Indian startups pledge support to draft digital competition bill; say ex-ante norms game-changer

New Delhi: Nearly 40 Indian startups have joined forces to pledge support to the draft digital competition bill, describing its proposed 'ex-ante' regulations as potential 'game-changer' in tackling the anti-competitive practices of big tech companies.

With battle lines drawn within the industry over provisions of the draft bill, prominent names like Matrimony.com, TrulyMadly, Innov8, QuackQuack, Magicbricks, Hoichoi, and Medibuddy are among startups which have written to the Ministry of Corporate Affairs (MCA) on the issue.

Asserting that the digital competition bill, with its focus on 'ex-ante' regulations, could potentially be a 'game-changer' for the Indian startup ecosystem, these companies have urged the MCA to move forward with the bill 'at the earliest' even as they accused the big tech players of often indulging in delay tactics.

As many as '40 Indian startups have come out strongly in support of the draft Digital Competition Bill, which proposes ex-ante regulations to curb anti-competitive practices of big tech companies,' according to a press note.

As such, the ex-ante provision aims to ensure that the behaviours of large digital enterprises are proactively monitored and that the CCI intervenes before instances of anti-competitive conduct transpire.

Currently, the Competition Act primarily envisages an ex-post framework of intervention, wherein the CCI intervenes after the occurrence of anti-competitive conduct.

These startups have termed the draft bill as a step in the right direction and said it will address long-standing concerns of Indian ventures to rein in practices, which stifle innovation, and limit consumer choice and 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)," according to a release.

They argue 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," it said.

In a joint letter to Manoj Govil, Secretary in the Ministry of Corporate Affairs, the startups said that the digital competition bill, with its focus on ex-ante regulations, has the potential to be a 'game-changer' for the Indian startup ecosystem.

The startups, however, felt that current thresholds prescribed for designating Significant Strategic Digital Entities were low and could "perhaps, inadvertently encompass startups and other digital enterprises which are not gatekeepers".

It has, therefore, suggested an increase in the financial thresholds and also provided numbers for end-user and business-user count, which would 'better reflect' the realities of the Indian startup ecosystem.

The startups, in their letter, have also urged the MCA to move forward with the bill 'at the earliest' and not give in to further requests for extensions in the consultation period. The current consultation period has been more than sufficient, they said.

The startups accused the big tech companies of demonstrating 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," the startups claimed in the letter.