Exclusive | Meta says enacting gatekeeper norms in India will have chilling effect on startups

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Meta (formerly Facebook) has told a parliamentary panel that enacting ‘gatekeeper’ norms similar to the ones proposed in the European Union (EU) could stifle innovation and have a chilling effect on Indian startups, hurting their ability to scale or be acquired, people aware of the developments said.

This was in response to a set of questions the parliamentary committee on finance asked technology majors like Meta, Google, Microsoft and Amazon about alleged anti-competitive practices.

Gatekeeper norms are anti-competition rules that apply to digital platforms having huge user bases and clocking voluminous transactions. Such rules have been included in the Digital Markets Act of the European Union, although they have not been enforced yet.

“Meta also argued that large players like itself can help bridge the digital connectivity gap by providing last mile connectivity and driving up digital adoption, and imposing gatekeeper regulation would impair its ability to do so in India, while additionally distinguishing the EU market from the Indian one,” said one of the sources.

Meta did not respond to a Moneycontrol query on the matter till the time of publishing this article.

Officials of Meta, Google, Amazon, Apple and others appeared before the parliamentary panel on finance last month which is looking into anti-competitive practices in the digital space.

They were asked about specific definitions of the markets that they operate in, competition concerns about their businesses in other countries, how their algorithms are structured to distribute content, and views on competition regulation, among other things.

The panel had summoned top executives of several tech companies to discuss their market behaviour following allegations of unfair market practices. Companies like Flipkart, MakeMyTrip, Ola, Paytm, Swiggy and Zomato told the committee that Big Tech companies like Google and Facebook were unfairly promoting their platform operator's products, services or lines of business. They also warned that Big Tech players are on the verge of becoming a duopoly.

Meanwhile, the parliamentary standing committee on commerce has also taken a hard stance on large e-commerce platforms, saying that India should identify ‘gatekeeper’ platforms of a certain size that need tougher regulation.

The committee is of the opinion that it is high time India revamped and strengthened its ex-ante regulatory framework and took steps to identify entities that act as gatekeeper platforms and set a threshold for qualifying as gatekeepers.

It has recommended that the Competition Act, 2002 be amended to prescribe additional quantitative criteria such as the number of registered or active consumers and sellers on the platform, number of transactions taking place and volume of revenue generated to identify entities that act as a gatekeeper platform.