India Digital Competition Bill risks service degradation for major platforms

The immediate implication is a potential 'digital curtain' where advanced features are withheld from Indian users to avoid legal risk, mirroring Apple and Google's recent product delays in Europe. For the streaming and digital ecosystem, these ex-ante rules replace effects-based analysis with rigid size thresholds, potentially penalizing commercial success and increasing customer acquisition costs for MSMEs. This shift from the Competition Act 2002 framework toward structural presumptions could stifle the experimentation necessary for India's emerging AI stack. Watch for whether the Ministry of Corporate Affairs introduces a 'substantial and entrenched market power' requirement to align the bill with more flexible regulatory models like the UK's DMCC.

India's push toward ex-ante digital regulation places it alongside a growing number of jurisdictions adopting structural rules for large platforms. The European Union's Digital Markets Act, which entered full enforcement in March 2024, has already produced compliance disputes with Apple and Google over app store rules and search defaults. Apple delayed its AI-powered notification summaries in the EU citing regulatory uncertainty under the DMA, a precedent that ICLE's submission explicitly references as a cautionary outcome for India. The UK's Digital Markets, Competition and Consumers Act, which received Royal Assent in May 2024, took a different approach by requiring the Competition and Markets Authority to designate firms with substantial and entrenched market power before imposing conduct obligations, a flexibility mechanism absent from India's draft bill. The business implications for India's domestic platform ecosystem are significant. Flipkart, which is majority-owned by Walmart, operates a marketplace serving over 450 million registered users across India, and Zomato's parent Eternal reported consolidated revenue exceeding ₹12,000 crore in fiscal year 2025. If the bill's size-based thresholds capture these companies as Systemically Significant Digital Enterprises, they would face obligations including interoperability mandates and restrictions on self-preferencing that could alter their core business models. Paytm's parent One97 Communications has already navigated regulatory friction after the Reserve Bank of India restricted its payments bank operations in early 2024, illustrating how overlapping regulatory frameworks can compound compliance costs for Indian digital firms. On the technical and competitive front, the bill's potential impact on AI deployment in India has drawn attention from economists and technologists. Such investments depend on regulatory predictability, and ICLE's submission argues that the bill's vague obligations around data portability and algorithmic transparency could deter similar commitments. The academic debate around ex-ante platform regulation also features prominently in the submission, with references to work by Herbert Hovenkamp of the University of Pennsylvania and Frank Easterbrook of the Seventh Circuit, both of whom have cautioned against presumptive regulation absent demonstrated consumer harm. David Teece, the Berkeley economist known for dynamic capabilities theory, has similarly argued that rigid structural rules risk freezing the competitive dynamics that allow new entrants to challenge incumbents.