Policy Wrap: EC sends Statement of Objections to Meta, India’s digital economy growing 2.4 times faster than overall GDP, EC accepts new terms from Amazon, and more

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Policy & Economy

European Commission sends Statement of Objections to Meta over abusive practices due to its dominating position in the market

By restricting competition in the markets for online classified ads, the European Commission has warned Meta that, in its first assessment, the company violated EU antitrust laws. The Commission has raised objection to Meta linking Facebook Marketplace, its online classified advertisements service, to Facebook, its personal social network. The Commission is particularly worried that Meta is using Facebook Marketplace's competitors as leverage to impose unfair trading conditions on them.

According to the first findings of the Commission, Meta dominates both the national markets for online display social media advertising and the European market for personal social networks.

The following two instances of Meta abusing its dominating positions are found by the Commission:

Firstly, Facebook Marketplace and Meta's primary personal social network, Facebook, are tied together. This implies that Facebook users, whether they want it or not, have automatic access to Facebook Marketplace. The partnership offers Facebook Marketplace a significant distribution advantage that rivals cannot match, and the Commission is worried that competitors may be shut out.

Secondly, Competitive online classified ad providers that run advertisements on Facebook or Instagram are subject to unfair trading terms imposed unilaterally by Meta. The terms and conditions, which permit Meta to use advertising-related data obtained from rivals for Facebook Marketplace, worry the Commission since they are excessive, unreasonable, and not required for the supply of online display advertising services on Meta's platforms. Such requirements hurt rival businesses and solely help Facebook Marketplace.

These actions would violate Article 102 of the Treaty on the Functioning of the European Union (the "TFEU"), which forbids the misuse of a dominating market position, if they were proven to be true.

European Commission accepts new terms from Amazon after it revised them on EU’s directive

According to EU antitrust laws, the European Commission has rendered the undertakings made by Amazon legally binding. The Commission's concerns were mainly regarding Amazon's use of private marketplace seller data and a potential bias in allowing sellers access to its Buy Box and Prime program.

The Commission had opened a formal investigation in July 2019 to look into Amazon’s use of non-public data of its marketplace sellers. The following year in November, another investigation was opened to assess the criteria Amazon used to select winners of the Buy Box, and to enable sellers to use the Prime programme to sell their products. The scepticism was mainly about a possible bias from Amazon for sellers that use Amazon’s logistics and delivery services.

In order to address these apprehensions, Amazon proposed a few commitments. Firstly, they would not use non-public data from independent sellers’ activities in the market to take any retail decisions, for selling branded goods or to label their private products. Regarding Buy Box, they proposed treating all sellers equally for the Buy Box winner and to display a second competing offer to the winner with the same descriptive information and purchasing experience. Thirdly, regarding Prime concerns, Amazon promised to set conditions without bias for Prime offers, to allow Prime sellers to choose the logistics and delivery service providers of their choice and not to use any information from Prime for its own logistics services.

After months of negotiation, an amendment was made wherein Amazon agreed to improve the presentation of the second competing Buy Box offer with a review mechanism in place, increase transparency to sellers and carriers, improve carrier data protection and to introduce a centralised complaint system for sellers and carriers amongst other things.

The final commitments will be in effect for seven years for Prime and the exhibition of the second rival Buy Box offer and five years for the remaining commitments. An independent trustee will be in charge of overseeing the execution and adherence to the commitments under the direction of the Commission.

Parliamentary Standing Committee advocates need for Digital Competition Act for fairplay in gig economy

To prevent digital companies from stifling competition with their market dominance, India has to pass a new Digital Competition Act and establish a code of behaviour for them. Parliamentary Standing Committee on Finance, led by BJP’s Jayant Sinha, said in a set of recommendations on Thursday.

A code of conduct-based strategy (ex-ante approach), according to the committee's study titled "Anti competitive tactics by Big Tech corporations," was required for digital market winners, or "gatekeepers," who control the digital economy. The report was presented to Parliament on Thursday.

The panel's list of questionable market practises includes e-commerce platforms that prioritise their own private labels above brands from outside vendors, use user data to outperform rivals, and bundle various goods and services.

The panel's report on the Competition Amendment Bill, 2022, which is currently before Parliament, was presented earlier this month.

Digital Personal Data Protection, Telecom bills likely to be passed in the Monsoon session

Union Minister Ashwini Vaishnaw stated on Monday that the administration anticipates passing both the Telecommunications Bill and the Digital Personal Data Protection Bill during the Monsoon session of Parliament.

The Digital Data Protection Bill and the Telecommunications Bill, according to the minister, will be approved by Parliament in July-August.

According to him, the government will create light-touch restrictions under the Telecommunications Bill with an emphasis on user protection.

The IT and telecom minister announced that another bill on the Digital India Act will be filed for public consultation in a month while speaking at a Google For India event.

MeitY moves deadline for public comments On DPDP Bill To January 2nd 2023

The deadline for public comments on the draught Digital Personal Data Protection Bill (DPDPB) 2022 has been extended by the Ministry of Electronics and Information Technology (MeitY) to January 2, 2023 from December 17, 2018.

“In response to the requests received from several stakeholders, the Ministry has decided to extend the last date for receipt of comments till 2nd January 2023,” said MeitY in a statement. 

The development took place a month after the Center republished the DPDP Bill after removing it last year in response to several recommendations made by the joint parliamentary committee.

Among other things, the most recent draught ignored the limited scope on personal data, failed to take into account how data is used by the blockchain and cryptocurrency industries, and severely penalised data fiduciaries for non-compliance.

India’s digital economy driving growth, expanding 2.4 times faster than overall GDP

According to a study published in the RBI's Bulletin, India's digital economy is expanding 2.4 times faster than the country's overall GDP due to the country's high rate of technological adoption.

The digital output multiplier has expanded over time, demonstrating the need of investments to fuel growth, while 62.4 million (11.6%) workers are employed in the digitally reliant economy. The growth has strong forward links to non-digital sectors.

The core digital economy is estimated to have made up 5.40% or $0.11 trillion of the Indian economy's total gross value added (GVA) in 2014 ($1.99 trillion), increasing by more than 15% annually in absolute terms to make up 8.5% of the economy's GVA in 2019. This estimate is based on the Asian Development Bank's 2021 framework.

The scale of the digitally dependent sector has not risen at a comparable rate, despite the core digital economy's extraordinary growth, according to the report. This might be because digital innovations show visible impact in the economy over a longer timeframe.

Startups

DPIIT recognized startups self-reports 8.6 lakh direct jobs since launch of Startup India

Since the introduction of Startup India in 2016, the Department for Promotion of Industry and Internal Trade (DPIIT) recognised startups have self-reported creating over 8.6 lakh direct jobs.

The government announced the Startup India initiative on January 16, 2016, with the goal of creating a robust ecosystem for fostering innovation and businesses in the nation. The government launched an Action Plan for Startup India to provide the groundwork for government assistance, programmes, and incentives envisioned to develop a thriving startup ecosystem in the nation. The Action Plan has 19 areas of focus including, including "Simplification and handholding," "Funding support and incentives," and "Industry-academia partnership and incubation."

Big plans for Indian startups in 2023; expansion of Web3 community and investments to be in focus

Anil Kakani, the country manager for the Algorand Foundation, the non-profit organisation that created the Algorand Blockchain and its native coin Algorand (ALGO), said that the country has a number of significant goals.

The expansion of the Web3 community and investments in the ecosystem are among Kakani's major ambitions for India, he stated.

The focus, according to him, will be on expanding the web3 developer community through investments in training programmes to create a talent pool and putting cash into the business developing practical solutions on the Algorand blockchain.

They are dedicated to helping entrepreneurs who are developing solutions to improve access to markets, health care, education, agriculture, and financial services in a way that advances India's transition to a more inclusive economy, the speaker continued.

According to a number of statistics, India is one of the countries housing the most web3 startups in the world, with over 500 of them attempting to harness the full potential of the technology.