30 March 2024 – The Hindu

Regulating Big-Techs

• The conflict between a major technology giant like Google and numerous Indian firms began years ago when app developers lodged a complaint with the Competition Commission of India (CCI). The complaint alleged that Google was abusing its dominant position in the Android and Play Store ecosystem. Specifically, the search engine was accused of pressuring app developers to use Google’s proprietary billing system or face a fee if they opted for a competitor’s service.
• The situation continues to unfold, with the CCI directing its Director General to conduct an investigation and submit a report within 60 days. It is possible that the outcome, as anticipated by the CCI, will find Google’s actions in violation of the Competition Act, 2002.

What are the Different Aspects Related to Big-Tech Firms?

About:

• Big Tech refers to the largest and most influential technology companies globally. These companies wield significant power and influence in various sectors due to their massive market capitalization, innovative products and services, and widespread user base.
• Some of the prominent examples are Google, Facebook, Amazon, Apple, etc.

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 behavior, and even public policy.
• Amazon: Dominates e-commerce and cloud computing with its Amazon.com platform and Amazon Web Services (AWS).
• Google (Alphabet): Controls the majority of online search traffic and digital advertising revenue through its search engine and subsidiary companies like YouTube and Google Ads.
• Facebook (Meta): Leads the social media landscape with platforms such as Facebook, Instagram, and WhatsApp, shaping online communication and content consumption.

Technological Innovation:

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

Data Collection and Privacy Concerns:

• Big Tech companies gather vast amounts of user data through their platforms and services, raising concerns about privacy, surveillance, and data security.
• Google: Collects user data through search queries, email communications, location tracking, and browsing history, fueling targeted advertising and personalized services.
• Facebook (Meta): Faces scrutiny over its data collection practices, including the Cambridge Analytica scandal, which involved the unauthorized harvesting of millions of Facebook users’ data for political profiling.
• Amazon: Analyzes customer shopping habits and preferences to optimize product recommendations, pricing strategies, and supply chain management.

Regulatory Scrutiny and Antitrust Concerns:

• Big Tech companies often face regulatory scrutiny and antitrust investigations due to their market dominance, alleged anti-competitive behavior, and potential violations of consumer rights.
• Google: Under investigation by government 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, as well as concerns about its control over digital advertising and social networking markets.
• Amazon: Subject to antitrust scrutiny over 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.

What are the Recent Steps Being Taken to Regulate Big Techs?

US’s Federal Trade Commission:

• The change comes due to the appointment of the Federal Trade Commission’s Chiarman. US Department of Justice and 16 states sued Apple alleging it monopolised and abused the smartphone market.
• The case against Apple follows a growing list of lawsuits against Google, Meta and Amazon for abusing market power. The modus operandi is familiar – blocking, suppressing, excluding, diminishing functionality of rival products and limiting third-party wallets.

EU’s Initiatives:

• In a slew of measures to ensure “contestable and fair markets in the digital sector” in line with the provisions of the Digital Markets Act (DMA), 2022 the European Commission in March,2024 initiated ‘non-compliance investigations’ against so called Big Techs (Apple, Meta and Google’s parent Alphabet). It will also investigate Amazon’s ranking practices in its marketplace.

India’s Stand:

• Competition Act, 2002: In India, antitrust issues are governed by the Competition Act, 2002 and the CCI checks upon monopolistic practices.
• In 2022, the CCI imposed a penalty of Rs 1,337.76 crore on Google for abusing its dominant position in multiple markets for ‘anti-competitive practices’.
• Competition Amendment Bill, 2022: The government has proposed amendments to the competition law in the Competition Amendment Bill, 2022. The Bill receives Presidential Assent in April 2023.
• The CCI shall frame regulations to prescribe the requirements for assessing whether an enterprise has substantial business operations in India.
• It will strengthen the Commission’s review mechanism, particularly in the digital and infrastructure space, a majority of which were not reported earlier, as the asset or turnover values did not meet the jurisdictional thresholds.

What are the Different Concerns in Functioning of Big-Techs?

Prioritising In-House Services:

• The non-compliance investigations concern Alphabet’s alleged rules on steering or directing its customers to its in-house services over those of its competitors. Apple will be investigated for allegedly similar practices in its App Store, as well as the way it positions its Safari browser. Lastly, Meta will be investigated for its “pay or consent model.”

Non-Compliance With Digital Markets Act, 2022 (DMA) of EU:

• Alphabet, Amazon, Apple, TikTok’s parent company ByteDance, and Microsoft were designated as ‘gatekeepers’ in September 2023. They were expected to fully comply with obligations under the DMA by March 7, 2024.
• The European Commission assessed the mandatory compliance reports submitted by these companies and gathered feedback from stakeholders, including in the context of workshops, before launching the investigation into non-compliance of DMA provisions.

Discriminatory Approach Adopted by Big-Techs:

• The European Commission aims to assess if Google’s search results show bias, specifically if the company prioritizes its own verticals over competitors’ services.
• It has suggested that Alphabet’s efforts to comply with the DMA may not guarantee fair treatment for third-party services on Google’s search results page, compared to Google’s own services.
• Further, the CCI in March,2024 also ordered a detailed probe against Google for alleged discriminatory practices on its Play Store pricing policy after having discovered a prima facie violation of competition law.