In recent times, the Competition Commission of India, (“CCI”) has started examining anti-competitive practices of big technology companies. With the explosion of digitization, CCI receives many complaints about the conduct of Big Tech who, ostensibly, use their exclusive agreements with selective e-commerce platforms with the aim of excluding other e-portals. Clearly, the phenomenal growth in the digital markets has brought greater challenges and complexities for anti-trust regulators not simply in India, but across the globe. Behemoths like Amazon, Google, MakeMyTrip, and OYO are some key tech companies that have come under CCI’s scrutiny and, since 2018, it has imposed cumulative penalties of about INR 28.66 billion (about USD 350 million) on them. Out of USD 350 million, INR 22.74 billion (about USD 277 million) was imposed on Google India Private Limited (“Google India”) for its anti-competitive practices and CCI told Google to change its approach to its Android platform.
This newsletter focuses on the critical issue of abuse of dominance, sharing potential data of the consumer and how CCI has been dealing with such issues.
2. The Jurisprudential Evolution
The legal framework in India for dealing with anti-competitive practices and identification of abusive use of dominant position is covered under sections 3 and 4 of the Competition Act, 2002 (“the Act”). Section 3 deals with and prohibits certain types of anti-competitive agreements, while section 4 prohibits abuse of dominant position by an enterprise. The Act also regulates combinations to ensure there is no adverse effect on the competition in the market. Below is a brief evolution of selective jurisprudence on cases against Big Tech.
2.1 MakeMyTrip: In 2019, Federation of Hotel and Restaurant Associations of India, a representative body for hospitality industry, complained to the CCI against MakeMyTrip Pvt. Ltd. and Go Ibibo (“MMT-GO”). The informant alleged MMT-Go and OYO executed an exclusive agreement agreeing to provide preferential treatment to OYO subscribed franchisees which denied market access to others, namely Fab Hotels, Treebo and other budget hotels. After due consideration, CCI formed a prima facie view and referred the matter to the Director-General (“DG”) to investigate pursuant to section 26 of the Act. DG considered various factors mentioned under section 19(4) of the Act for assessing the position of dominance delineated the market for online intermediation services for booking hotels in India and noted that as MMT-GO had significant market power in the vertical chain, it held a dominant position in the relevant market. MMT-Go refused to list the independent hotels which were on FabHotels and Treebo platform and gave preferential treatment to OYO thereby denying access to other distribution channels.
MMT-GO contested this, but after due consideration CCI held in delineating the relevant product market under section 19(4) of the Act, dependence of a consumer is an important parameter to gauge the strength of an enterprise. MMT-GO’s platform had the biggest online travel agencies listed and the highest market share during the period of investigation. It was a dominant channel of distribution which provided non-discriminatory access of its platform to other users and abused its dominant position in the market for online services for booking hotels in India. CCI imposed a penalty of INR 16.8 billion (about USD 1,377 million) on OYO and INR 22.3 billion (about USD 1,826 million) on MMT-GO. They challenged the CCI order before the National Company Law Appellate Tribunal (“NCLAT”), wherein NCLAT directed MMT-Go to deposit 10% of the penalty within 6 weeks. NCLAT order was challenged before the High Court of Delhi. The High Court granted stay on the recovery of the penalty subject to deposit 10% of the penalty imposed by the CCI.
The CCI’s historical position was that both offline and online markets are not two different relevant markets but differ in terms of discounts and shopping experience where buyers weigh the options available in both markets and then decide accordingly. This was reiterated and followed in this case too. It noted that all travel channels operate through both offline and online modes, and from a demand side perspective, it is easy for a consumer to switch between the two modes.
2.2 Google: In Q4 of 2022, CCI imposed a massive fine on Google, as stated above. Briefly, different informants filed two separate cases against various Google entities and corroborated them with necessary documents. After due consideration, CCI formed a prima facie view and referred the matter to the DG to investigate pursuant to section 26 of the Act. In its investigation, the DG sought information from various third parties (mobile handset manufacturer and key app developers) and submitted its report to the CCI.
The DG delineated the market for licensable mobile operating system for smart mobile devices, app stores for android OS and apps facilitating payments through UPI in India and framed the following issues (a) whether Google abuses its dominant position by signing an exclusive Mobile Application Distribution Agreement (“MADA”) with all OEMs of Android devices making obligatory on the OEMs to exclusively pre-install Google’s proprietary applications, (b) whether Google leverages its market dominance by making it mandatory for app developers to use Google Play’s Billing System (“GPBS”) for processing payments for apps and digital product purchases thereby preventing use of third-party payment option, (c) whether Google imposes unfair fee on the app developers on all paid app downloads. Examining Google’s payment policy it came to light that any app developer wishing to list their app on Google Playstore must necessarily use GPBS for payment and cannot lead users to alternative payment methods. If they do not comply, they will not have access to potential customers on Playstore in India. By imposing mandatory and unfair conditions on app developers and users, restricting their choice of preferred payment partners and denial of market access for other payment processors amounts to violation of section 4 of the Act.
Google put forth several arguments including (a) its proprietary applications are not pre-installed on all android devices and OEMs can customize the OS to build different versions offering competition to android OS, and (b) mandatory application of GPBS impacts small number of apps in India. However, after careful consideration, CCI concluded Google abused its dominant position in the relevant market in the licensing of its Android operating system for a range of smartphones, web searches, browsing and video hosting services and OEMs had to choose Google’s proprietary application without an option to delete it. Google’s underlying objective in imposing various restriction via MADA was to protect and strengthen its dominant position in the market so that only its bouquet of apps were used which, according to CCI, was stifling competition and gave Google continuous access to consumer data and lucrative advertising opportunities.
Subsequently, Google approached NCLAT seeking an injunction on the operation of CCI penalty; however, NCLAT directed Google to deposit 10% of the penalty within four weeks. Thereafter, Google challenged the orders before Supreme Court where it asserted that non-monetary directions of CCI regarding its play store policies case are ex-ante in nature, several of them are not based on any finding of infringement against it under the Act and contrary to the construct of the Act. However, the SC refused to interfere and on January 18, 2023, directed NCLAT to dispose of appeal by March 31, 2023.
3. The Issues in Digital Markets
CCI findings in the recent cases depict its paradigm shift in its approach through which it refrains and regulates the big tech from abuse of their dominant position. However, the regulator faces some unique challenges in regulating big tech for abuse of their dominance which consists of the following:
3.1 Delineation of market: The initial step in any dominance analysis of a platform is to correctly delineate the relevant market. Any incorrect delineation may defeat the assessment purpose. Market determination is based on marked realities which may vary from one case to another. The top digital platforms i.e., Amazon, Facebook, Google, Uber, etc., offer perfect illustrations on how the regulators reviewed forms of market power that adversely affected small players in the market. It is important to remember that in rapidly changing markets, it is not possible to have a static approach. Delineation of relevant market and competitive assessment are based on market realities as they exist at the time of assessment, keeping in view the facts and allegations.
3.2 Merger control regime: Section 5 and 6 of the Act regulates mergers and acquisitions in India. The current merger framework of the Act is dependent on “assets and turnover based approach” rather than “transaction value-based approach.” Although in the digital market, mergers often derive value from some business innovation which often do not have a traditional asset base. Therefore, assets and turnover based threshold criteria may not fully capture the significance of a transaction for competition and can often be an inaccurate proxy to capture the full effects of transaction in the digital market.
3.3 Big data complexity: Data is a factor of dominance. CCI chairperson, Mr. Ashok Kumar Gupta addressing CCI’s annual conference on competition law and practice mentioned that “the online platform has control over user data and online real estate.” Big Techs possess data advantage over other business and sometimes even their competitors, as they can change the course of consumer behavior online. Most of the data driven businesses are multi sided platforms where one or more sides of the platform is designed to attract user presence and the other sides are used for monetizing the data related user behavior. Recently, CCI recently approved the acquisition of 9.99% stake by Facebook in Jio Platform, a subsidiary of Reliance Industries Ltd. Analyzing the arrangement between the world’s largest social media site and India’s biggest telecom operator required not just the assessment of business aspect of the deal, but also the collection and sharing of data. RIL submitted that the proposed acquisition may not result in unrestricted access to users’ data. However, CCI was of the view that any competitive conduct resulting in data sharing in the future could be taken up by CCI under sections 3 and 4 of the Act. Further, since the digital platforms operate globally the jurisdictional issue relating to intervention of competition authorities in data protection remains a challenge for CCI.
The aforementioned challenges have been addressed by the Ministry of Corporate Affairs in its Competition Law Review Committee Report, 2019. The report recommended ex-ante legislative framework which might be applicable to all the digital intermediaries operating in Indian market. Anti-trust regulators across various jurisdictions have also come forward to support ex-ante legislative framework to pre-evaluate the competitive behavior.
Globally, there appears to be a change in trend while dealing with online platforms and state regulators differentiated online markets from the traditional retail shops and several have levied fines on Big Tech to punish monopolistic behavior. For instance, European Commission slammed fines of EUR 4.34 billion (about USD 4.7 billion) on Google for breaching anti-trust rules in the online digital market, and Amazon got EUR 1.1 billion (about USD 1.19 billion) by the Italian Antitrust Commission. Apple too is currently under the scrutiny by the European Commission for abuse of its dominant position in the mobile wallet on iOS devices.
It would also be necessary to pause and reflect on the role of the competition authorities in assessing digital services – should it encourage innovation, control prices, or promote local services? In times to come, perhaps, the competition authorities may need to work with other agencies who are putting in place other forms of digital regulation to make such assessments. And, of course, it will be necessary to understand and measure consumer welfare in a digital environment, and the extent to this it should be the basis for competition analysis.
The massive growth of tech giants’ power has alarmed the competition watchdogs. However, authorities face numerous challenges when bringing abuse of dominance cases in digital markets. In the digital economy, the detection of abusive exploitation of market power is a particular challenge and authorities need to decide whether to use new theories of harm, such as self-preferencing. Recent scrutiny by CCI has sent a clear message that it is now in sync with the anti-trust regulators across the globe. Economic analyses in digital markets remains complex and abusive effects often cannot be identified with usual methods and techniques. These traditional tools need to be adjusted. In other words, to loosen the hold of Big Tech on digital markets would require restructuring regulations of the online platforms by taking an ex-ante approach before the market penetration runs deeper than it already is. The challenges posed by the digital economy and data driven markets is going to increase in the future and one-size-fits-all approach may not work.
 Amazon: about USD 24 million, Google: about USD 277 million, MakeMyTrip: about USD 27 million, OYO: about USD 20 million, where USD 1 = INR 82 and rounded off
 USD about 114 million, USD about 163 million
 CCI, FHRAI vs. MMT-Go & Ors.,[Case no. 14 of 2019]
 Google’s proprietary application i.e., Google Playstore, Google Chrome, YouTube, Google Maps, Google Pay, etc.
 The Competition Law Review Committee Report (CLRC Report, July 2019), See https://www.ies.gov.in/pdfs/Report-Competition-CLRC, last accessed on Jan 21, 2023
 Federal Court of Germany in KVR 69/19 on June 23, 2020 available See https://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Entscheidungen/BGH-KVR-69 19__blob=publication File & v=3, last accessed on Jan 21, 2023