Ex-ante regulation of Big-Tech

The Indian anti-trust body, the Competition Commission of India (CCI)’s move, in October, to impose a penalty of ₹1,337.76 crore on Google for abusing its dominant position in the android mobile device ecosystem, has forced us, once again, to rethink the market power of Big Tech companies.

Market dominance issue –

• In any free economy, market dominance is natural. But things get hazy when it is abused to prevent competition.
• As the CCI says, the intent of Google’s business was to make users on its platforms abide by its revenue-earning service, i.e., an online search to directly affect the sale of their online advertising services.
• Thus, network effects, along with a status quo bias, created significant entry barriers for competitors to enter or operate in the markets concerned.

Need of ex-ante regulation –

• While the competition laws address that anomaly, they are too slow to respond in complex technical sectors. By the time an order is passed, the dominant player has gained an edge — as in the case of Google. Thus, in this context, there is an urgent need for ex-ante legislation to prevent market failures and mitigate possible anti-competitive conduct.
• While the data economy has evolved, we have not dealt with its regulation as effectively. There is sensitive data stored on these platforms (financial records, phone location, and medical history). Big corporations have asserted ownership of the right to use or transfer this data without restriction.
• While one might attribute it to efficiency barriers, the greed for data is a motivation. Further, the storage and collection of women’s and children’s data need to be dealt with more cautiously to build a safe digital place.
• Finally, market distortion can also lead to poorer quality of services, data monopoly, and stifle innovation. For a consumer, there is a need to establish harmony of the Competition law with the new Consumer Protection Act 2020 and e-commerce rules.

What is required to be done?

• The new law should include a mechanism to ensure fair compensation for consumers who face the brunt of the anti-competitive practices of the Big Techs. This should ensure that the penalties and restrictions being imposed on companies also ensure proportionate compensation for consumer losses.
• With India now on the cusp of a digital transformation, it is essential that the country has a level-playing field to ensure a fair opportunity for new-age start-ups and Micro, Small and Medium Enterprises.
• The Competition Act of 2000, was largely constituted to deal with the physical marketplace. There is an urgent need to contextualise the law to the digital marketplace and devise new provisions with adequate ex-ante legislation.

Conclusion –

India needs a new ex-ante-based framework that promotes competition by ensuring a level-playing field for the big, the small, the old and the new.

Source – The Hindu

QUESTION – The power of Big-Tech transcends the existing regulations that India has enacted in anticipation of regulating them effectively. Discuss the need for ex-ante regulation of the big-tech and corporations to make a healthy balance between data privacy and consumer rights.