India’s EU-inspired antitrust law raises concerns among tech giants

India’s recent legislative push to implement antitrust laws like those in the EU has stirred significant concern among technology giants operating within the country, like Google, Meta, Apple and Amazon. That move, aimed at curbing the dominance of big tech companies and fostering a more competitive market environment, was met with a mixed reception, particularly from those within the technology sector.

The proposed antitrust law draws inspiration from the regulatory framework of the EU, which has been at the forefront of global antitrust enforcement. The EU’s regulations are known for their rigorous scrutiny of large tech corporations, often resulting in major fines and operational restrictions for companies that violate competition laws. Adaptation of this model in India signals a shift towards more assertive regulatory practices in the tech industry.

The Indian government is examining a panel’s report proposing a new ‘Digital Competition Bill‘ to complement existing antitrust laws. The law would target ‘systemically significant digital’ companies with a domestic turnover exceeding $480 million or a global turnover over $30 billion, along with a local user base of at least 10 million for its digital services. Companies would be required to operate in a fair and non-discriminatory manner, with the bill recommending a penalty of up to 10% of a company’s global turnover for violations, mirroring the EU’s Digital Markets Act. Big digital companies would be prohibited from exploiting non-public user data and from favoring their own products or services on their platforms. Additionally, they would be barred from restricting users’ ability to download, install, or use third-party apps in any way, and must allow users to select default settings freely.

Both domestic and international tech firms have voiced concerns about the potential impact of these regulations on their operations. A key US lobby group has already opposed the move, fearing its business impact. The primary worry is that the new laws could stifle innovation and place difficult compliance burdens on companies. That sentiment echoes the broader global debate on the balance between regulation and innovation in the tech sector.

Why does it matter?

•  Market Dynamics: These laws could significantly alter the competitive landscape in India’s tech industry, making it easier for smaller companies to challenge established giants. 
• Consumer Protection: Robust antitrust regulations are designed to protect consumers from monopolistic practices that can lead to higher prices, reduced choices, and stifled innovation. Ensuring fair competition can enhance consumer welfare.
• Global Influence: By aligning its regulatory framework with that of the EU, India could influence how other emerging markets approach antitrust issues.
• Investment Climate: Clear and consistent regulatory standards can attract foreign investment by providing a predictable business environment. However, the perceived stringency of these laws could also deter some investors concerned about compliance costs and regulatory risks.