This report is authored by Sharmadha Srinivasan, Principal at Artha Global; Vikram Sinha, Junior Fellow at Artha Global and Saurabh Modi, Research Fellow with TrustBridge.
Report name
Drafting a pro-antitrust and data protection regulatory framework (2023)
Who wrote this report?
Artha Global is a policy organisation that supports global partners to design, implement and institutionalise practices that promote prosperity and resilience, with a primary focus on the developing world. They provide actionable research, support policy implementation and work to institutionalise change.
Over the next few decades, the developing world will negotiate overlapping transitions: from rural to urban, farm to factory, informal to formal, brown to green, analogue to digital. Artha helps governments manage these transitions, and the inevitable dislocations they cause, in order to secure long-term prosperity and social stability for citizens.
Artha believes that the multiple challenges of the 21st century require new thinking that cuts across the traditional boundaries of geography, disciplines and interests. Therefore, they leverage their global network of experts to help craft new development agendas, create consensus and build broad coalitions across governments, business, academia, philanthropy and civil society.
Artha's research is housed in six centres: Emerging Cities, Access to Justice, Technology and Innovation, Rapid Insights, Public Health and Inclusive Growth.
Best quote
Competition regulators can no longer look at their traditional toolkit to regulate these complex firms. This is primarily due to the way data, regulated by data protection laws and market competition considerations intersect in these markets. Such firms can use data to foreclose competition in myriad ways.
Key Takeaways:
- The Data-Network Effect Erects a Barrier to Entry: Dominant technology platforms can leverage the sheer volume, variety and velocity of data they collect to produce innovative products. These data-driven personalised products attract more users to join the platform and contribute more data resulting in a positive feedback loop and market concentration. This creates a ‘winner-takes-all’ phenomenon as the lack of access to such a network and thereby data, erects powerful market barriers for new start-ups in this space.
- Replacing Price to Judge Anti-Competitive Conduct: Zero-price platforms, such as Facebook and Google Search, appear to be ‘free’ on the face of it. However, they use data collected from users to exert power on the adjacent positive price advertising market. Here, data could potentially replace price as the parameter to judge anti-competitive conduct and account for the erosion of privacy and consumer welfare.
- Incorporate Data Protection into Consumer Welfare Standard: Market regulators have traditionally focussed on price to capture anti-competitive conduct. However, the zero-price nature of new technology platforms can manipulate competition in subtle ways not captured by price but by data which lowers the privacy protection for consumers. Consequently, price alone is not indicative of consumer welfare harm and there is a need to have a more nuanced and qualitative approach by acknowledging that data privacy can take the form of non-price competition.
- Incorporate Right to Data Portability in DPDP Act: A legal right to data portability could enhance user control over data as well as provide an avenue to lower market entry barriers. By reducing user lock-in and switching costs, data portability could lead to the data being transferred to a fiduciary of the user’s choosing, thus having a positive effect on enhancing competition and data protection.
- Reducing Regulatory Ambiguity in DPDP Act: Incorporating clear qualitative and quantitative criteria for decision-making and implementing a carefully calibrated approach to regulating entities within the Indian context can mitigate the regulatory ambiguity introduced by two clauses of the DPDP law: the identification of certain data fiduciaries as significant and the transfer of personal data outside of India.
- Scrutinise Data-Related Mergers and Acquisitions: The CCI needs to factor in data considerations to benchmark the approval needed for mergers and acquisitions in the digital market. As India grows to be a significant market for Big Tech firms, mergers and acquisitions to combine greater volumes of data will have to be scrutinised by the CCI’s updated toolkit for its anti-competition effects.
- Consider the Issue of Ecosystem Dominance: By taking into account the ‘gatekeeper’ role of platforms like the PlayStore, Amazon and Flipkart that act as ecosystems within themselves, the CCI should make a concerted attempt to redefine relevant markets. This will enable them to identify these firms as dominant and address the issue of anti-competitive practices in digital markets.
- Call for Institutional Coordination between Regulators: Coordination between the Data Protection Board and the CCI through formal and informal mechanisms is crucial to address conflicts and foster synergies between data protection and competition objectives. Following global trends, such as the EU's Digital Clearinghouse and the UK's proposed Digital Markets Taskforce, India can ensure comprehensive oversight in its digital ecosystem.
Why should you read this report?
The intersection of digital personal data protection and antitrust regulation has become a focal point for policymakers and competition regulators globally. The enactment of the Digital Personal Data Protection (DPDP) Act 2023 in India has profound implications for digital platforms, raising concerns about competition and antitrust in digital markets. It offers an opportunity to align data protection and antitrust considerations. This report explores the necessity for an adapted antitrust framework amidst the rise of data-driven digital platforms, analysing evolving jurisprudence within India's digital landscape. By mapping the DPDP Act within India's legal landscape, the report theoretically illustrates the interplay between personal data regulation and antitrust measures. To uphold the twin objectives of data protection and fair competition, this report stresses on the essential evolution of personal data legislation and offers policy recommendations to the Competition Commission of India (CCI) to effectively navigate digital antitrust cases. This research unpacks the need for a more comprehensive regulatory framework that balances innovation and consumer welfare within the global context of data-centric markets.
This report unpacks why a new approach to antitrust law is required in the realm of data-driven digital platforms and how regulators across the world are making strides to upgrade their toolkits. It offers valuable insights into the evolving jurisprudence with respect to digital platforms in India. The framework that maps the intersection of data protection and antitrust concerns in the digital platforms market is particularly relevant for global regulators. By exploring the intersection between data protection and antitrust enforcement, the report offers practical recommendations for regulators like the CCI and the Data Protection Board.
Who is this report for?
While the report is grounded in the Indian context, its insights will be relevant for government officials, policymakers, individuals and organisations globally concerned with matters of antitrust, data protection and competition.
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