Post NCLAT ruling, startups demand government action against "dominant digital gatekeepers"

Indian startup founders are urging the government to enact proactive regulations against anti-competitive practices, particularly those of "dominant digital gatekeepers," following the National Company Law Appellate Tribunal (NCLAT)'s ruling on Google's Play Store policies, as per reports.

The NCLAT upheld key findings of the Competition Commission of India (CCI)'s antitrust order, confirming Google's unfair imposition of its Play Billing System (GPBS) on app developers. However, the tribunal reduced Google's penalty from ₹936.44 crore to ₹216.69 crore.  

"While the penalty reduction is a minor setback, the ruling validates that Google's payment system is anti-competitive," stated Vinay Singhal, co-founder of Stage. He emphasized the need for "proactive regulation" to prevent market distortions before damage occurs, advocating for the Digital Competition Bill.  

The draft Digital Competition Bill, released in February 2024, aims to address anti-competitive practices by Big Tech companies, but it remains unfinalized. Snehil Khanor, co-founder of Truly Madly, highlighted the lengthy resolution times in competition cases, often resulting in "irreparable economic harm" for smaller companies. The CCI's initial probe into Google's Play Store policies began in November 2020, with the penalty imposed in October 2022.

Google, in response, stated its commitment to complying with regulations and supporting the Indian app ecosystem. "Google is committed to supporting the growth of Indian developers and contributing to a thriving app ecosystem for both developers and users in India," the company said.  

Khanor reiterated the necessity for "proactive, forward-looking regulations" to prevent dominant entities from abusing market power. Hitesh Uppal, CFO of MagicBricks, echoed this sentiment, suggesting a "more comprehensive legislative approach" to regulate digital entities. He pointed out that the NCLAT's concerns about designating "gatekeepers" without a clear legal framework underscore the current competition law's limitations.

The government, through the Ministry of Electronics and Information Technology (MeitY), is currently reviewing feedback on the draft Digital Competition Bill. Stakeholders have raised concerns that ex-ante regulation could stifle startups and innovation. The debate highlights the delicate balance between fostering competition and ensuring a conducive environment for technological advancement.