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Regulating Big Tech Firms in India

Context: The Lok Sabha passed the Competition (Amendment) Bill, 2022, aimed at bringing in greater regulation of corporates, particularly Big Tech firms in India.

About the Competition (Amendment) Bill, 2022

  • The Bill seeks to amend the Competition Act, 2002, which was enacted to promote and sustain competition in markets, protect the interest of consumers, and ensure freedom of trade for market participants.
  • Key provisions of the amendment bill:
    • Regulation of combinations: Combinations with transaction value of more than Rs 2,000 crore will require CCI’s approval. Combinations imply mergers, acquisitions, or amalgamation of enterprises.
    • Time limit for approval of combinations: The Bill proposes to reduce the timeline for the CCI to pass an order on such transactions from 210 days to 150 days.
    • Anti-competitive agreements: Currently, enterprises or persons engaged in similar businesses can be held to be a part of anti-competitive agreements.  The Bill expands this to also include enterprises or persons who are not engaged in similar businesses.
    • Settlement and Commitment: The Bill provides a framework for settlement and commitment for faster resolution of investigations of anti-competitive agreements and abuse of dominant position.
    • Decriminalisation of certain offences: The Bill changes the nature of punishment for certain offences from imposition of fine to penalty.  These offences include failure to comply with orders of CCI and directions of Director General with regard to anti-competitive agreements and abuse of dominant position.

About the Competition Act, 2002

  • It established the Competition Commission of India (CCI) to eliminate practices having adverse effect on market competition.
  • Under the Act, enterprises are not allowed to enter into anti-competitive agreements which can cause an appreciable adverse effect on competition in India or abuse their dominant position.
  • Combinations that meet certain thresholds based on their assets or turnover have to be notified for CCI’s approval.

What is Big Tech?

  • Big Tech, also known as the Tech Giants, is a term used to describe the most dominant companies in the information technology industry, majority of who are centered in the United States.
  • The Big Tech are further classified as Big Four or Big Five presently consisting of Alphabet (Google), Amazon, Apple, Meta (Facebook)—with Microsoft completing the Big Five.
  • Significance of Big Tech in the world:
    • Economy: The impact of Big Tech is felt on a global level. They are continually looking to expand their reach, influencing domestic economy of almost all countries.
    • Society: Big Tech influences societal change by being accessible to the masses. The products of these companies are widely used and can impact the consumer choices.
    • Politics: Big Tech have the reach and capability to create political opinion. These can be in form of political ads on their platform and also promoting opinion of certain political leaders on social media.
    • National Security: Since Big Tech operate across the world, countries claim that these companies support rival economies, which ultimately affects national security. Ex: Huawei was blamed by the US for spying on behalf of China.
    • Technology: The Big Tech are well known for their innovation and technology development. They are the first to introduce ground-breaking technologies.

Need for Regulating Big Tech

  • Anti-competitive practices: Big Tech indulge in destroying competition so that they can increase their profits. Many smaller companies have been forced to shut down, unable to compete against Big Tech.
  • User privacy: Big Tech have been criticized for violating user privacy by using their private data for commercial purpose. There are also concerns of monitoring internet activity of users.
  • Tax evasion: Big Tech have been accused of using tax evasion practices by registering their business in low-tax jurisdictions.
  • Destroying jobs: Many technology and practices promoted by Big Tech have destroyed jobs in developing and underdeveloped countries. The main culprit is automation.
  • Lack of concern for law of the land: Big Tech have been accused of ignoring laws of the land and claiming immunity, citing their overseas origin.
  • Misinformation: Platforms run by Big Tech have been accused of promoting misinformation, which have implications on law and order of the country.
  • Political interference: The political preferences of Big Tech have been visible when they promote certain political thought through selective promotion.

Big Tech Regulations in India

  • In India, antitrust issues are governed by the Competition Act, 2002, and the Competition Commission of India checks upon monopolistic practices.
  • So far, big tech companies in India are protected by the safe harbour of the Communications Decency Act (CDA) of the USA along with its Indian counterpart Section 79 of India’s Information Technology Act, 2000 (IT Act).
    • Safe harbour – as prescribed under Section 79 of the IT Act, 2000 – is legal immunity that online intermediaries enjoy against content posted by users on their platforms.
  • However, now India is working on its own Digital India Acta replacement of IT Act 2000 along with many others like Telecom bill, data localisation and others.

Big Tech Regulations Across the World

Europe Digital Markets Act (DMA): The DMA will directly ban harmful business practices by very large digital players, create a fairer and more competitive economic space for new players and European businesses.

Digital Services Act (DSA): This act targets category of online services, from simple websites to internet infrastructure services and online platforms.

USA The USA (Anti-trust legislation): The US adopted Anti-trust legislation targeting the dominance of Big Tech companies by giving states greater power in competition cases and increasing money for federal regulators.
Australia Competition watchdog in Australia recommended tighter regulation of Facebook and Google, and moves to improve media competition.

The Online Safety Act will have the power to force social media companies to delete posts that amount to online bullying, and to fine the companies and those who hosted the alleged abuse.

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