Key Highlights:
- Proposed Rework: The Centre is considering raising regulatory thresholds and narrowing the scope of the draft Digital Competition Bill to avoid over-regulating Indian startups.
- Current Concerns: Startups expressed fears that the original draft’s broad coverage and thresholds could stifle innovation and impose compliance burdens on small digital firms.
Background:
- The bill, released last year, was drafted based on inputs from the Ministry of Corporate Affairs, Parliamentary Standing Committee on Finance, and an expert panel.
- It aims to introduce ex-ante regulation—preemptive rules to prevent anti-competitive behavior by powerful digital platforms, unlike ex-post regulation that addresses issues after they occur.
Current Draft – Key Provisions:
- Thresholds to Qualify as SSDE (Systemically Significant Digital Enterprise):
- ₹4,000 crore annual domestic turnover (3-year average), or
- $30 billion in global turnover, or
- ₹16,000 crore gross merchandise value (GMV) in India, or
- $75 billion global market capitalization
AND either - 10 million end-users or
- 10,000 business users in India
- Nine Digital Segments Originally Covered:
- Online search
- Social networking
- Video-sharing platforms
- Interpersonal communication services
- Operating systems
- Web-browsing
- Cloud services
- Digital advertising
- Online intermediation services
Likely Revisions:
- Trimmed List of Digital Services: Fewer categories to be regulated under the SSDE framework.
- Higher Thresholds: To ensure only large tech firms fall under the ambit, while startups are spared.
- Periodic Compliance Reporting: Will still apply to firms designated as gatekeepers.
Implications:
- For Startups: Likely relief from regulatory compliance, allowing them to grow freely.
- For Big Tech: Continued scrutiny under a sharpened framework focusing on platform dominance and market power.
- For Policy Makers: A balancing act between market fairness and innovation enablement.
