In the ever-evolving digital landscape, the Indian government is taking significant strides to ensure fair and transparent business practices within the online sector. The upcoming Digital Competition Bill is set to introduce a series of rules aimed at regulating units providing online services. This groundbreaking legislation will require online companies, often referred to as gatekeeper platforms or Systematically Imported Digital Intermediaries (SIDIs), to make explicit declarations about their business conduct and potential hindrances posed to third-party technologies or applications.

Key Provisions:

Self-Declaration Requirement:- According to sources familiar with the matter, the proposed bill mandates that SIDIs must submit declarations regarding the fairness and transparency of their business practices to the Competition Commission of India. Failure to comply with this requirement may result in a penalty of 1 percent of the company’s global revenue.

Timeframe for Declarations:- Online entities will be granted a six-month window from the time of crossing the prescribed limit to make these declarations. The prescribed limit is determined based on factors such as India and global revenue, gross merchandise value (GMV), average global market capitalization, and the number of end-users.

Data Privacy and Misuse Prevention:- SIDIs are obliged to clearly state, through self-declaration, that they are not mixing or misusing consumer information without their explicit permission. This provision underscores the importance of respecting user privacy and maintaining ethical data practices.

Curbing Anti-Competitive Practices:- The bill addresses unfair measures, specifically anti-steering tactics, employed by online companies to prevent consumers from using services offered by other companies. This is a crucial step in fostering a competitive digital market and preventing monopolistic practices.

Scope of Regulations:- The proposed regulations will extend to major digital service providers, including but not limited to companies like Amazon, Flipkart, WhatsApp, Signal, search engines, social networking platforms, web browsers, and online advertising companies. These precautions are aimed at preventing anti-competitive practices within the digital realm.

Alignment with Competition Act:- Provisions related to competition regulation, including fine settlements and promises, will be determined in line with the core Competition Act. This ensures that actions taken against digital sector companies align with established legal frameworks for unfair business practices.

Government Initiatives:- The Digital Competition Bill comes on the heels of a recommendation by a parliamentary committee on finance in December 2022. The committee emphasized the need for a clear definition of SIDIs and advocated for stricter rules governing their operations. The classification of SIDIs based on revenue, market capitalization, and the number of active users was highlighted as a key aspect of the proposed regulations.

As the Indian government takes proactive measures to regulate the digital landscape, the Digital Competition Bill emerges as a significant milestone in ensuring fair and transparent business practices. By imposing obligations on online companies and introducing penalties for non-compliance, the legislation aims to foster a competitive and ethical digital market. As the proposed bill makes its way to the Finance Ministry for opinion, the industry awaits the potential transformation of the digital sector in India.