Anti-Trust & Big Tech Market

Introduction

Today digital products and services are ubiquitous, and “Big Tech ” is at the heart of the modern economy all around the globe. According to a survey done by the McKinzie Global Institute, India is the second-fastest adopter of digital technology among the 17 largest digital economies . Digital technologies have transformed the participation of people, goods, and platforms across various important economic sectors on a worldwide scale. The innovations brought forth by digitalization have resulted in major consumer benefits, including cheaper pricing, more accessibility and convenience, greater product diversity, and new items.

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But in contrast to non-digital counterparts, digital markets include inherent characteristics like the fixed non-variable price of information goods which create high entry barriers for new potential entrants, direct and indirect network effects, and low marginal and distribution costs for expanding access and distributing products or services to additional consumers that make Big Tech more susceptible to market domination and concentration tendencies in their industry which they utilize to exert leverage in adjacent and ancillary sectors.

Catching up with Tech Economy

The exponential rise of Google in the search engine and a variety of other popular service industries, Facebook in social networking, and Amazon in online shopping exemplify the winner-take-all nature of numerous digital marketplaces . This expanding impact of Big Tech within and outside the market has regulators increasingly concerned about economic problems, prevention of competition, data privacy issues, media domination as well as political concerns, and even the democratic process itself.

Antitrust authorities throughout the world are catching up to the digital economy and expanding their analytical tools to evaluate such behavior. The Competition Commission of India (CCI), has also intensified its examination and scrutiny of digital and high-technology markets and participants but there exists a huge gap to fill.

The limitations of competition law are perhaps nowhere as evident as in the case of reigning in Big Tech. Demystification of Shri Sonam Sharma v Apple Inc. & Ors 2011 and Ramakant Kini v Dr. L.H. Hiranandani Hospital 2014 reveal that Big Tech may participate in agreements that qualify as anti-competitive under Section 3 of the Competition Act, 2002 but as opposed to its contemporaries, CCI has adopted a rather deferential approach as evidenced by its clearance of tying-in arrangements in aforementioned cases.

As regards the determination of abuse of dominant position the fundamental challenge encountered by CCI is the delineation of the relevant market because Big Techs do not operate in homogeneous monoliths, rather there are several relevant markets with each exhibiting unique competition dynamics. Additionally, the substitutability of goods or services depends on their price, and Big Tech companies that supply free products or services in exchange for data can render price-based criteria obsolete. In Matrimony.com Ltd v Google LLC 2012 CCI considers ownership and access to data as a crucial driver in technological markets but Vinod Kumar Gupta v WhatsApp Inc 2016 and Track Call Cab Pvt Ltd v ANI Technologies 2015 reveal the idea is often dispelled if there is multi-homing among users.

Further, in terms of combinations, the majority of Big Tech acquisitions derive value from the acquired company’s data or innovations, which at times may not result in significant turnover due to the lack of assets of the target. Though Sections 6 & 5 of the Competition Act, 2002 collectively do allow CCI to investigate non-notifiable transactions even if their potential anticompetitive effects are obvious. Lastly, the horizons of Big Tech often led to a jurisdictional tussle between CCI and other sectoral regulators. In CCI v. Bharti Airtel 2018, Apex Court ruled that prior to addressing considerations of competition, sectoral regulators will be required to rule on matters falling under their scope but there’s still scope for harmonization.

Conclusion

To address these pressing issues, in light of the ever-increasing need to promote and preserve economic welfare, efficiency, and free and fair competition within markets, substantial reforms should be implemented so that the conventional regulatory regime is capable of responding to new and evolving antitrust problems stemming from technology markets:

1. CCI must assess dominance in the market and use the rule of the reason the ‘effects-based’ doctrine of tie-in as internationally recognized.

2. There is a need to draft a new rule as a typical small but significant Non-Transitory Price Increase strategy to market definition may not work.

3. Inclusion of non-monetary thresholds such as data access, ownership, or flow inside the legal definition of ‘price ‘ and its enforcement can aid regulators in defining and determining relevant markets for the purposes of implementing appropriate antitrust remedies against Big Tech as recognized by the Competition Law Review Committee.

4. Competition (Amendment) Bill, 2022 proposes an amendment to Section 5 of the Act in the form of a proviso that allows the Central Government to prescribe any criteria like user-based thresholds, in addition to the thresholds of assets and turnovers specified in sub-sections (a), (b), and (c) of Section 5, for the purpose of classifying a transaction as a combination to address the regulatory barrier.

5. CCI in its 2021 “Market Study on the Telecom Sector” observed that issues of overlapping jurisdiction needed to be synchronized through robust regulatory structure and improved lines of communication across different regulatory agencies by streamlining the statutorily mandated inter-regulatory consultation mechanism outlined in section 21 read with section 21A of the Competition Act.

Recently, CCI imposed a hefty penalty on Google for abusing its dominant position in the android mobile device ecosystem market apart from passing cease and desist order against acts in contravention of the law. It is one of the biggest competition law developments in India where CCI has used its tooth to the full, however, the matter is appealed before NCLAT and it would be interesting to see how the matter unfolds.

Author: Shambhavi Sirothia, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing.

Reference

1. Conor Sen, “The ‘Big Five’ Could Destroy the Tech Ecosystem,” Bloomberg, November 15, 2017.
2. Nisha Kaur Uberoi, Radhika Seth, Pramothesh Mukherjee, “Digital Market Guide”, Global Competition Review, December 21, 2021.
3. Ministry of Business, Innovation and Employment New Zealand, “Competition Law and Regulation in Digital Markets”, APEC Competition Policy and Law Group, March 2022.
4. Samriddha Sen, “India’s Anti-Trust Problem with the Big Tech”, RMLNLU Law Review, 2021.
5. Gene Kimmelman, “Syncing Antitrust and Regulatory Policies to Boost Competition in the Digital Market”, Centre for International Governance Innovation, 2019.