The Policy Wrap: CCI to set up digital market unit to assess Big Tech behaviour, SEBI’s concerns about crypto assets, and more
The Policy Wrap is ADIF’s weekly newsletter on all things policy in the Indus Valley Ecosystem and beyond. Share your feedback and comments with us at email@example.com.
Report: 14.9 billion users have had personal data breached since 2004
According to a report by Surfshark, a total of 14.9 billion users have faced data breaches since 2004, with data on email addresses, passwords and IP addresses etc compromised.
Countries with the highest number of data breaches include the United States (2.3 billion breached users), Russia (2.2 billion), and China (987 million), followed by Germany (427 million) and France (395 million).
After a lengthy period of decrease, global data breaches are picking up again. The study follows the count of breached users worldwide and updates numbers monthly. Records show that in Q1 2022, 304 accounts were being breached every minute. In the present quarter (Q2 2022), however, breach rates are already 6.7% higher, with 324 accounts being leaked every 60 seconds.
Access the full report by Surfshark here.
Big Tech won't be a beneficiary of the National Data Governance Framework: MeitY
As per the Ministry of Electronics and Information Technology (MeitY), the large repository of India-specific datasets that will be created under the National Data Governance Framework Policy (NDGFP) will not be shared with Big Tech companies – it will only be available for Indian start-ups.
However, sources added that there was no clarity on whether ‘Indian start-ups’ meant those registered in India or the ones with operations in the country.
During the meeting, concerns were also raised on the definition of non-personal data. Stakeholders asked if there would be an 'absolute boundary' for defining non-personal data citing that many non-personal datasets when combined with other datasets can lead to identification. MeitY will take into consideration this recommendation, sources said.
Information Technology (IT Act)
Digital India Act necessary as Information Technology Act is over two decades old: Tata Sons Chairman N. Chandrasekaran
Tata Sons Chairman N. Chandrasekaran on Thursday said that the upcoming Digital India Act is "necessary" as it has been over two decades since the IT Act was promulgated and the technology landscape has changed since then.
He added: "I am glad that the government is engaged and developing a participative approach to develop the Digital Act which is an important thing, especially there are new issues like privacy and other aspects that will come into this (new) Act."
Big Tech Regulation
United Kingdom’s Competition and Markets Authority (CMA) finally eyes action on Apple, Google mobile duopoly
The U.K.’s competition watchdog has published its final report on a comprehensive, year-long mobile ecosystem market study — cementing its view that there are substantial concerns about the market power of Apple and Google which require regulatory intervention.
In a press release accompanying the report, the CMA sums up its conclusions by asserting that Apple and Google “hold all the cards” in the mobile ecosystems market — and that interventions are needed “to give innovators and competitors a fair chance to compete”.
Specifically, the CMA is now proposing to open an in-depth probe with two points of focus: One on Apple and Google’s market power in mobile browsers; and another on Apple’s restrictions on cloud gaming through its App Store.
Access the full report here.
Small merchants may receive a subsidy on merchant discount rate (MDR) after UPI-credit card linkage
With the Reserve Bank of India’s (RBI’s) move to link credit cards with the Unified Payments Interface (UPI), speculations have been growing around the merchant discount rate (MDR) for these transactions. The MDR is a fee that is paid by the merchants to the banks for processing every card payment. While the card-issuing bank gets a share of it, the remaining amount is distributed between the payment network and point-of-sale terminal providers.
Experts believe that the move to link credit cards with UPI will lead to an uptick in credit card transactions in the country. However, MDR charges are likely to prove to be a deciding factor for its success.
A Business Standard report quoted a source from the payment industry as saying that the central bank’s decision to allow credit cards for payments via the UPI is likely to attract an MDR. However, the RBI will give subsidies to smaller merchants for MDR.
Startups to get $250 million funding from HSBC in India
HSBC India announced that it will lend $250 million to start-ups in the country. While the bank did not specify the timeframe for disbursal of the amount, the lending will be done to high-growth, tech-led start-ups, the lender said in a statement.
The lending, which comes amid increased focus on start-ups’ debt needs by financial intermediaries locally and a 'funding winter' impacting equity funding to the sector, will be managed by the lender's commercial banking vertical. The bank has also carved out a credit model and offerings to suit the specific requirements of a wide spectrum of start-ups and new-age entities, ranging from growth stage to unicorns.
Google India launches accelerator program for women-led start-ups
Google India has launched a new cohort-based accelerator, called Google for Startups Accelerator Women Founders program for women-led start-ups in India.
Under the new initiative, Google India would focus on providing mentorship and other benefits to 20 women entrepreneurs in each cohort. The sector-agnostic program would focus on the very early-stage to up to Series A start-ups.
Apple’s payment options offer for Dutch dating apps is compliant: Authority for Consumers and Markets
The ACM has hit Apple with a series of fines since January — totalling €50 million — for non-compliance with its order, and had warned it could issue further penalties if Apple did not resolve its concerns.
On June 11, ACM provided an update on Apple’s approach to complying with competition orders, saying that the tech giant had changed the unfair conditions it had been imposing following an order by the regulator to allow dating apps to use non-Apple payment tech for processing in-app purchases.
The changes Apple announced on Friday are a significant update to its previous proposal, which it published in March. The updated rules give developers more flexibility about which payment systems they use, change the language users see when they go to pay, and remove other restrictions that the previous rules put in place. The ACM has expressed approval of these changes, noting Apple “will meet the requirements... set under European and Dutch competition rules.”
In the documentation for developers distributing dating apps in the Netherlands, Apple confirms they may do one of the following:
continue using Apple’s in-app purchase system,
use a third-party payment system within the app,
include an in-app link directing users to the developer’s website to complete a purchase, or
use a third-party payment system within the app and include a link directing users to the developer’s website to complete a purchase
Martijn Snoep, chairman of the ACM’s board, also said: “We want everyone to be able to reap the benefits of the digital economy. In the digital economy, powerful companies have a special responsibility to keep the market fair and open. Apple avoided that responsibility, and abused its dominant position vis-à-vis dating-app providers. We are glad that Apple has finally brought its conditions in line with European and Dutch competition rules. That offers app providers more opportunities to compete. And consumers will ultimately reap the benefits, too.”
All the things Apple Sherlocked at Worldwide Developer Conference (WWDC) 2022
Apple introduced various updates across iOS, iPadOS, watchOS and macOS at the worldwide developer conference (WWDC) last week.
The company announced a few new features never seen before on iOS, like Stage Manager for better multitasking and Safety Check to get away from abusers. But there are others that Apple simply Sherlocked — the term for when Apple incorporates features that have been hallmarks of third-party apps, making those apps no longer necessary to use for those features.
The full list of features and apps that were Sherlocked can be found here.
Competition Commission of India (CCI)
CCI to set up a digital market unit to assess Big Tech behaviour
The Competition Commission of India (CCI) will set up a digital market unit (DMU) to better understand and assess the conduct of e-commerce platforms and other digital economy firms so that any anti-competitive behaviour of new-age businesses does not go undetected by the regulatory framework, senior officials said on June 11.
The Government is currently working on amendments to the Competition Act, which are likely to be tabled in the monsoon session of Parliament. These amendments are expected to update the law to better regulate digital economy firms.
CCI Chairperson Ashok Kumar Gupta said, “In view of the increasing number of cases and complexity in the digital sector and the increasing need for data and technology skills, we are now planning to set up a dedicated digital markets unit within CCI as a centre of expertise for digital markets."
What are SEBI’s concerns about crypto assets?
The Securities and Exchange Board of India (SEBI), the watchdog which regulates the securities and commodities market, has reportedly told the Parliamentary Standing Committee on Finance led by Jayant Sinha that regulation of crypto assets would be difficult given the nature of technology that sustains them.
SEBI has essentially flagged the problems with regulating crypto assets because they “are maintained in decentralised distributed ledgers, which are nested in computer nodes spread all across the globe.”
SEBI has elaborated upon the possible need for different regulators to deal with different aspects of a crypto asset market. Crypto exchanges, for instance, represent one such aspect. These exchanges, in case of a cross-border transaction, in effect, enable the use of a cryptocurrency as a bridge to convert one nation’s official currency to another.
These exchanges, SEBI has suggested, could be brought under the regulatory purview of the RBI. The idea is to implement what are called KYC/AML/CFT (Know Your Customer/Anti-Money Laundering/Combating of Financing of Terrorism) norms. For some years now, the RBI has implemented a set of these guidelines for regulating banks so as to prevent them from being used by criminal elements.
The subscribers or customers of crypto assets form another important part of the market. SEBI has suggested that the Consumer Protection Act of 2019 be invoked to make sure their interests are safeguarded. It has also sought clarity on whether cryptocurrencies can be legally classified as securities.
In December 2021, it was widely reported that the government was looking to get SEBI to regulate crypto assets by bringing in legislation around that time. Though such legislation — the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 — did not materialise at that time, the talk that the government wants to treat cryptocurrencies as digital assets, rather than as currencies, has not ebbed.
Open Network Digital Commerce (ONDC) may charge consumers 1-2% transaction fee from year-end
Open Network for Digital Commerce (ONDC) may start charging consumers a per-transaction fee of 1-2% by the end of the year, and the number could go down to as low as 0.1% later when it hits scale, according to sources close to the developments. The open e-commerce network, which started its pilots in five cities in April, is currently not charging any fees to customers.
Understanding ONDC, a simple explainer
Built on the guardrails of software designed by the Beckn Foundation, ONDC wants to replicate the success of the United Payments Interface (UPI) in digital payments for digital commerce in India.
ONDC’s thesis is simple: build a digital standard for the e-commerce industry that allows any seller to connect with any buyer on the network.
The ONDC model breaks down this value chain into multiple parts such as the buyer-side app, the gateway, the seller-side app and logistics providers.
Any app —be it an e-commerce platform, a banking app, a D2C app, a cab-hailing app— can be a ‘buyer-side app’ where the consumer logs into, searches for things and completes a transaction. Similarly, a seller-side app could be any platform that registers sellers of goods or services — fashion brands, wholesalers or retailers, restaurants, cab drivers, kirana stores and even home service providers like plumbers or electricians. An e-commerce platform can choose to enlist itself as both buyer and seller app — or only one of those.
For an app or an e-commerce platform that integrates itself with the network, when the consumer searches for a product on a buyer app, it will relay that information to a gateway which will send it to all the seller apps on the network.
After the seller apps respond to the request from the gateway and show it all relevant results, the gateway relays the information back to the buyer app and the consumer gets to see a much wider catalogue of offerings. Additionally, for all those cases where the seller-side platform cannot deliver to a particular address, the buyer will get an option to choose from multiple logistics service providers who can fulfil the order. This will again happen through the gateway mechanism.
E-commerce customs duty key to end big tech’s monopoly, rent-seeking behaviour: India
On June 15, India stated that a G20 and Organisation for Economic Cooperation and Development (OECD) like pact on levying customs duties on e-transmissions should be considered to end the monopolistic, rent-seeking and anti-competitive practices of big tech companies, and allow developing countries to share a small portion of the super-profits and huge benefits they enjoy.
WTO members have agreed not to impose customs duty on electronic transmission since 1998 and the moratorium has been periodically extended at the ministerial conferences but several countries are seeking to make the moratorium permanent.
India, South Africa and other developing countries have opposed this, and in one of the joint statements by India and SA, it was argued that the percentage of customs revenue lost for developing nations is 4.35% while that of the developed countries is a mere 0.24%.
At a thematic session of the World Trade Organisation’s (WTO) 12th Ministerial Conference, Minister Piyush Goyal said that five big tech giant companies control the market, make super profits, have high market capitalisation, and don’t allow new entrants in this space due to their financial clout and influence.
Therefore, levying these duties would create a level playing field for domestic companies when compared to global tech giants whose monopolistic and anti-competitive practices are already under the scanner in many large countries.