third-party apps from outside their app stores, and select third-party defaults. This could challenge the walled ecosystems that some tech companies have developed, increase choice and innovation for users, and increase the fairness mentioned in the previous section.

Sanctions and penalties for violations: The expected penalties for violations are quite severe. They can reach up to 10% of the company’s total turnover and are intended to be quite an important factor discouraging non-competitive behavior.

Awaited results:

Extended competition: The new law is expected to provide equal opportunities for all smaller players – without the dominance of big technologies. This seems practical and could sanction a much more vibrant technology industry in India, rich in innovation and new offerings for consumers.

User empowerment: It probably makes users feel more empowered about data privacy and open platforms. Greater control over your data and choices in the digital ecosystem.

Compliance costs: Compliance with new regulations would increase, from business model changes to app store policies and changes to data practices.

Legal challenges: As with any new law, there will likely be legal challenges to certain provisions or arguments about the entire framework that tech companies will want to challenge.