Regulating Big Tech: India & Abroad – UPSC

Regulating Big Tech companies has emerged as a pressing concern both in India and abroad, as these tech giants wield significant influence over various aspects of modern life. From social media platforms shaping public discourse to e-commerce platforms dominating retail landscapes, the power and reach of companies like Facebook, Google, Amazon, and others have prompted calls for regulatory intervention. In India, as in many other countries, debates rage on about the appropriate balance between fostering innovation and protecting consumers’ rights, privacy, and market competition. Meanwhile, on the global stage, discussions revolve around harmonizing regulations to address the transnational nature of these corporations. Understanding the regulatory approaches taken both domestically and internationally is essential in navigating the complex terrain of Big Tech governance.

Tags: GS—3, GS—2, IT & Computers – Statutory Bodies — Government Policies & Interventions 

For Prelims: Competition Commission of India (CCI), Big Tech, Fintech, Competition Act, 2002, Start-ups, Micro, Small and Medium Enterprises, European Union Digital Services Act, Open Network for Digital Commerce (ONDC) Platform, Consumer Protection (E-Commerce) Rules 2020. 

For Mains: Role of Big Tech in Transforming India’s Digital Space, India’s Current Approach to Regulate Big Tech, Challenges Associated with Big Tech Firms in India, Competition Amendment Bill, 2022. 

Conext: 

• The conflict between Google and numerous Indian firms originated from app developers filing a complaint with the Competition Commission of India (CCI), alleging Google’s abuse of its dominant position in the Android and Play Store ecosystem. 
• The situation is ongoing, with the CCI directing its Director General to investigate and submit a report within 60 days. There’s anticipation that the outcome may find Google’s actions in violation of the Competition Act, 2002. 

The Different Aspects Related to Big-Tech Firms:  

About:  

• Big Tech companies globally include Google, Facebook (Meta), Amazon, and Apple. These companies wield significant power and influence across various sectors due to their massive market capitalization, innovative products and services, and widespread user base. 

Market Dominance and Influence: 

• Big Tech companies typically dominate their respective markets, often holding monopolistic or oligopolistic positions. They exert considerable influence over industry trends, consumer behaviour, and even public policy. 
• Amazon: Amazon is known for its dominance in e-commerce and cloud computing, with its Amazon.com platform and Amazon Web Services (AWS) leading the market. 
• Google: Google, operating under Alphabet Inc., controls the majority of online search traffic and digital advertising revenue through its search engine and subsidiary companies like YouTube and Google Ads. 
• Facebook :Facebook (Meta) holds a leading position in the social media landscape with platforms such as Facebook, Instagram, and WhatsApp, shaping online communication and content consumption. 

Technological Innovation: 

• Big Tech companies are renowned for their continuous innovation, propelling advancements in fields like artificial intelligence, cloud computing, and digital entertainment. 
• Apple: Apple is celebrated for its groundbreaking products like the iPhone, iPad, and MacBook, along with services such as Apple Music and iCloud. 
• Microsoft: Microsoft innovates across software, hardware, and cloud services, offering products like the Windows operating system, Office suite, Xbox gaming consoles, and the Azure cloud platform. 
• Tesla: Tesla disrupts the automotive industry with its electric vehicles, renewable energy solutions, and autonomous driving technology. 

Data Collection and Privacy Concerns: 

• Big Tech companies gather extensive user data through their platforms and services, sparking worries about privacy, surveillance, and data security. 
• Google collects user data from search queries, email correspondence, location tracking, and browsing history, enabling targeted advertising and personalised services. 
• Facebook (Meta) faces scrutiny regarding its data collection practices, notably the Cambridge Analytica scandal, which involved the unauthorised harvesting of millions of Facebook users’ data for political profiling. 
• Amazon analyses customer shopping behaviours and preferences to enhance product recommendations, pricing strategies, and supply chain management. 

Regulatory Scrutiny and Antitrust Concerns: 

• Big Tech firms frequently encounter regulatory scrutiny and antitrust investigations due to their market dominance, alleged anti-competitive behaviour, and potential infringements of consumer rights. 
• Google is under investigation by governmental agencies and regulatory bodies worldwide for alleged monopolistic practices, unfair competition, and antitrust violations related to its search engine, advertising business, and Android ecosystem. 
• Facebook (Meta) faces antitrust lawsuits and regulatory probes over its acquisitions of potential competitors like Instagram and WhatsApp, alongside concerns about its control over digital advertising and social networking markets. 
• Amazon is the subject of antitrust scrutiny regarding its treatment of third-party sellers on its e-commerce platform, allegations of predatory pricing, and potential conflicts of interest as both a retailer and a marketplace operator. 

Antitrust: 

• Antitrust laws, also known as competition laws, are regulations designed to uphold fair competition in the market by deterring monopolistic practices, price fixing, and other behaviours detrimental to consumers or competition. 
• The objective of antitrust laws is to guarantee consumers access to a diverse range of high-quality products at reasonable prices. 
• These laws seek to prevent the consolidation of monopoly power, wherein a single company or group dominates a significant portion of the market. Monopolies can result in inflated prices, diminished product quality, and stifled innovation. 

The Recent Steps Being Taken to Regulate Big Tech: 

1. US Federal Trade Commission: 

• Recent changes in the leadership of the Federal Trade Commission (FTC) have led to increased scrutiny of Big Tech companies. The FTC, along with 16 states, filed a lawsuit against Apple, alleging monopolistic behaviour and abuse of the smartphone market. 
• Similar lawsuits have been initiated against Google, Meta (formerly Facebook), and Amazon, accusing them of anti-competitive practices such as blocking, suppressing, and limiting rival products and services. 

2. EU’s Regulatory Measures: 

• In alignment with the Digital Markets Act (DMA) of 2022, the European Commission has launched non-compliance investigations against major tech players like Apple, Meta, and Google’s parent company, Alphabet. Additionally, Amazon’s ranking practices within its marketplace are under scrutiny. 

3. India’s Regulatory Framework: 

• Antitrust matters in India fall under the purview of the Competition Act, 2002, overseen by the Competition Commission of India (CCI). In 2022, the CCI fined Google for anti-competitive practices amounting to Rs 1,337.76 crore. 
• The government introduced the Competition Amendment Bill, 2022, which received Presidential Assent in April 2023. This bill aims to strengthen the CCI’s regulatory framework, particularly in digital and infrastructural sectors.  
• It empowers the CCI to assess enterprises’ substantial business operations in India and enhances its review mechanism, addressing jurisdictional gaps that were previously overlooked. 

The Different Concerns in Functioning of Big-Techs:  

• Investigations Into In-House Services: Allegations against Alphabet involve steering customers towards its own services over competitors’. Similar concerns are raised against Apple’s App Store and Safari browser positioning, as well as Meta’s “pay or consent model.” 
• Non-Compliance with EU’s Digital Markets Act: Alphabet, Amazon, Apple, ByteDance (owner of TikTok), and Microsoft were designated as ‘gatekeepers’ under the Digital Markets Act (DMA) in September 2023. They were required to comply fully by March 7, 2024. The European Commission initiated investigations into their non-compliance after assessing mandatory reports and stakeholder feedback. 
• Discriminatory Practices: The European Commission scrutinises Google’s search results for bias, questioning if it prioritises its own services over competitors’. Compliance efforts by Alphabet may not ensure fair treatment for third-party services, as indicated by the Commission’s concerns. 
• Additionally, the Competition Commission of India (CCI) ordered a probe into Google’s Play Store pricing policy in March 2024, citing potential violations of competition law. 
• Impact on Consumer Choices: The U.S. Department of Justice accused Google in October 2020 of maintaining monopolies through anti-competitive practices, which allegedly reduced the quality of search results and limited consumer choices. Amazon faces similar scrutiny for tailoring marketplace listings. 
• Ecosystem Captivity Concerns: The European Commission investigates whether Apple allows users to uninstall pre-installed apps on iOS easily, change default settings, and choose alternative services. It seeks to address concerns that Apple’s measures limit users’ choice within its ecosystem. 
• Meta’s Binary-Choice Model: Meta’s subscription model, offering ad-free Facebook and Instagram experiences with consent to personalised ads, faced regulatory scepticism. Regulators doubted its effectiveness in providing a genuine alternative for users who opt out of personalised advertising. 
• Regulatory Challenges: Regulators struggle to keep pace with Big Tech’s rapid innovation, often reacting to developments rather than preemptively addressing issues. Big Tech platforms argue they are intermediaries and thus not liable for content, creating a regulatory vacuum. 
• Arbitrary Pricing and Consumer Control: In digital markets, Big Tech firms wield significant pricing power, influencing consumer choices and market dynamics. Concepts like network effects and winner-takes-all, along with gatekeeping practices, further exacerbate concerns over consumer autonomy. 

The Different Steps to be Adopted in Regulating Big-Techs: 

• Standing Committee on Finance: In December 2022, the Standing Committee on Finance released a report on ‘Anti-Competitive Practices by Big Tech Companies’. The report outlined several key observations and recommendations: 
• Regulating Digital Markets: The Committee highlighted the unique characteristics of digital markets, where returns often increase with company size due to learning and network effects. To prevent the emergence of dominant players before antitrust measures can be implemented, the Committee recommended evaluating competitive behaviour proactively. 
• Digital Gatekeepers: To address potential competition issues, the Committee proposed identifying Systemically Important Digital Intermediaries (SIDIs) based on factors like revenue, market capitalization, and user base. SIDIs would be required to submit annual reports to the Competition Commission of India (CCI) detailing their efforts to comply with regulatory requirements. 
• Digital Competition Act: Recognizing the need for updated competition laws, especially in the digital sector, the Committee suggested the introduction of a Digital Competition Act. This legislation would aim to foster fairness, transparency, and competition in the digital ecosystem. 
• Self-Preferencing: The Committee raised concerns about self-preferencing practices, where platforms prioritise their own services over competitors’. To promote fair competition, SIDIs would be prohibited from favouring their own services when providing access to their platforms. 
• Data Usage: The Committee observed that access to user data can contribute to the dominance of market players. To address this, SIDIs would be restricted from processing personal data of users who use third-party services dependent on the SIDI’s core services without explicit consent. 
• Revamping CCI: To enhance regulatory oversight, the Committee recommended strengthening the CCI and establishing a specialised digital markets unit within it. This unit would monitor SIDIs, provide recommendations on their designation, and adjudicate cases related to digital markets. 
• Third-Party Applications: The Committee emphasised the importance of allowing the installation and operation of third-party applications by SIDIs. However, data transfer to foreign governments deemed adversaries would be prohibited. 
• Bundling and Tying: SIDIs would be prohibited from forcing businesses or end-users to subscribe to additional services to access their core platform services. This measure aims to prevent asymmetry in pricing and maintain competition in the market. 
• Anti-Steering: The Committee recommended anti-steering provisions that restrict business users from directing customers to offerings outside the platform. SIDIs would not be allowed to condition platform access on the purchase or use of unrelated products or services 

Conclusion: 

The European Commission and CCI have embarked on a journey to foster fair and competitive digital markets, launching non-compliance investigations against major tech players like Apple, Meta, Google’s Alphabet, and Amazon. Aligned with the Digital Markets Act’s mission to regulate ‘gatekeepers’ and encourage equitable competition, these actions signal a concerted effort to uphold market integrity. Nonetheless, companies like Apple have expressed reservations about the DMA’s provisions, arguing that they may overlook the broader benefits to consumers and businesses. 

UPSC Civil Services Examination, Previous Year Question (PYQ) 

Prelims 

Q:1  With reference to ‘consumers’ rights/privileges under the provisions of law in India, which of the following statements is/are correct? (2012) 

1. Consumers are empowered to take samples for food testing. 
2. When a consumer files a complaint in any consumer forum, no fee is required to be paid. 
3. In case of the death of a consumer, his/her legal heir can file a complaint in the consumer forum on his/her behalf. 

Select the correct answer using the codes given below: 

(a) 1 only  

(b) 2 and 3 only  

(c) 1 and 3 only  

(d) 1, 2 and 3 

Ans: (c) 

Source: (IE) 

FAQs

Q: What is the purpose of regulating Big Tech companies?

Regulating Big Tech aims to address concerns regarding market dominance, data privacy, misinformation, and anticompetitive practices. It seeks to ensure fair competition, protect consumer rights, and safeguard democratic values.

Q: How does India regulate Big Tech companies?

India employs various regulatory measures to oversee Big Tech, including the Ministry of Electronics and Information Technology (MeitY), which formulates policies and regulations concerning digital platforms. Additionally, the Competition Commission of India (CCI) monitors antitrust issues, while the Personal Data Protection Bill aims to safeguard user data privacy.

Q: What are some challenges in regulating Big Tech globally?

One challenge is the rapid pace of technological advancement, which often outpaces regulatory frameworks. Additionally, the global nature of Big Tech companies complicates enforcement efforts, as they operate across jurisdictions with differing legal standards. Balancing innovation with regulation and addressing concerns without stifling technological progress poses another significant challenge.

Q: How do other countries regulate Big Tech companies?

Countries like the United States, the European Union, and China have implemented various approaches to regulate Big Tech. The U.S. focuses on antitrust enforcement and consumer protection laws, while the EU emphasizes data privacy regulations like the General Data Protection Regulation (GDPR). China employs a mix of censorship, market restrictions, and domestic competition to regulate its tech giants.

Q: What are the potential consequences of ineffective regulation of Big Tech?

Ineffective regulation of Big Tech may lead to further consolidation of market power, erosion of user privacy, spread of misinformation, and stifling of competition and innovation. It can also exacerbate socioeconomic inequalities and undermine democratic principles by allowing unchecked influence over public discourse and political processes.

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