THE CHALLENGE OF POLICING DIGITAL GIANTS

THE CONTEXT: The Competition Commission of India (CCI) imposed a ₹213.14 crore fine on Meta in November 2024 for WhatsApp’s 2021 privacy policy update, deemed an abuse of dominant position. This action, along with a similar fine of ₹1,337.76 crore on Google in 2022, highlights India’s efforts to regulate digital markets and address data-driven monopolies in the evolving competition law landscape.

COMPETITION LAW AND DIGITAL MARKETS IN INDIA

Background

• • The Competition Commission of India (CCI) imposed a ₹213.14 crore fine on Meta in November 20241.
  • CCI found WhatsApp’s 2021 privacy policy update an abuse of dominant position1.
  • Similar action taken against Google in 2022, fining ₹1,337.76 crore for abusing dominant position1.

THE ISSUES:

Concentration of Data

• • As of 2024, Meta has over 3 billion monthly active users across its platforms, allowing it to collect and analyze an unprecedented volume of personal data.
  • Google processes over 8.5 billion searches per day, giving it unparalleled insights into user behavior and preferences.
  • This concentration of data creates substantial barriers to entry for potential competitors, as they cannot match the depth and breadth of insights available to established players.

Network Effects and Data Feedback Loops

• • More users generate more data, which improves the quality of services, attracting even more users.
  • WhatsApp, with over 2 billion users globally, benefits from strong network effects, making it difficult for new messaging apps to gain traction1.
  • This self-reinforcing cycle can lead to winner-takes-all markets, stifling competition and innovation.

Data as a Competitive Advantage

• • Meta’s ability to offer highly targeted advertising is directly linked to its vast data resources across multiple platforms.
  • Google’s dominance in search is partly due to its ability to continuously refine its algorithms based on billions of user queries.
  • The Furman Review (2019) in the UK highlighted that the ability to access and process large amounts of diverse data can be a key source of market power in the digital economy.

Leveraging Data Across Markets

• • Google has leveraged its dominance in search to gain a strong position in online advertising and mobile operating systems.

• • Meta’s data integration across its platforms (Facebook, Instagram, WhatsApp) raises concerns about unfair advantages in targeted advertising.

• • The European Commission’s investigation into Facebook’s use of advertiser data (ongoing as of 2025) exemplifies the growing scrutiny of such practices.

Unfair Data Collection Practices

The CCI’s order against WhatsApp (November 2024) highlights concerns about:

• • Excessive data collection beyond what is necessary for providing the core service.
  • Lack of transparency and user choice in data sharing practices.
  • The “take it or leave it” nature of privacy policies, exploiting user lock-in effects.

Exclusionary Practices

• • Google’s practice of pre-installing its suite of apps on Android devices was found to be abusive by the CCI, resulting in a ₹1,337.76 crore fine in 2022.
  • Apple and Google’s control over their respective app stores has led to investigations in multiple jurisdictions, including India, over potentially anti-competitive practices.

Self-Preferencing

• • The European Commission’s investigation into Amazon’s use of non-public data from independent sellers (concluded in 2022) highlighted self-preferencing risks in e-commerce platforms.
  • Google has faced scrutiny for favoring its specialized search services in general search results.

THE WAY FORWARD:

 Establish a Unified Digital Regulatory Authority (UDRA)

Create a centralized body to streamline oversight of digital services and technology platforms, integrating expertise from CCI, TRAI, CERT-In, and other relevant agencies. This approach would:

• • Implement a single-window clearance system for tech companies, reducing compliance burden while ensuring comprehensive oversight.
  • Grant autonomous status similar to RBI, with technical experts leading specialized divisions for AI, data protection, platform governance, and cybersecurity.
  • Develop a tiered compliance framework based on platform scale and market impact, balancing innovation with oversight.
  • The UK’s Digital Markets Unit within the Competition and Markets Authority offers a model for specialized digital market regulation.

 Implement a Data Sharing and Interoperability Framework

• • Require large platforms to provide APIs for data sharing with smaller competitors, similar to the EU’s Digital Markets Act.
  • Establish a Data Sharing Authority to oversee implementation and resolve disputes.
  • Incentivize the creation of data trusts and cooperatives to empower users and smaller businesses.
  • India’s Unified Payments Interface (UPI) demonstrates the power of interoperability in fostering innovation and competition in financial services.

Develop an AI-Powered Market Monitoring System

• • Create a joint task force between CCI, CERT-In, and academic institutions to develop AI algorithms for market surveillance.
  • Implement a real-time monitoring system for digital markets, focusing on algorithmic collusion and predatory pricing.
  • Establish an AI Ethics Board to ensure fair and transparent use of AI in regulatory processes.

Introduce a Digital Competition Sandbox

• • Allow companies to experiment with new ideas under regulatory supervision for a limited time period.
  • Provide a safe space for startups to challenge incumbent platforms without immediate full regulatory burden.
  • Use insights from the sandbox to inform future policy decisions and regulatory frameworks.
  • The UK’s Financial Conduct Authority’s regulatory sandbox has fostered fintech innovation while maintaining consumer protection.

Establish a Multi-Stakeholder Digital Policy Forum

• • Conduct quarterly roundtables to discuss emerging challenges and potential solutions.
  • Publish annual reports on the state of digital competition and data protection in India.
  • Collaborate with international bodies like OECD and UNCTAD to incorporate global best practices.

Implement a Digital Literacy and Empowerment Program

• • Integrate digital rights and responsibilities into school curricula.
  • Conduct awareness campaigns on data privacy, online safety, and consumer rights in digital markets.
  • Establish Digital Empowerment Centers in every district to provide hands-on training and support.

THE CONCLUSION:

India’s digital future hinges on a visionary approach that balances innovation with equitable competition, necessitating a comprehensive overhaul of regulatory frameworks to address data-driven monopolies. By establishing a Unified Digital Regulatory Authority, implementing AI-powered market monitoring, and fostering digital literacy, India can lead the global charge in creating a fair, innovative, and inclusive digital ecosystem that empowers citizens and nurtures homegrown tech giants.

UPSC PAST YEAR QUESTION:

Q. Describe the context and salient features of the Digital Personal Data Protection Act, 2023. 2024

MAINS PRACTICE QUESTION:

Q. In light of recent regulatory actions against tech giants in India, Discuss the challenges posed by data-driven monopolies in the digital economy. Analyze the adequacy of India’s current competition law framework in addressing these challenges.

SOURCE:

https://www.thehindu.com/opinion/lead/the-challenge-of-policing-digital-giants/article69354690.ece

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