India's Digital Market Rules: Back to the Drawing Board, and Why It's a Good Thing
India’s ambitious journey to establish ex-ante competition rules for its rapidly expanding digital economy – a global trend aimed at regulating “Big Tech” – has reached a pivotal moment. The draft Digital Competition Bill (DCB), initially proposed following a 2022 report on the anti-competitive practices of large tech firms, is no longer considered fit for purpose in its current iteration. The recent Standing Committee Report indicates a significant policy re-evaluation, effectively sending the DCB back to the drawing board.
This isn’t a retreat, but a vital pause to re-vamp the DCB and strengthen the Competition Commission of India (CCI), learning from the complex experiences of other jurisdictions such as the EU's Digital Markets Act (DMA) and the UK's Digital Markets, Consumers and Competition Act (DMCC).
Why the Rethink? The DCB’s Initial Design Flaws
The criticisms of the DCB largely coalesce around three key areas that undermined its proposed effectiveness and fairness:
1. The Evidentiary Blind Spot. A primary concern raised by stakeholders was the lack of a robust evidentiary basis for the DCB. There were no actual market studies to support either the market practices it sought to curb or the quantitative thresholds used to identify firms for regulation. This stood in stark contrast to the extensive studies and impact assessments undertaken by the EU, UK, Australia and Japan when formulating their digital market rules.
While many Indian digital businesses rely on platforms for rapid growth, benefiting from practices that the DCB might prohibit, smaller businesses simultaneously expressed concerns about “gatekeeper” firms entrenching market power, particularly in e-commerce. The good news is that both the Ministry of Corporate Affairs (MCA) and CCI are now conducting market studies, aiming to thoroughly weigh the costs and benefits of ex-ante digital market rules - a crucial step to build credibility and buy-in for such a far-reaching framework.
2. Overly Broad and Vague Definitions. The DCB’s definitional ambiguities created significant uncertainty regarding the scope of digital services it would regulate and the companies that would fall within its ambit.
Designation thresholds - Stakeholders expressed concern that the proposed low quantitative thresholds for designating firms as “systemically significant digital enterprises” (SSDEs) would hinder fast-growing Indian digital firms. The consensus is to revise these thresholds to only include truly “systemically significant” firms, supporting domestic players.
Identifying Core Digital Services - The initial list of nine Core Digital Services (CDSs) in the DCB was problematic due to its inclusion of sectors that are relatively competitive and an overly broad definition of “online intermediation.” The Standing Committee recommends a more targeted, evidence-based DCB, excluding fast-growing domestic firms and potentially including “virtual assistants.”
Associate Digital Enterprises - The DCB's conduct requirements extended to “Associate Digital Enterprises” (ADEs), broadly defined by “indirect involvement” in providing a CDS. This expansive definition was criticised for its lack of clarity, potential over-regulation, strain on regulatory resources, and negative impact on innovation.
3. The Missing Rebuttal and Exemption Mechanisms. A significant procedural omission in the DCB was the absence of a rebuttal mechanism. Unlike the EU’s DMA, which allows firms meeting quantitative thresholds to demonstrate that they do not, in fact, have a significant impact on the market, serve as an important gateway, or hold an entrenched position, the DCB offered no such facility. This was a key concern, as it meant firms that might not truly possess “systemic significance” could still be designated as gatekeepers.
The DCB also lacked a mechanism for designated entities to claim exceptions or limitations to conduct requirements after designation. The DMA, for instance, allows for suspensions or exemptions in circumstances such as threats to economic viability or public health and safety. While the DCB requires the CCI to consider factors like economic viability, cybersecurity, and fraud prevention when formulating conduct requirements, it crucially lacked a mechanism for designated enterprises to present evidence to support these “exceptions” before obligations were imposed. Facilitating greater engagement with digital enterprises is vital for a targeted, context-specific implementation, avoiding blanket prohibitions.
Global Lessons and India’s Forward Path
The global experience with ex-ante digital competition regulations has been varied, offering valuable insights for India.
The EU's DMA is actively designating gatekeepers, issuing penalties for non-compliance, and conducting its first public review of the DMA, even exploring its implications for the AI sector.
The UK’s DMCC is proceeding at a more measured pace, requiring market studies and consultations before interventions, and is in the process of designating Google and Apple for “strategic market status” (SMS) in key markets. Meanwhile, Japan has proposed targeted ex-ante regulations for mobile ecosystems, due to come into effect in December 2025. However, South Korea’s proposal has faced significant pushback from the US amid bilateral trade negotiations - echoing concerns that US tech companies are being unfairly targeted. This emphasises the growing perception of digital regulation as an aspect of foreign policy and geopolitical alignment, rather than solely an issue of domestic policymaking.
Alongside these ex-ante efforts, “traditional” antitrust routes continue to be pursued by the EU and the US, with the EU handing Google a penalty in its ad-tech investigation and the US District Court ruling that restricts Google’s search business practices. The CCI also has several on-going investigations involving digital markets.1
The message for India is clear: the DCB, in its current form, is very unlikely to be enacted. Both the MCA and CCI have reportedly gone back to the drawing board, with comprehensive market studies and discussions with the Ministry of Electronics and Information Technology (MeitY). They are also considering the introduction of consultative mechanisms to safeguard against overregulation in specific sectors.
This renewed emphasis on transparency, clarity, checks and balances, and technical expertise is a promising sign. It suggests the DCB will be re-cast in a more pragmatic, evidence-based, and India-specific manner, carefully building on global experiences while fostering, rather than hindering, domestic digital innovation. The aim is to create a balanced law that addresses anti-competitive risks without stifling an important segment of the Indian economy.
Ongoing investigations relate to ad tech, app store restrictions, online movie ticket platforms, mobile app distribution, and food delivery apps among others.