The Parliamentary Standing Committee of Finance, headed by Jayant Sinha, is set to recommendex-ante regulationof Big Tech on the lines of the framework specified in the recently-enacted Digital Markets Act (DMA) of the European Union.The proposed ex-ante — ‘before the event’ regulatory framework — will supplement the ex-post — ‘after the event’ enforcement actions of CCI.

The recommendation with ex-ante regulations will form part of the panel’sreport on‘Anti-competitive practices by Big Tech’ to be tabled in Parliament in the Winter Session commencing on Wednesday, sources said.

Ex-ante regulation

The panel had identified ‘Anti-competitive practices by Big Tech’ as a subject for examination and report early this year. After multiple sittings with stakeholders, including representatives of industry associations, Big Tech, start-ups, besides the Ministry of Corporate Affairs and Competition Commission of India, the panel is believed to have finalised its report.

Unlike the present competition regulations that operate post-occurring of anti-competitive conduct, the ex-ante framework is expected to ensure timely and faster market corrections, obviating the need for lengthy investigations and inquiries marred by delays due to judicial challenge during the course of investigations.

The panel is expected to suggest identifying key gatekeeper platforms that would be required to follow a number of obligations in their operations to ensure free and open digital markets. Having an ex-ante regulation will open up possibilities for start-ups to compete on the merits of their products and services, without being disadvantaged or discriminated by gatekeeper platforms, sources said.

The new stipulations will only apply to big digital platforms that will be identified on the basis of active users and other criteria.

Gatekeeper platforms

The gatekeeper platforms that would be subjected to ex-ante regulations will be on the lines identified by the EU under The Digital Markets Act, which came into force from November 1 this year, seven months after it was passed by the European Parliament in March.

The Digital Markets Act introduces rules for platforms that act as ‘gatekeepers’ in the digital sector. These platforms will have a significant impact on the market, serve as an important gateway for business users to reach their end users, and enjoy an entrenched and durable position.

The EU law aims at preventing gatekeepers from imposing unfair conditions on businesses and end users. Under this framework, gatekeepers would be required to ensure end users easily unsubscribe from core platform services or uninstall pre-installed core platform services, stop the installation of software by default alongside the operating system, allow developers to use alternative in-app payment systems, besides enabling end users to download alternative app stores.

Big Tech under fire

In India, Big Tech firms have recently come under the lens of CCI which has issued its rulings against Google and MakeMyTrip imposing heavy monetary penalties, apart from various directions which were in line with the obligations placed upon gatekeeper firms under DMA.

Such case-by-case approach of CCI came under scrutiny of Parliamentary panel and it was felt that looking at the dynamic nature of the digital markets, such interventions may come too late in the day and may not be effective. It was, therefore, mooted that a comprehensive standalone legislation providing for ex-ante framework would capture all gatekeeper firms that would be mandated to allow end users to uninstall pre-installed apps, change default settings and install third party apps or app stores. They have also been obligated to allow third parties to inter-operate with the gatekeeper’s own services.