The exponential growth of the global digital economy has expanded the influence of digital platforms, especially since the Covid-19 pandemic which drove millions of consumers online for commercial transactions. With an estimated 907 million internet users by end-2023, India’s consumer digital economy is expected to become a $1 trillion market by 2030. Simultaneously, the rise of the big technology companies that act both as intermediary platforms as also providers of goods and services has heightened concerns about the concentrated structure of the digital economy. As tech giants became increasingly dominant, concerns related to data protection and privacy arose alongside their deliberate manoeuvres to prevent competition.

Large platforms were seen to leverage their market power in the digital economy to make their end-users unlikely to switch to small competitors, even when they offered better services. The prolonged legal battles between the US and the European competition authorities and Big Tech in the last decade have demonstrated the limitations of the traditional ex-post framework where intervention is prompted after a specific business conduct is established to be anti-competitive. Globally, governments have begun adopting agile remedies including ex-ante or preemptive regulation to curb anti-competitive acts of Big Tech. The global consensus is that leading Big Tech players are identified as ‘Systemically Important Digital Intermediaries (SIDIs)’ and subjected to specific ex-ante provisions to ensure fair competitive conduct. The EU, for instance, has come up with legislation that identifies these small number of leading players and lists regulatory provisions. The American Innovation and Choice Online Bill (AICO) targets Big Tech companies for potential antitrust and consumer choice violations. The UK government too has published its Digital Competition and Consumers Bill which introduces an ex-ante regulatory regime.

In this context, the Parliamentary Standing Committee on Finance was prescient in underlining the urgency of instituting ex-ante regulatory framework for Big Tech. In its report on ‘Anti-Competitive Practices by Big Tech Companies’ submitted to Parliament in December, last year, the House Panel recommended enactment of a Digital Competition Act. Unfortunately, the Government chose to set up an inter-ministerial Committee in February, this year to ‘examine the need for an ex-ante regulatory mechanism for digital markets through a separate legislation’. As the inter-ministerial committee was packed with representatives of Big Tech and the law firms representing them, it has predictably meandered and produced nothing substantive despite multiple extensions.

As this newspaper reported earlier this week, the Committee has not met even once in the last three months. The Government should dismantle the committee and take immediate steps to draft the digital competition law. In fast evolving dynamic markets, any delay in effecting regulatory intervention may prove costly for India’s start-up ecosystem.