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Four companies submit opposing ex-ante regulation as proposed by IAMAI

After an industry association opposed a separate law to regulate digital competition proposed by a committee constituted by the corporate affairs ministry, saying that existing legislation could be amended rather than enacting a new law, some prominent members have broken ranks to support it in a dissent note.

The Internet and Mobile Association of India (IAMAI), which counts more than 550 tech companies in India as members, had in a submission to the ministry last month opposed the creation of a new law, called the Digital Competition Bill, proposed by the committee on March 12 to separately regulate digital markets, and said existing laws need to be modified to address issues of gatekeeping by mobile app stores.

Four of its members, Matrimony.com, Hoichoi, Match Group (Shaadi.com) and Sharechat, however, on May 30 sent a dissent note to corporate affairs secretary Manoj Govil to urge the ministry to move ahead with the draft law at the earliest. They claimed that “only a minuscule percentage” of IAMAI’s over 540 member opposed the draft bill, and yet, “the submission predominantly echoes this minority perspective”.

“While we share similar concerns over the thresholds for designation of Systematically Significant Digital Enterprise (SSDE), IAMAI’s submission on the rest of the draft DCB seems to present obtuse concerns which go against the broader imperative of fostering fair competition across all core digital services in India, supporting the growth of startups and protecting consumer welfare in India’s digital economy,” their letter said.

The dissent note, like IAMAI’s main submission, said that thresholds for designation of an SSDE may require revision so that startups and other digital enterprises that are not “true digital gatekeepers” are not “inadvertently” included. It cited the digital markets law of the European Union where similar apprehensions were assuaged when only six companies were included within its purview.

The four members claimed that “only a minuscule percentage” of IAMAI’s over 540 member opposed the draft bill, and yet, “the submission predominantly echoes this minority perspective”. “Looking back, a session could have been conducted to explain the details of the Bill to members who are smaller companies and thus do not have the resources to fully respond to the Bill,” said Murugavel Janakiraman, founder and CEO of Matrimony.com, a matchmaking platform.

The IAMAI, in its submission in mid-May, had argued that ex ante competition regulation only for digital markets imposes “dual legislations” on such companies while other markets will continue to be governed only by the Competition Act. In ex ante regulation, the law defines what conduct is illegal while in ex post regulation, the regulator adjudicates whether certain acts are illegal after they have been committed.

“This will be an unfair imposition on an untenable for digital businesses in India. The current ex-post framework is well-tested and relies on evidence of abuse thereby avoiding the risk of false positives,” it said. Ex ante regulations could dry up investments in tech start-ups “as the thresholds under the Draft Bill would act as a ceiling to the potential scalability of businesses”, the lobby group said.

The dissent note noted how the European law mandated compliance by March 7 and after that, within the same month, the European Commission initiated non-compliance investigations into Google and Apple’s rules on steering in Google Play and App Store, respectively. “Similarly, under the draft DCB, the Competition Commission of India will be able to address an enforcement gap that has been evident and lacking in the current ex post regime,” it said.

Commenting on the division within IAMAI, Janakiraman said it was inevitable. “Such a split is inevitable because the big companies think that such a regulation will make large growth impossible. But on the other hand, for smaller companies, it is a fight for survival,” he aid. “In my opinion, the growth of big companies will not be affected. The fears about government intervention are overstated and exaggerated while our existential fears are very real.”

BharatMatrimony and more than 150 apps from Matrimony.com were delisted by Google from its Play Store in February over disagreements related to the service fee to be paid in in-app purchases. At least nine other companies were similarly affected.

On March 5, a truce was brokered by IT minister Ashwini Vaishnaw after meeting the app developers and Google. It was decided that Google and the developers will create a forum to reach a long-term resolution on the issue within 100-120 days, and while Google could enforce its payments policy, it will not collect payments from the developers whose appeals were pending in the Supreme Court until a resolution is reached either through this new forum, a Supreme Court judgement, or an order from the Competition Commission of India. Hindustan Times

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