Anti-Competitive Practices by Big Tech

Table of Contents

Context: A parliament committee has asked a government panel on digital competition law to focus on ten anti-competitive practices by the big tech firms.

What is Big Tech?

Big Tech, also known as the Tech Giants, is a term used to describe the most dominant companies in the information technology industry, majority of who are centered in the United States.
The Big Tech are further classified as Big Four or Big Five presently consisting of Alphabet (Google), Amazon, Apple, Meta (Facebook)—with Microsoft completing the Big Five.
Significance of Big Tech in the world:
- Economy: The impact of Big Tech is felt on a global level. They are continually looking to expand their reach, influencing domestic economy of almost all countries.
- Society: Big Tech influences societal change by being accessible to the masses. The products of these companies are widely used and can impact the consumer choices.
- Politics: Big Tech have the reach and capability to create political opinion. These can be in form of political ads on their platform and also promoting opinion of certain political leaders on social media.
- National Security: Since Big Tech operate across the world, countries claim that these companies support rival economies, which ultimately affects national security. Ex: Huawei was blamed by the US for spying on behalf of China.
- Technology: The Big Tech are well known for their innovation and technology development. They are the first to introduce ground-breaking technologies.

Anti-Competitive Practices by Big Tech Companies

The Standing Committee on Finance (Chair: Mr. Jayant Sinha) submitted its report on ‘Anti-Competitive Practices by Big Tech Companies’ in December 2022.
The committee has identified 10 types of anti-competitive practices which are practiced by Big Tech companies as:

Anti-Competitive Practice	Description
Anti-Steering Provisions	Prominently associated with ‘App Stores’ (Google and Apple App Stores), the app publishers prevent their business users (app users) from moving out of the platform and use other alternatives for payments.
Platform Neutrality/ Self Preferencing	Commonly associated with ‘marketplaces’, some platforms place their own products prominently. E.g., prominent placement of Google Pay on Play Store by Google.
Adjacency/ Building and Tying	In it, digital firms force people to buy related services. E.g., Food delivery apps making it mandatory for restaurants to use the platform’s delivery services.
Data Usage (use of non-public data)	Monopolistic usage of data by digital firms, especially from leading platforms with vast repositories of data. E.g., Past purchase data is used by Swiggy and Zomato to customize offerings for users, dissuading other players from entering.
Mergers and Acquisitions	‘Killer acquisitions’ is a repeated issue in digital markets where Big Techs buy highly valued start-ups, disallowing the smaller firms to grow beyond a certain limit. E.g., Facebook acquisition of WhatsApp.
Pricing/ Deep Discounting	Prominently associated with e-commerce sales, huge discounts are also used by leading platforms in hotel booking, food delivery etc. It compromises service providers control over the final price and offline player’s ability to compete. E.g., Amazon, Flipkart.
Exclusive Tie-ups	An exclusive arrangement of e-commerce platforms with a brand hampers the business of other platforms as well as of brick-and mortar sellers. Similarly, platforms use price parity clause to stop businesses from selling at lower rates on other platforms.
Search and Ranking Preferencing	Giving preference to sponsored products in algorithms used to show results for users search rather than showing organic search results. E.g., Preferential listing by Amazon and Flipkart.
Restricting Third-Party Applications	Presence of gatekeepers in digital markets which restrict installation or operation of third-party applications. E.g., for app developers, Apple’s App Store is the only channel to distribute their apps to iOS consumers.
Advertising Policies	Digital advertising market faces issues of conflict of interest and self-preferencing when platforms operate at all levels of the ad-tech supply chain.

Recommendations by the Committee

To ensure a fair, transparent, and contestable digital ecosystem, India needs a Digital Competition Act based on the unique needs of digital markets. On lines of global ex-ante approaches, this Digital Competition Act should:

Define and identify a small number of Systemically Important Digital Intermediaries (SIDIs)/Digital Gatekeepers that can negatively influence competition.
Impose ex-ante competitive restraints on SIDIs in India to regulate competition in digital markets.
Global Harmonization of digital regulations to reduce the regulatory burden for companies and help Indian companies compete globally.
Harmonize competition law with Consumer Protection Act 2020 and the e-commerce rules under it.
Mechanism to ensure fair compensation to the consumers.
Revamping CCI (Competition Commission of India) and strengthening it to take new responsibilities.
- E.g., Setting up specialized digital Markets within the commission with skilled experts, academics, and attorneys.
Prescribe a code of conduct with specific measures for SIDIs to prevent them from abusing their market power to stifle competition.

Big Tech regulation in India

In India, antitrust issues are governed by the Competition Act, 2002, and the Competition Commission of India checks upon monopolistic practices.
So far, big tech companies in India are protected by the safe harbour of the Communications Decency Act (CDA) of the USA along with its Indian counterpart Section 79 of India’s Information Technology Act, 2000 (IT Act).
- Safe harbour – as prescribed under Section 79 of the IT Act, 2000 – is legal immunity that online intermediaries enjoy against content posted by users on their platforms.
However, now India is working on its own Digital India Act—a replacement of IT Act 2000 along with many others like Telecom bill, data localisation and others.

Big Tech regulation across the world

Europe	Digital Markets Act (DMA): The DMA will directly ban harmful business practices by very large digital players, create a fairer and more competitive economic space for new players and European businesses. Digital Services Act (DSA): This act targets category of online services, from simple websites to internet infrastructure services and online platforms.
USA	The USA (Anti-trust legislation): The US adopted Anti-trust legislation targeting the dominance of Big Tech companies by giving states greater power in competition cases and increasing money for federal regulators.
Australia	Competition watchdog in Australia recommended tighter regulation of Facebook and Google and moves to improve media competition. The Online Safety Act will have the power to force social media companies to delete posts that amount to online bullying, and to fine the companies and those who hosted the alleged abuse.