India mulls pre-emptive guardrails for big tech in its digital competition law

By moving towards pre-emptive guardrails, the government aims to shape how firms such as Google, Meta and Amazon use consumer data, treat smaller rivals, and define the room Indian start-ups have to compete and grow.

The discussions follow a March 2024 report by a government-appointed Committee on Digital Competition Law, which, along with a draft Digital Competition Bill, recommended a standalone Act with upfront rules for large platforms, triggering pushback from big tech and support from start-ups seeking higher thresholds. The draft is still at a consultative stage.

The Ministry of Corporate Affairs (MCA) and the Ministry of Electronics and Information Technology (MeitY) have since held separate stakeholder consultations on digital competition, while the Competition Commission of India (CCI) has also deliberated on the issue. The corporate affairs ministry is now set to commission a market study of the digital economy before a final view is taken, said the people in the know.

If India goes ahead with a new law based on the pre-emptive, or ex-ante, approach, laying down upfront the ‘dos and don’ts’ for big tech firms, the statute will also spell out the financial and market thresholds for identifying companies capable of influencing markets, along with the specific digital segments it will cover, such as online search, social networking, e-commerce, operating systems, and cloud services.

The market study will help in this as well, said the persons, who spoke on the condition of anonymity. It will make sure the new regulatory framework is based on India’s market realities.

The proposed new regulatory regime will look to ensure the digital economy comprising big tech multinationals as well as the large domestic tech firms follow certain norms on the use of consumer data and refrain from practices that could be disadvantageous to new entrants.

While industry bodies representing the big tech voiced their concerns about the draft Digital Competition Bill, 2024, saying it was “prescriptive” and “regressive,” Indian start-ups said such a law was needed but it should have higher thresholds so that tighter regulations govern the largest players, while they themselves remain out of its ambit.

Queries emailed on Friday to the corporate affairs ministry and to the CCI, seeking comments on the story remained unanswered till press time.

Experts support a standalone law for regulating competition in the digital markets.

India should prefer a standalone Digital Competition Act, said Shankey Agrawal, partner at BMR Legal. “The present Competition Act, 2002, was designed to deal with issues like cartels, abuse of dominance, and merger control through long investigations and penalties. That approach works in the traditional markets, but it is too slow for digital platforms where dominance builds rapidly,” he said.

The ex-ante—or forecast-based and not result-based—approach should remain the central concept in the proposed Digital Competition Bill as the adage that prevention works better than cure is equally applicable on digital competition, Agrawal added. “As the Digital Markets move fast, once a platform becomes dominant, competition may be shut out before the regulator can act, causing an irreparable damage to the entire competitive landscape. Ex-post action under the existing Competition Act arrives late and it may never be able restore the lost parity.”

Moksha Kalyanram Abhiramula, managing partner of La Mintage Legal LLP said the ex-ante approach is vital as it proactively prevents anti-competitive practices by large digital platforms before harm occurs and that a standalone digital competition law will be preferable to simply modifying the existing competition law.

“The current Act’s ex-post (after-the-fact) framework is inadequate for the unique challenges of digital markets, such as rapid innovation and platform dominance. A dedicated law can introduce proactive measures and rules specifically targeting “systemically significant digital enterprises” (SSDEs). However, the new law must be carefully harmonized with the existing Act to prevent regulatory conflicts and ensure a coherent enforcement regime under CCI, providing clarity and effective oversight,” said Abhiramula.

India’s regulatory framework must strike a calibrated balance between curbing anti-competitive conduct by dominant global platforms and nurturing the growth of indigenous start-ups and small and medium enterprises, Abhiramula said, adding: “Overregulation risks dampening innovation and investment, while weak regulation allows market tipping harmful to competition. The law should apply proportionate ex-ante measures primarily to systemically significant digital enterprises, ensuring fair access, data portability, and transparency without burdening smaller firms.”

A key advantage of a standalone law is clarity, said Agrawal of BMR Legal. “Businesses will know exactly which statute applies. The regulator will also avoid confusion between digital competition rules and existing antitrust provisions, such as Sections 3 and 4 of the Competition Act, he said.

“While some countries such as the UK have integrated digital rules into their main competition law, India will benefit from a separate statute that provides certainty and reduces litigation on its scope, implementation as well as procedure,” Agrawal added.

Section 3 and 4 of the Competition Act deal with anti-competitive agreements and abuse of dominant position, respectively.

Regulation must be targeted and proportionate, Agrawal said. “The law should not place the same burden on global tech giants and Indian startups.”

The committee on digital competition law had in 2024 suggested a dual test to identify systemically-significant digital enterprises (SSDEs) or digital economy gatekeepers, he said. This takes into account both financial strength parameters, such as turnover or market capitalization, and user base in India, indicated by one crore end-users or 10,000 business users of a core digital service (CDS).

“This ensures only the largest platforms are covered. Once designated, these SSDEs should face obligations like fair access, no self-preferencing, and data portability. Smaller and growing firms should remain outside heavy compliance,” said Agrawal.

He said a phased approach is also important. “CCI must begin with core digital services where concentration of global dominant players is the highest, such as app stores, search engines, and online marketplaces. It may then expand its reach to other business models as evidence supports. This balance will protect competition while encouraging Indian innovation,” said Agrawal.

Globally, the ex-ante or pre-emptive approach is gaining currency in competition regulation. The EU has already implemented its Digital Markets Act that follows ex-ante approach, designating Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft as digital gatekeeper entities with specific compliance obligations. The UK’s Digital Markets, Competition and Consumers Act also got Royal Assent in May 2024 and the new digital markets competition regime came into force this year. Germany has also added ex-ante powers to its competition law to check abusive conduct of businesses of paramount significance for competition across markets.

Sonam Chandwani, managing partner at law firm KS Legal & Associates says digital markets are not just an extension of traditional commerce, they operate on entirely different dynamics where data, algorithms, and network effects concentrate power much faster than in conventional sectors. “Simply modifying the existing Competition Act may not be adequate because it was not designed with these structural realities in mind. A stand-alone digital competition law, framed on an ex-ante basis, would give regulators sharper and more future ready tools to identify gatekeeper entities and intervene before harm to competition becomes irreversible,” said Chandwani.

She also said the regulatory architecture must be carefully calibrated to India’s unique ecosystem. “On one side we have global giants with entrenched dominance, and on the other, we have homegrown start-ups still finding their footing. Over regulation risks choking the latter, while under regulation emboldens the former. The optimum path lies in designing thresholds and obligations that are proportionate and stringent enough to discipline gatekeepers, yet flexible enough to allow smaller players to innovate and scale,” said Chandwani.