IAMAI warns that draft digital competition bill can dry up investments in startups

Industry IAMAI represents various Indian technology companies as well as few Big Tech firms

Opposition to the draft Digital Competition Bill is gaining momentum as industry bodies and policy experts voice concerns. While initially introduced to address anti-competitive behavior among Big Tech companies, there's growing apprehension that the bill could have adverse effects on Indian startups and other digital enterprises.

The Internet and Mobile Association of India (IAMAI), a significant trade body representing numerous digital entities, including Big Tech firms, has expressed reservations. They argue that the proposed regulations have the potential to stifle venture investments in technology startups.

"The current ex-post framework is well-tested and relies on evidence of abuse thereby avoiding the risk of false positives. The proposed ex-ante regulations can dry up venture investments in tech start-ups, as the thresholds under the draft bill would act as a ceiling to the potential scalability of businesses," said a submission made by the trade body.

Also read: 10% of global turnover, 3 years imprisonment: Big Tech stares at hefty penalties in Digital Competition Bill

Moneycontrol has reviewed a copy of the submission. The last date to make submissions on the draft bill was May 15.

Additionally, IAMAI said that the criteria for designating enterprises as Systematically Significant Digital Enterprises (SSDEs) can potentially include the entirety of the Indian digital sector.

The draft digital competition bill brings in additional obligations for SSDEs such an ensuring not conducting anti-competitive practices such as "tying and bundling" and so on.

Also read: Stakeholder positions 'misrepresented' in CDCL report on Big Tech regulation

"The criteria for designating enterprises as Systemically Significant Digital Enterprises (SSDEs) are subjective, all-encompassing, and self-contradictory, and could potentially cover the entirety of India’s digital sector," the submission read.

Also read: Open-ended definitions in digital competition bill creating chilling effect on startup ecosystem: PhonePe CEO Sameer Nigam

The bill was included in the report of the Committee of Digital Competition Law (CDCL) released in March 2024. The CDCL had studied whether India needed a separate law for regulating anti-competitive practices by Big Tech companies.

As part of this study, CDCL had invited comments from various stakeholders. IAMAI had, then too, voiced its reservations against such a regulation. This led to a controversy where many Indian tech companies had accused IAMAI of parroting the views of Big Tech companies.