The digital economy is the epicenter of technological innovation and economic transformation. Technology has catalyzed fundamental changes across industries, resulting in new channels of innovation, creative expression, and communication. Indeed, digital platforms are not only paving the way for consumers by providing accessibility and convenience to facilitate day to day activities but are also benefiting small and medium businesses owners by expanding their reach and allowing them to take advantage of global value chains. Further, these markets are a source of global investments and foreign advancements which aim to explore India’s growing market needs and experimentative consumer base.
The size and scale of the digital economy is prompting regulators around the globe to train their sights on the markets within this paradigm. In the arena of competition regulation, authorities are increasingly breaking away from traditional market agnostic, ex-post approaches and moving towards market-led, ex-ante prescriptions for competition governance in the digital sphere. A recent executive order from the Biden administration in the US on Promoting Competition in the American Economy and the EU’s Digital Markets Act both speak to this trend. The shift in approach is guided by a concern that the existing competition statutes such as the US Sherman Act, which gauge effects on competition through the lenses of consumer welfare and efficiency, are ill-equipped to meet the unique competitive constraints in digital markets that may be predisposed to winner-take-all outcomes. Importantly, Indian competition law and jurisprudence broadly adhere to the conventional standards and principles on competition regulation.
Digital competition policy, then, is in a deep state of flux. The contradictions in the different approaches to competition governance highlighted above create uncertainty for players in digital markets and risk long-lasting harms to innovation.
In this above context, the Esya Centre, a New Delhi based tech-policy think-tank, in collaboration with Jindal Global University (JGU), brought together experts, academics and, practitioners in a discussion on ‘First Principles for the Governance of Competition in Digital Markets’.
A key takeaway from the discussion was that competition authorities need to be more circumspect about intervening in digital markets as the evolutionary trajectories of the latter are unpredictable. They must understand that their decisions can have long-lasting effects on digital businesses. Even digital industry leaders cannot predict the trajectory of innovation in digital markets. For instance, Michael Dell, the CEO of Dell Computers, stated in 1997 that he’d “shut Apple down and give the money back to the shareholders”. Apple is now a USD 2 trillion company.
Justice AK Sikri, Retired Justice, Supreme Court of India was of the opinion, “Freedom should be given to industry to do business which is their fundamental right under Article 19(1)(g) of the Constitution.” He also noted that “judicial authorities must keep in mind that interpretation of laws must keep in minds its impact on the economy, and this applies even more so in the context of competition law since it operates squarely in the realm of the economy”.
Dr. Aruna Sharma, IAS, Former Secretary to the Govt. of India, also said, “we need to frame laws where we clearly distinguish between platforms and utilities. Every platform is not a utility. Online platforms should be treated as tools and regulation must allow their expansion and innovation.”
India is well on its way to becoming a digital superpower. However, its journey towards a robust digital economy faces obstacles in the form policy and regulatory uncertainty and incoherence. Moving forward, there is a need to adopt a unified and systematic approach, which involves the Government, business entities and other key entities, to realize the transformative potential of digital technologies. First principles are key to ensuring such cohesion.