To regulate WhatsApp and Big Tech, India’s competition panel needs more teeth – and fresh thinking

The Competition Commission of India is keen to regulate big tech. Last month, the regulatory body ordered an investigation into WhatsApp’s privacy policy update alleging that the Facebook-owned company has breached antitrust provisions through its “exploitative and exclusionary conduct”. This move comes after the much-publicised “take-it-or-leave-it” kind of privacy policy update from WhatsApp in January 2021.

What is ironic about this order, though, is its timing. The commission has called for the probe a month after the government notified the Information Technology Rules (Intermediary Guidelines), 2021, to regulate social media intermediaries, over-the-top services and digital news. Under these new guidelines, the government mandates a “traceability” requirement that compels social media platforms including entities like WhatsApp to trace the originator of a particular message.

As a consequence, companies now need to collect a lot more user data to furnish user details if and when the government asks for it. Such an obligation only dilutes end-to-end encryption and user privacy. On the other hand, the commission has waxed eloquently about user privacy, the importance of user consent and the need to protect personal data in its latest order. So, what does the Competition Commission of India’s investigation into “exploitative conduct” really mean considering these new government requirements?

In addition, how does the commission plan to investigate WhatsApp? To investigate a company’s data-sharing practices, the commission needs to understand the technical design of digital systems. The United Kingdom’s Competition Markets Authority, for example, has recruited data scientists, ethicists, behavioural experts, engineers, developers and artificial intelligence specialists to deploy new investigative techniques to understand consumer harms in digital markets.

India’s competition policy

But in India, we do not yet have an insight into the commission’s institutional capacity. Do they have technically competent bureaucrats to tackle such cases? Do they recruit AI-experts and engineers to understand big tech algorithms? These discussions never feature in any of the commission’s announcements either.

We must also understand India’s competition policy to fully understand the nature of these probes. India’s antitrust laws operate under the aegis of a philosophy that supports the bigness and dominance of firms. Under our competition laws, only “abuse of dominance”, that is, imposition of unfair or discriminatory conditions or prices in the purchase or sale of goods, is problematised. But this may not be the right strategy to investigate digital platforms for antitrust behaviours.

First, India’s Competition Act lays out various factors that will be considered while inquiring into whether an enterprise abuses its dominant position or not, but these do not adequately capture the unique features of the digital space like network effects, blurring market boundaries, multi-sidedness and data aggregation effects.

The fact that WhatsApp can offer a take-it-or-leave-it policy to all its users itself is a by-product of its dominant position in the messaging-app world. The company knows that most users are likely to accept the updated privacy policies because most others they communicate with also use WhatsApp.

Hence, mere focus on the abuse of dominant position may help achieve short-term ends by curbing monopoly power “then and there”, a method that has been adopted by the Competition Commission of India thus far, but they will remain reactionary quick-fixes when the object of regulation – the big tech platforms themselves – are not well understood.

Boundary-less market

Second, India’s competition framework needs an upgrade. The current law operates on a traditional understanding of markets: that is, if you are doing an offline business in India, you are doing business in a “relevant” market. But the digital medium is a new kind of space. It is boundary-less.

The core of technology platforms’ business model lies in dynamic innovation, and their market boundaries keep changing accordingly. For example, how can one define WhatsApp’s market? WhatsApp, whose initial product offering was only a messaging platform, now has many other products, including peer-to-peer money transfer services, hustled into one big platform.

Third, as an external regulator, the Competition Commission of India needs to monitor big tech’s technical apparatus. Algorithmic systems are becoming cleverer by the day, invoking new kinds of user harms The commission needs to be in sync with these developments. It must proactively study and identify these new kinds of harms that algorithms create in digital markets

Overall, there is an urgent need for fresh thinking if the Competition Commission of India wants to effectively regulate big tech in India. We need more policy and legislative tools, interim remedies to address potentially abusive conducts and new definitions of theories of harms to scrutinise digital platforms. The Competition Commission of India has only been reactive thus far. Prudence and proactiveness are essential toolkits in these times where user harms come in undefined ways.

Archana Sivasubramanian works at the Centre for Policy Research. She is also Area Editor, Algorithmic Governance at the Data and Policy journal published by the Cambridge University Press.