‘Big Tech like Google, Meta dominate market’ — Parliament panel bats for ‘Digital Competition Act’

‘Big Tech like Google, Meta dominate market’ — Parliament panel bats for ‘Digital Competition Act’

In report tabled Thursday, standing committee on finance emphasized need for strengthening anti-competitive laws to ensure level playing field for smaller digital players.


New Delhi: A parliamentary panel in its report tabled Thursday highlighted “anti-competitive practices by Big Tech companies” like Google and Meta, suggesting that the ‘Digital Competition Act’ should come to fruition as major players with a huge market share have engaged in “anti-competitive” practices and restricted the reach and growth of smaller market players.

The Standing Committee on Finance headed by Lok Sabha MP Jayant Sinha of the Bharatiya Janata Party (BJP) — in its report on ‘anti-competitive practices by Big Tech firms’ — also pointed out the different ways in which these bigger organisations have set their wide footprints, sidelining smaller firms.

Citing instances of how companies like Google and Apple have blocked other lesser-known players through their app stores, the report by the parliamentary panel read: “Google’s play store and Apple’s app store are the major players in this marketplace and both have been found to have anti-steering provisions on their platforms.”

In addition, the report also explicitly revealed details of specific provisions that harmed competition in the market.

For the report, the panel heard from representatives of hotels, restaurants and travel agents, along with digital media and newspaper associations via federations and industry bodies, and “took evidence” from the officials of the Ministry of Corporate Affairs (MCA), Ministry of Electronics and Information Technology (MeitY) and the Competition Commission of India (CCI).

The report has also highlighted how “monopolistic” firms such as Google, Meta and Apple have been put under the spotlight for steering smaller companies away from the market by making it hard for them to reach their collective target audience. This comes against the backdrop of the CCI’s punitive orders against companies like Google, who have already stacked up fines due to similar reasons in the United States and the European Union.

ThePrint reached Apple, Google and Meta for comment via email but did not get a response at the time of publishing. This report will be updated once a response is received.

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The Rise of Big Tech

In a bid to rein in Big Tech companies around the world, countries with strong governmental anti-trust committees have initiated fines worth millions against companies like Google and Meta.

Among the reasons cited in the parliamentary panel’s report to explain why Big Tech occupied so much space in the market was the fundamental discrepancy between how traditional and digital markets operate.

“The rise of big tech is due to the fundamental difference in the way digital markets operate, as compared to traditional markets. Digital markets are driven by a massively powerful increasing return to size economies. These increasing returns result not just from the traditional scale and scope effects, but also from dramatically powerful learning and network effects. Due to these powerful increasing returns to size, digital markets often tip quickly (within 3-5 years) to winner-take-all monopolistic outcomes,” the report read.

Traditional markets, on the other hand, tend to lose their competitive streak due to “diminishing returns to size”, said the report, adding that there are other variables at play which may not ensure profits the way a digital ecosystem does.

Diminishing returns to size refers to a situation in the traditional market when profits go stagnant even if investment in a particular area increases.

“Moreover, leading players in one digital market can quickly unlock these increasing return effects in adjacent markets as well. Since digital markets do not have sufficient competition, they are also prone to significant anti-competitive behaviour by leading players,” the report added.

‘Anti-steering provisions, Network effects’

The report also talked about how Big Tech companies have engaged in “anti-steering provisions” to ensure that organisations prominently associated with app stores prevent their business users — for instance, app publishers — from moving out of the platform and using alternatives for payments. 

“The issue lies in the fact that this does not allow the user any choice of alternatives, which may cost him less and provide a better interface. By mandating the use of their own payment system, App stores eliminate possible competition from other payment applications,” said the report.

The phenomenon of “network effects” was also found to be a catalyst in this problem wherein larger firms took advantage of the fact that users were more likely to sign in to a platform if it is highly utilised by a large group of people.

“An ‘incumbent platform’ continues to grow, also due to network effects. As the number of users on a platform grows, so does the utility of every user of that platform,” the report read. This essentially means that users found an impetus to migrate to or be part of a digital community once it accumulates a large number of users and how this is then used as leverage.

The report also mentions how leading players in the market can systematically and strategically leverage their position to cut off innovative start-ups, thereby eliminating competition. “This creates entry-level barriers for an emerging firm,” it said.

The CCI has been actively monitoring Big Tech companies and it has, on multiple occasions, recognised ways in which they may have played unfairly. The report also cited CCI’s comments wherein it accused Google of unfairly utilising and leveraging the payments platform Google Pay.

“Google unfairly privileges ‘Google Pay’ by prominent placement on the play store, android OS and Android-based smartphones skewing the search results on the play store in favour of Google Pay; and by pre-installing and prominently placing Google Pay on android smartphones at the time of initial set-up resulting in a “status-quo bias” to the detriment of other apps facilitating payments through UPI as well as other methods of payment, such as mobile wallets, net banking etc.,” the report explained.

‘Exclusive tie-ups’

The report added that not just major social media intermediaries, but several e-commerce platforms have engaged in “exclusive arrangements” with their peers, thereby reducing the total market share for others.

It read: “One of the most common anti-competitive behaviours on part of e-commerce platforms is that of exclusive arrangements. An e-commerce platform may decide to enter into an agreement with a brand, to allow the sale of the brand’s products on its platform, absolutely exclusively. This not only hampers the business of other e-commerce platforms but may also lead to losses for brick-and-mortar sellers.”

(Edited by Amrtansh Arora)

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