Editorial. Digital markets law needed to curb monopolistic excesses

The digital revolution presents a complex challenge for regulators — fostering a vibrant digital economy while preventing dominant players from stifling competition. Google’s recent decision to delist start-ups from the Playstore for non-compliance with its rules exemplifies this challenge. The reach of Google’s online products and services grants it immense power, allowing the tech giant to shape consumer behaviour and influence political landscapes globally.

In India, Google’s Android operating system controls nearly 85 per cent of the smartphone market. Google leverages the reach of its Playstore by creating entry barriers, such as high fees for Indian app developers that are dependent on the platform to reach customers. The delisting of apps is a case of Google flexing its monopolistic muscle. Despite complaints by start-ups, the Competition Commission of India (CCI) has been slow to respond. It has been nearly two years since the problem was brought to light. In contrast, the European Commission has set a precedent by acting against tech giants like Google and Apple for anti-competitive practices on their respective app stores. India too must hold companies accountable to protect the interests of start-ups and consumers. India’s burgeoning start-up ecosystem needs a fair marketplace, without unfair barriers to entry.

India needs to adopt a multi-pronged approach. Firstly, regulating the fees that Google can charge start-ups is essential to prevent monopolistic practices. While market forces ideally dictate commercial terms, intervention becomes necessary when monopoly power is at play. While Google wants 11-26 per cent commission which may be high for a number of new start-ups, the fact is that app developers owe over 40-50 per cent of their sales to Playstore’s massive reach. The ongoing efforts led by the IT Ministry to find a long-term solution should focus on arriving at the optimum fee which Google can charge for its service. Secondly, the Centre should develop an India-centric alternative to the Playstore, and make it mandatory for it to be accessible on all devices regardless of operating systems or hardware brands. This would promote local innovation and spur Google to adopt fair practices. Products from India Stack, including UPI and ONDC, have democratised digital payments and e-commerce to a large extent. The same model can be deployed for developing an Indian app store.

Thirdly, the government should consider recommendations by the Parliamentary Standing Committee on Finance, headed by Jayant Sinha, to formulate a law similar to the EU’s Digital Markets Act (DMA) which establishes a framework to curb the dominance of Big Tech companies. The Ministry of Corporate Affairs had even set up a Committee on Digital Competition Law in February 2023 to look into the need for a separate digital competition law, but the panel is yet to submit its report. In the absence of a legal framework, it will be hard to move against unfair market practices.

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