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Digital Competition Act Could Impact User Experience on Online Platforms | News

Posted on by darion

As many as thirteen platforms, including Zomato, Swiggy, Paytm, IRCTC, Makemytrip, Flipkart, JioSaavn, Pharmeasy and others, would come under the Digital Competition Act

draft law on digital competition

Ashutosh Mishra New Delhi

The unbundling requirements in the draft Digital Competition Bill (DCB) could negatively impact the overall experience of users of digital platforms, a study published on the bill has found.

“The designation of Systemically Important Digital Enterprises (SSDEs) is expected to result in changes in product architecture and may require individual access to the various services currently available within a single application,” said a report by the think tank CUTS Institute for Regulation and Competition (CUTS CIRC).

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In the current version of the draft law, the bundling and tying of digital services is included among 10 anti-competitive practices (“ACPs”) used by large digital companies to abuse and strengthen their position in digital markets.

According to the authors of the study, this requirement will affect the smoothness of using digital services by consumers and may require more effort and time from them.

As many as thirteen platforms, including Zomato, Swiggy, Paytm, IRCTC, Makemytrip, Flipkart, JioSaavn, Pharmeasy and others, would be brought under the purview of the Digital Competition Board (DCB), as per the current terms and conditions of the Act, the study said.

Under the draft law, large digital platforms providing essential digital services are designated as systemically important digital enterprises (SSDEs) if they meet certain financial and user thresholds.

Explaining how the bill will also impact Indian companies (apart from big tech firms), the newspaper, citing Paytm as an example, says that the company will now have to unbundle or “unbundle” its services as per the requirements of the proposed rules.

“This means that the ability to provide multiple connected services within a single application will be limited. As a result, it is also assumed that this separation may have potential implications on the convenience and seamless user experience that Paytm users currently enjoy,” it said.

Moreover, in this context, it is assumed that, according to the study, the implementation of DCB will lead to the separation of various Paytm services into separate stand-alone applications.

“Essentially all super apps fall under this term because they now offer us different core digital services under one umbrella – bundled and bundled. But this bill says no, you can’t do that,” said an industry expert.

The unbundling clause in the DCB was inspired by a similar requirement in the European Union Digital Market Act, which prohibits controllers (large companies) from tying and bundling their core platform services and imposing restrictions on switching or changing default, pre-installed services.

As stated in the study, the separation of services may also result in the loss of personalized, multi-service recommendations that users previously enjoyed, which may result in decreased user engagement and reduced use of online platforms.

Under the user threshold criterion, any company with more than 10 million end users or 10,000 business users on its core digital service will be considered an SSDE and will therefore be subject to the proposed ex ante regulation.

“So to say that this is a bill that only focuses on the four or five largest companies or foreign companies is completely untrue. The truth is that it affects many more Indian companies,” said another industry executive.