Mumbai: 40 Indian startups have come out in support of the draft Digital Competition Bill which proposes ex-ante regulations to curb anti-competitive practices of Big Tech companies. These startups which include Matrimony.com, TrulyMadly, Innov8, QuackQuack, Magicbricks, Hoichoi, Medibuddy etc. have written to the Ministry of Corporate Affairs saying that the Bill is a step in the right direction and it will address long-standing concerns of Indian startups to rein in practices which stifle innovation, limit consumer choice, and hinder the growth of young businesses.
While requesting that the government move forward with the Bill at the earliest and not give in delay tactics, the startups have also asked for an upward revision of the thresholds for designating Systematically Significant Digital Enterprises (SSDEs). They have argued that the Bill should only target the real gatekeepers of the internet – firms that have long enjoyed dominant positions, accumulating extensive resources, and influence to shape the rules of the digital ecosystem. By narrowly targeting the new law, the government can rein in monopolistic practices while making sure that Indian startups have the space to grow within India and beyond Indian borders, to compete globally.
More Context: The Committee on Digital Competition Law (CDCL) published its report (https://shorturl.at/jwBM6) in March this year. This outlined the challenges associated with anti-competitive practices of digital enterprises such as anti-steering, self-preferencing, tying and bundling in the digital markets in India. The report proposed a Digital Competition Bill providing for ex-ante regulations to curb these anti-competitive practices. The report was open for public consultation and the last date for submission of comments was 15th May 2024.
In the letter the startups wrote, “In consonance with the above observations of the CDCL, India has maintained its position as the third-largest tech start-up ecosystem worldwide. Over 950 tech start-ups were established in India last year alone. The cumulative funding for more than 31,000 tech start-ups has surpassed $70 billion from 2019 to 2023. It is clear that incorporating the voice of start-ups in shaping the digital competition law is crucial because these entities are reflective of the needs and realities of the tech landscape in the country today.
“The proposed Digital Competition Bill (DCB) outlined in the CDCL report resonates deeply with the startup community. We perceive it as a forward-thinking piece of legislation that directly addresses our long-standing concerns regarding monopolistic practices by dominant digital platforms. These practices have often stifled innovation, limited consumer choice, and hindered the growth of young businesses. The Digital Competition Bill, with its focus on ex-ante regulations, has the potential to be a game-changer for the Indian start-up ecosystem.
“While we fully support the draft Bill, we propose a key revision regarding the thresholds for designating Significant Strategic Digital Entities (SSDEs). Our concern is that the current thresholds are low, and they are likely to – perhaps, inadvertently – encompass startups and other digital enterprises which are not gatekeepers. The gatekeeper companies ideally being targeted by the DCB have long enjoyed dominant positions, accumulating extensive resources, brand recognition, and influence over the digital ecosystem. Their entrenched status enables them to shape the rules of the game to their advantage. In contrast, start-ups and other digital enterprises -even if they meet the financial thresholds – are fundamentally different. These are young companies still establishing their product, user base, and navigating a complex market shaped by gatekeeper companies. Consequently, designating start-ups as SSDEs under the Act could impose unwarranted regulatory burdens, hindering their growth and competitiveness. This could in fact further undermine the objective of the Bill by restricting competition, instead of increasing it. It could also severely hamper the growth potential of Indian startups and impede their ability to grow beyond Indian borders to compete globally.
“To this end, we have suggested an increase in the financial thresholds and also provided numbers for end-user and business-user count that would better reflect the realities of the Indian start-up ecosystem.
“Request to Move Forward Without Further Delay
“We also urge the MCA to move forward with the Bill at the earliest and not give in to further requests for extensions in the consultation period. We believe the current consultation period has been more than sufficient.
“The CDCL has already undertaken a year-long process to evaluate the need for the DCB. This process involved consultations with various stakeholders, including industry experts, legal professionals, and public interest groups. Granting another long extension will serve no further purpose other than submitting to delay tactics being employed by Big Tech companies who want to stall the implementation of the Bill.
“Big Tech companies have demonstrated a consistent pattern of employing delay tactics even when faced with clear orders from antitrust regulators worldwide to address their anti-competitive practices. These companies frequently resort to tactics such as prolonged legal battles, exploiting regulatory loopholes, or opting to pay fines instead of implementing required changes. For instance, Apple opted to pay a weekly fine of 5 million euros for an extended period rather than opening its App Store to alternative forms of payment for dating apps in the Netherlands.
“A clear regulatory framework established by the DCB’s implementation would benefit the Indian digital ecosystem in the long run. It would encourage innovation by fostering fair competition and incentivize start-ups and smaller businesses to innovate without fear of being stifled by larger players. It would also protect consumers and allow them more choice and protection. Additionally, the DCB can help attract more investment for start-ups and the Indian digital ecosystem, leading to further growth and job creation.”
Start-ups supporting the bill
1. Murugavel Janakiraman, founder, MD, Matrimony.com
2. Vinay Singhal, co-founder, CEO, Stage
3. Snehil Khanor – founder, CEO, TrulyMadly
4. Satish Kannan, co-founder, CEO, MediBuddy
5. Anand Virani, founder, chairman, Cutting Chai Technologies
6. Ajay Data, MD – Data Group of Industries, Chair – FICCI Multilingual and UA committee
7. Pawan Agarwal, deputy MD, DB Corp
8. Srinivasan B, MD, Ananda Vikatan Digital
9. Ravi Mittal, founder, CEO, QuackQuack (Verve Mobile)
10. Shruti, founder, Apnaklub
11. Srinivas Kollipara, managing partner, Biome Venture Studio, CEO of T-Hub, Hyderabad
12. Vishnu Moha, co-founder, Hoichoi
13. Sudhir Pai, CEO, MagicBricks
14. Sriram Subramanya, MD, CEO @ Integra Software Services, chairman – Nasscom, National SME Council
15. Ganesh N Mandalam, founder, CEO, Xerago
16. Ritesh Malik, founder, Innov8
17. Arokiaswamy Velumani, founder, Thyrocare Technologies
