40 Indian Startups urge MCA to move forward with Digital Competition Bill; 'not give in to delaying tactics by Big Tech'

Forty Indian startups have come out strongly in support of the draft Digital Competition Bill which proposes ex-ante regulations to curb anti-competitive practices of Big Tech companies. These startups which include prominent names like Matrimony.com, TrulyMadly, Innov8, QuackQuack, Magicbricks, Hoichoi, Medibuddy etc. have written to the Ministry of Corporate Affairs saying that the Bill is a step in the right direction and it will address long-standing concerns of Indian startups to rein in practices which stifle innovation, limit consumer choice, and hinder the growth of young businesses.

While requesting that the government move forward with the Bill at the earliest and not give in to delay tactics, the startups have also asked for an upward revision of the thresholds for designating Systematically Significant Digital Enterprises (SSDEs). In a letter to MCA, they have argued that the Bill should only target the real gatekeepers of the internet - firms that have long enjoyed dominant positions, accumulating extensive resources, and influence to shape the rules of the digital ecosystem. By narrowly targeting the new law, the government can rein in monopolistic practices while making sure that Indian startups have the space to grow within India and beyond Indian borders, to compete globally.

The Committee on Digital Competition Law (CDCL) published its report in March this year outlining the challenges associated with anti-competitive practices of digital enterprises such as anti-steering, self-preferencing, tying and bundling in the digital markets in India. The report proposed a Digital Competition Bill providing for ex-ante regulations to curb these anti-competitive practices. The report was open for public consultation and the last date for submission of comments was 15th May 2024.

The letter stated-

"India has maintained its position as the third-largest tech start-up ecosystem worldwide. Over 950 tech start-ups were established in India last year alone.2 The cumulative funding for more than 31,000 tech start-ups has surpassed $70 billion from 2019 to 2023.3 It is clear that incorporating the voice of start-ups in shaping the digital competition law is crucial because these entities are reflective of the needs and realities of the tech landscape in the country today."

The proposed Digital Competition Bill (DCB) outlined in the CDCL report resonates deeply with the startup community. We perceive it as a forward-thinking piece of legislation that directly addresses our long-standing concerns regarding monopolistic practices by dominant digital platforms. These practices have often stifled innovation, limited consumer choice, and hindered the growth of young businesses. The Digital Competition Bill, with its focus on ex-ante regulations, has the potential to be a game-changer for the Indian start-up ecosystem.

While we fully support the draft Bill, we propose a key revision regarding the thresholds for designating Significant Strategic Digital Entities (SSDEs). Our concern is that the current thresholds are low, and they are likely to – perhaps, inadvertently - encompass startups and other digital enterprises which are not gatekeepers. The gatekeeper companies ideally being targeted by the DCB have long enjoyed dominant positions, accumulating extensive resources, brand recognition, and influence over the digital ecosystem. Their entrenched status enables them to shape the rules of the game to their advantage. In contrast, start-ups and other digital enterprises -even if they meet the financial thresholds - are fundamentally different. These are young companies still establishing their product, user base, and navigating a complex market shaped by gatekeeper companies. Consequently, designating start-ups as SSDEs under the Act could impose unwarranted regulatory burdens, hindering their growth and competitiveness. This could in fact further undermine the objective of the Bill by restricting competition, instead of increasing it. It could also severely hamper the growth potential of Indian startups and impede their ability to grow beyond Indian borders to compete globally.

To this end, we have suggested an increase in the financial thresholds and also provided numbers for end-user and business-user count that would better reflect the realities of the Indian start-up ecosystem.

Request to Move Forward Without Further Delay

We also urge the MCA to move forward with the Bill at the earliest and not give in to further requests for extensions in the consultation period. We believe the current consultation period has been more than sufficient.

The CDCL has already undertaken a year-long process to evaluate the need for the DCB. This process involved consultations with various stakeholders, including industry experts, legal professionals, and public interest groups. Granting another long extension will serve no further purpose other than submitting to delay tactics being employed by Big Tech companies who want to stall the implementation of the Bill."

Start-ups supporting the bill include:

1. Murugavel Janakiraman, Founder & MD, Matrimony.com

2. Vinay Singhal, Co-Founder & CEO, STAGE

3. Snehil Khanor - founder and CEO, TrulyMadly

4. Satish Kannan, Co-founder CEO, MediBuddy

5. Anand Virani, Founder and Chairman, Cutting Chai Technologies Pvt. Ltd.

6. Ajay Data, MD - Data Group of Industries, Chair - FICCI Multilingual and UA committee

7. Pawan Agarwal, Dy MD, DB CORP ltd

8. Srinivasan B, Managing Director, Ananda Vikatan Digital Private Limited.

9. Ravi Mittal, Founder and CEO, QuackQuack (Verve Mobile Pvt Ltd)

10. Shruti, Founder, Apnaklub

11. Srinivas Kollipara, Managing Partner, Biome Venture Studio, CEO of T-Hub, Hyderabad

12. Vishnu Moha, Co-founder, Hoichoi

13. Sudhir Pai, CEO, MagicBricks

14. Sriram Subramanya, Managing Director and CEO @ Integra Software Services Private Ltd, Chairman - NASSCOM, National SME Council

15. Ganesh N Mandalam, Founder and CEO, Xerago

16. Ritesh Malik, Founder, Innov8

17. Arokiaswamy Velumani, Founder, Thyrocare Technologies Ltd