Google’s hold on plans to shift mfg to India after CCI’s order sets the govt thinking

The government is looking at setting up an inter-ministerial panel for putting in place a mechanism by which certain areas, where policies are still in evolutionary stages, could be demarcated, and therefore cannot be examined by the Competition Commission of India (CCI) solely on the grounds of competition. Creation of manufacturing hubs through incentive schemes, Information Technology Rules, Digital Data Protection Bill and the upcoming Digital India Act are some of the areas identified for now.

Sources said that higher echelons of the government are of the view that certain orders of the CCI in recent times have been intersecting, and in some cases, even clashing with matters which fall in the domain of policymaking.

The inter-ministerial panel which will be formed would have officials from the finance ministry, the ministry of home affairs, the department for promotion of industry and internal trade (DPIIT), the ministry of electronics and IT, the ministry of consumers affairs, and the ministry of corporate affairs.

Sources said that recently, several cases related to payment gateways, e-commerce platforms, app stores, and food and travel aggregators have come up before the CCI where the issues involved are multifaceted and even unprecedented. “Even experts in the fields of cybersecurity, fintech, algorithms and data are grappling with the technicalities involved. In view of this, CCI’s outlook towards competition assessment needs a shift in gears, taking into view the unique nature of digital markets and potential overlaps with domains other than competition,” an official said.

For example, in a recent order, CCI has found Google to be abusing its dominant position and ordered that the company shall not restrict the ability of app developers in any manner to distribute their apps through what is called side-loading, instead of going through Google’s Play store. Officials said that while the order acknowledges the dangers of safety related to side-loading, it does not discuss how these dangers need to be curtailed.

The concern within the government over the CCI order is that it could lead to security implications. For instance, if Google or Apple are not in control of the apps which get loaded onto their devices, checking those which could be a security hazard may pose a problem. The government was able to ban all Chinese apps in 2020 at the height of Indo-China border tensions only because there was no provision of side-loading. “If side-loading is allowed, in the event of demand by the government to ban any app, players like Google and Apple can express their helplessness because they would not be fully in control,” another official said.

The other issue which has alarmed the government is the impact the CCI’s order could have on its efforts to make global technology players relocate their manufacturing hubs and supply chains to India from countries like China and Vietnam. It has been successful in doing so to quite an extent with Apple, but has received a temporary setback with Google.

In the aftermath of the CCI’s order, the technology major has put on hold its plans to shift the manufacturing of its Pixel phones to India from China till the judicial process is over. “Reactions like this impact the country’s manufacturing ambitions, investor sentiments, export targets and the overall shifting of the ecosystem to India,” one of the officials quoted above said.

“To adjudicate on competition matters of technology with far-ranging repercussions, the CCI needs to be mindful of the government’s well thought out policy considerations that have been arrived after several layers of consultations and research,” the official said, adding: “Complex matters with wide-ranging implications call for inter-ministerial consultations rather than any unilateral action.” Financial Express