During the past decade, the digital sector has grown rapidly in India and around the world. As a result of this growth, new business models have emerged, new markets have been opened, and significant efficiencies have been realized. However, it has also led to concerns that tech giants are using the excessive amounts of user data they hold to manipulate digital markets and affect competition. In order to promote innovation in a given industry sector, sharing, exchanging, or collecting data jointly may be beneficial to businesses involved, as well as for the development of a given industry sector. As a result, consumers may benefit as well.

In fact, data are of crucial importance to the development of the digital economy, both separately and as a basis for artificial intelligence. The availability of relevant data is therefore crucial for the competitiveness of companies in the market. The world we live in is a one-click world, where everything is available at our fingertips. Several factors contributed to this, including technology and an extremely sophisticated algorithm. The concept of big data entails all the information online companies collect from the information that users feed into their devices, which is then processed by an algorithm designed by the company to transform the average data into valuable information that will add value to their competitive market.

Companies holding certain data may find sharing it too risky or economically unjustifiable. In some cases, companies worry that their competitive advantage will be lost if the data is unauthorizedly appropriated or used in violation of their contracts. Concerns about violating the regulations governing competition might also surface. In light of this, the Competition Commission of India (the “CCI”) has opened inquiries against a number of participants, including WhatsApp, Facebook, and Google. Yet, there are also worries about using competition law (rather than consumer and privacy legislation) to handle such issues.

What are Competition Laws?

The act of one or more firms interfering with another company’s ability to enter or prosper in their market is known as anti-competitive behavior. Anti-competitive behavior can lead to market distortion, which can have a variety of repercussions, including increased pricing, inferior service, and the suppression of innovation. Anti-competitive practices might comprise agreements between two or more companies or can be the operation of one organization. Businesses may collaborate in order to develop and adopt anticompetitive techniques that will strengthen their dominance over a particular market.

Price fixing, mass boycotts, exclusive dealing contracts, and trade association restrictions are examples of anticompetitive practices. Between company tactics that are deemed to be legitimate and those that are deemed to be anti-competitive, there is a very fine line. Businesses engage in anti-competitive behavior not to further their own interests but rather to take advantage of their position in the market at the expense of customers or their rivals. These actions typically result in price hikes, decreased output, worse quality, decreased customer choice, hurdles to new entrants, etc.

Competition must be fair and unrestricted for a market economy to work efficiently. In a market where there is competition, each competitor will make an effort to win over customers and grow their market share by consistently attempting to improve the quality of the goods, striving to lower prices, and seeking out more effective ways of manufacturing. The Monopolistic Restrictive Trade Practices Act, which was passed in India in 1969 and heavily influenced by British legislation, notably the Resale Prices Act of 1964 and the Restrictive Trade Practices Act of 1956, set up the country’s regulations regarding competition.

The Monopolistic and Restrictive Trade Practices Commission was created by this Act, and its primary duty was to regulate monopolistic and restrictive trade practices. The need to evaluate current laws has arisen as a result of economic changes and economic liberalization. As a consequence of this activity, the Competition Act, of 2002 was enacted, and it was approved by the President in January 2003 after being ratified by Parliament in December 2002. Government notice of certain Act provisions has indeed transpired, however many other aspects of this new Act are still pending notification. In place of the former MRTP Commission, this new Act creates the Competition Commission of India.

Role of Data Concentration in Anti-Competitive Arrangements

The CCI, by way of the Competition Act, is entrusted with the obligation to “prevent practices having an unfavorable effect on competition and sustain competition in the market”. Digital marketplaces are frequently “zero-price markets,” which is at variance with the conventional legal and economic ideas pertaining to competition injury. This might make it difficult to apply the Competition Act in these markets.

The businesses involved in this industry initially tried to license their data and obtain exclusive rights through Copyright, but the biggest IP drawback is that the data controller must demonstrate the originality of the big data. This could be achieved in one of two ways: either by compiling all the data and work and then demonstrating its originality. This creates a concern since, once the controller establishes the compilation’s uniqueness, rivals may easily go around it. The second way to get exclusive rights under IP is to protect each individual piece of data, but this might cause the controller a lot of difficulties because the data collection is so large. It takes a long time and is laborious to obtain exclusive rights to one’s data using this strategy.

As a result, a second way to achieve legitimacy is through Competition Law. According to its regulations, Competition Law prohibits unfair competition practices that threaten the interests of competitors. In light of the fact that Big Data firms spend a great deal of resources and time in creating algorithms that enable them to collect and analyze big data for the benefit of their customers, they should be able to claim ownership of this data under competition law. An infringer or his competitive company may deny the controller these rights if they can prove to the competition commission that they have a legitimate right over the data collection.

Is Data Concentration a Threat?

Big data may give rise to serious antitrust and anticompetitive problems. Due to the explosive expansion of e-commerce, all antitrust and competition authorities are concentrating on examining how businesses are using big data and what impact it has on the market and the value of their rivals’ businesses. Having access to Big Data means having access to billions of gigabytes of user data and sophisticated algorithms, both of which have the potential to have negative market consequences.

Being open and using an open infrastructure also makes one subject to things like account hijacking, physical searches of cell phones without security features, and government surveillance of communications. Despite the fact that the media industry is aware of these concerns, efforts to combat them—both in terms of educating the public and funding safe IT infrastructure—remain comparatively underwhelming. It appears odd that there is a difference between the acceptance of recognized hazards and a somewhat fatalistic attitude toward them.

Although the CCI was established in 2010 and has had several opportunities to evaluate the digital industry, it has only lately examined data as an asset. The CCI noted the confluence of data privacy and competition legislation in a study on the Indian telecom industry (the “CCI Telecom Report”) that was published in January 2021. It labels the use of data as non-price competition, implying that information gathered from consumers by a business may be utilized to provide the firm a competitive edge over its rivals.

According to a different study from 2020, the CCI also stated that network effects brought on by massive quantities of data collection enable corporations to compete on a level unrelated to price and establish a “winner takes all” paradigm. The CCI has previously stated that organizations like Facebook have the “potential to gather and handle considerable volumes of user data” when it comes to data consumption. Taking this theory forward, the CCI states in its WhatsApp Suo Moto Order that competition law must examine whether excessive data collection and how that data is subsequently used or otherwise shared in a data-driven ecosystem may have anti-competitive implications, requiring antitrust scrutiny.”

Conclusion

Digital security is frequently viewed as a lower concern while most media sources concentrate on the sociological or economic issues that threaten their sustainability. The main justification is that digital dangers are inherently hypothetical since they are frequently invisible and immaterial. There is still a dire need for the swift implementation of comprehensive and explicit data protection laws. The CCI might determine market power in digital marketplaces based on the threshold for data collection as specified by the legislation.

It is quite noteworthy that the MEITY has already published a notification that categorizes social media intermediaries with 5 million or more Indian users as “major social media intermediaries”. As a result, it would be prudent for the CCI to avoid setting any criteria or requirements in the area of data, instead strengthening its comprehension of the underlying issues through market research and preparatory conferences, and putting an emphasis on effects-based strategies.