House panel finds Big Tech’s ad business a ‘monopolist threat’

Big Tech’s ad business is a “monopolist threat as it owns every step in a system that connects ad sellers and buyers and give the Big Tech companies an unfair edge over the market,” the standing committee on finance said in its report, Anti-Competitive Practices by Big Tech Companies, which was introduced in parliament on Thursday.

Pointing out that leaders tend to emerge quickly in digital markets, the committee said “competition behaviour needs to be evaluated ex ante before markets end up monopolised instead of the ex post evaluation being carried out at present,” proposing a framework for systemically important digital intermediaries (SIDIs).

The standing committee on finance suggested identifying and regulating leading players or market winners that can negatively influence competition in the digital ecosystem and recommended evaluation of competitive behaviour to ensure fair markets.

It detailed oversight of identified SIDIs, recommending specific measures on preferential access, platform neutrality and data usage among others.

The 70-page report presented in parliament on Thursday called for enhanced competition law and the strengthening of the Competition Commission of India (CCI) with a specialised digital markets unit to restrain anti-competitive behaviour in digital markets.

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Former minister of state for finance Jayant Sinha heads the 31-member standing committee on finance.
ET reported December 7 on the
panel’s intent to call for the identification of SIDIs.

India must identify the small number of leading players or market winners that can negatively influence competitive conduct in the digital ecosystem as SIDIs based on their revenue, market capitalisation, and the number of active businesses and users, the committee said.

The report identified 10 key competition issues, including deep discounting, steering, exclusive tie-ups, search and rank preferencing, advertising policies and third-party applications among others, proposing appropriate measures for SIDIs.

They should not be allowed to sell bundled products or process the personal data of their users for advertisement purposes, it suggested.

The SIDIs should not provide conditional access to a platform or provide a preferred status to any entities. This recommendation comes after CCI conducted an extensive probe on “preferred labels” of ecommerce platforms.

The committee also suggested platforms should maintain neutrality and not indulge in self-preferencing.

“The committee opine that platform neutrality must be ensured at all costs as otherwise it can lead to a negative effect on downstream markets, as their profits decline and an unfair advantage is provided to the leading platform i.e. the platform itself,” the report said.

SIDIs should not force business users to subscribe to a service of the platform as a condition to be eligible to avail of other services on the platform.

Further, in the case of mergers and acquisitions, SIDIs will be required to inform the CCI of the potential impact on the antitrust landscape prior to the implementation of a sale agreement for the corporate action.

The panel suggested that stakeholders including the CCI and the central government should collaborate to arrive at the definition of SIDIs.

An identified SIDI would have to submit a report to the CCI every year, describing transparency measures adopted by it.

Advertising

The panel report suggested SIDIs should not process the personal data of end users for the purpose of providing online advertising services by using the services of third parties that make use of core services of the platform.

The report also called for appropriate disclosures by these SIDIs.

“It should provide advertisers information on daily basis, regarding price paid by the advertiser and the remuneration received by the publisher,” it suggested.

The committee said SIDIs should provide advertisers and publishers with access to performance measuring tools and the necessary data for them to independently verify the advertisement inventory.

“India has diverse and numerous news publishers who get advertising revenue primarily through SIDIs and are of the opinion that regulatory provisions are required to ensure that news publishers are able to establish contracts with these SIDIs through a fair and transparent process,” the panel report said.