Startup founders hail BIS e-commerce guidelines for checking app store dominance

Apple's app store

With the Digital Competition Bill facing delays, startup founders have welcomed anti-competitive provisions in the recently released draft e-commerce guidelines by the Bureau of Indian Standards (BIS).

The draft guidelines, released in January, indicate that app stores of Big Tech platforms can be considered an e-commerce entity, experts said.

The guidelines define an e-commerce entity as “a company or organisation that operates an electronic commerce platform such as online marketplace or web store, where buyers can purchase products or services from third-party sellers”.

"The definition (of e-commerce) is quite broad and in my understanding, it will include any online marketplace, including app stores. It is not just the definition of the term e-commerce but the way other terms are defined, for example, marketplace e-commerce entity, business partners, platform, etc., the guidelines seem to include app stores within their scope," Bharat Matrimony CEO Murugavel Janakiraman told Moneycontrol.

Matchmaking app Truly Madly’s co-founder and CEO Snehil Khanor said the BIS's draft guidelines provide a strong framework for regulating app stores since they operate similarly to traditional e-commerce platforms by offering digital apps as products.

Khanor said that Indian startups and app developers have faced challenges due to the "arbitrary policies" of app stores and the high commissions they charge. "These guidelines aim to address some of these issues by promoting transparency and fairness among the stakeholders involved in the e-commerce ecosystem," he said.

The draft guidelines also outline several anti-competitive practices that align with concerns raised against Big Tech and specifically app stores.

“Marketplace e-commerce entities shall not extend preferential treatment, whether directly or indirectly, to a seller or service provider or a group of sellers," say the draft guidelines.

Big Tech platforms have often been accused of favouring their apps or services over independent developers.

"E-commerce platforms shall not influence the supply or price of goods and services sold on their platform," says the draft.

This is significant as Apple and Google mandate in-app purchases to be made through their payment systems for a high commission.

"Several provisions of the guidelines indeed echo the ex-ante provisions in the draft Digital Competition Bill (DCB). In addition to the provision on bundling, the guidelines also restrict unwarranted data usage and lay down requirements for transparent dealing," Janakiraman said.

A provision, for instance, requires platforms to offer a variety of payment methods to the users regardless of the type of product or service. “As a result, app stores will not be able to force app developers to use their own in-built payment systems for in-app purchases. Since we don’t know yet how long it will take for the Digital Competition Bill to be enacted, these guidelines can help fill a major regulatory vacuum," he added.

Khanor said platforms have to offer users a variety of payment methods and clearly inform them about any additional charges in relation to the payment instruments affiliated or associated with the platform.

"App stores have been levying a disproportionately high commission on certain types of apps. We expect the transparency provisions will require them to disclose the rationale behind the high commission charged to specific categories of apps," he said. Until a digital competition law is in place, these guidelines can help bridge the regulatory gap and provide guidance to reduce unfair practices in the app store ecosystem, Khanor said.