• UGI USER
  • Mar 29, 2024
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TAKING ON BIG TECH

Syllabus:

GS 1:

  • Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Focus:

  • The protective shield of the home country for these firms has been lifted. It will, therefore, become that much easier for India and the EU to proceed in case of violations by these firms without geopolitical repercussions
Source:- The Mint

The ongoing disputes between Google and Indian firms highlight a global issue of digital monopolies exploiting their dominant positions. The Competition Commission of India’s (CCI) investigation into Google’s practices marks a significant step in addressing these monopolistic actions.

Competition Commission of India (CCI):

·    Established: CCI is a statutory body formed by the Government of India in March 2009 to enforce the Competition Act, 2002.

·    Legal Framework: The Competition Act, 2002 replaced the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) based on the recommendations of the Raghavan committee.

·    Composition: The Commission comprises one Chairperson and six Members appointed by the Central Government. All members are full-time and possess quasi-judicial powers.

·    Functions: CCI acts as a quasi-judicial body, providing opinions to statutory authorities and adjudicating on various cases related to competition law.

·    Eligibility Criteria: The Chairperson and Members must possess abilities, integrity, and experience. They should either be qualified to be a High Court judge or have a minimum of fifteen years of professional expertise in fields such as international trade, economics, law, finance, management, etc., deemed relevant by the Central Government.

The Core of the Dispute

  • Google is accused of forcing app developers to use its billing system on the Android platform, a practice likened to a corkage fee in a monopolistic setting.
  • The public backlash led to temporary reinstatement of removed apps, showcasing the power imbalance and public interest in the matter.
  • Digital monopolies, unlike their brick-and-mortar predecessors, have a more pervasive and visible impact on competition and innovation.
  • Six of the world’s top seven companies, valued over $1 trillion, operate within the digital space, illustrating the scale and influence of these monopolies.
  • Skeptics argue that markets will self-regulate through innovation and competition, but evidence suggests big monopolies do not self-correct efficiently.
  • Historical antitrust cases, like Standard Oil and ALCOA, show that government intervention has been necessary to preserve market competition.

Global Responses to Digital Monopolies:

European Union (EU):

  • Implementing Stringent Regulations: EU has enforced regulations like GDPR and pursued antitrust investigations against Big Tech firms such as Google, Apple, and Amazon.
  • Legislative Proposals: Recent proposals include the Digital Markets Act (DMA) and the Digital Services Act (DSA) aimed at reducing the power of digital giants.

United States:

  • Resurgence in Antitrust Scrutiny: Various administrations have initiated significant lawsuits against companies like Google and Facebook for alleged anti-competitive practices.
  • Calls for Revision of Antitrust Laws: Discussions include breaking up tech giants and revising antitrust laws to better address digital market nuances.

China:

  • Robust Actions Against Tech Giants: China has taken steps to curb market dominance of companies like Alibaba and Tencent, enforcing anti-monopoly laws and ensuring data security.

Global Actions on Data Privacy and Security:

  • Intensified Regulations: Inspired by the EU’s GDPR, many countries are adopting or planning regulations to enhance data privacy and security.
  • Concerns over Cross-border Data Flows: Growing scrutiny and actions are observed regarding the control and flow of data across borders, impacting data sovereignty and national security.

Taxation of Multinational Tech Companies:

  • OECD Framework: Over 130 countries agreed on an OECD framework to ensure fair taxation of multinational tech companies, including a global minimum corporate tax rate.
  • Digital Services Taxes: Countries like France have introduced digital services taxes targeting tech giants, leading to international disputes.
  • Support for Local Tech Ecosystems: Nations are investing in digital infrastructure, education, and startup ecosystems to foster local competitors to Big Tech.

Current Status of India-U.S. Technology Trade:

  • Bilateral Trade Growth: In FY2023, the U.S. became India’s largest trading partner, witnessing a 7.65% increase in bilateral trade, reaching $128.55 billion in 2022-23.
  • Digital Services Lag: Despite the overall trade growth, digital or technology services did not play a prominent role in the bilateral trade scenario.

Concerns of U.S. Tech Firms:

  • Policy Barriers: The Computer & Communications Industry Association (CCIA) identified 20 policy barriers hindering trade with India in a note titled “Key threats to digital trade 2023”.
  • Economic Imbalance: The CCIA highlighted significant imbalances in the US-India economic relationship, citing instances where the U.S. extended market access to Indian companies without reciprocal actions from India.
  • Trade Deficit: The U.S. faced a $27 billion deficit in digital services trade with India in 2020, despite the strength of its digital services export sector and the potential of the Indian market.

Discriminatory Regulations and Policies of India:

  • Geospatial Data Guidelines: India’s guidelines on sharing geospatial data provide preferential treatment to Indian companies, creating barriers for foreign firms.
  • Censorship and Control: Increased government censorship and control over political speech in India have made it challenging for U.S. companies to operate.
  • Taxation Issues: India’s equalisation levy and Equalisation Levy 2.0 impose taxes on digital services, leading to double taxation and complexity in the taxation framework.
  • Regulatory Burden: Regulations like the IT Rules 2021 and the Digital Personal Data Protection Bill 2022 impose compliance burdens and uncertainties on tech firms.
  • Telecommunications Bill: The Draft Telecommunications Bill 2022 broadens the definition of telecommunication services, potentially subjecting digital firms to new licensing requirements.

The fight against digital monopolies is a complex but crucial aspect of ensuring fair competition and innovation in the global market. The developments in the US and India’s actions against Google signify a growing consensus on the need for stringent antitrust enforcement in the digital age.

Antitrust Law in India:

·    Definition and Purpose: Antitrust law, also known as Competition law, is designed to safeguard trade and commerce against unfair restraints, monopolies, and price-fixing practices.

·    Promotion of Fair Competition: Its primary objective is to foster fair competition within an open-market economy, thereby preventing the abuse of market power and promoting consumer welfare.

·    Legal Framework: India’s antitrust law is embodied in the Competition Act, 2002. This legislation replaced the outdated Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) based on recommendations from the Raghavan committee.

Source:

https://epaper.thehindu.com/reader

Mains Practice Question:

Critically examine the role of national and international regulatory bodies in managing the challenges posed by digital monopolies. In the context of recent actions against big tech companies in the United States and India, analyze the effectiveness of antitrust laws in promoting competition and innovation in the digital economy. Discuss the potential implications of these regulatory measures for global market dynamics.