India's Draft Digital Competition Bill 2024 may impact smartphone security: Study

A study has revealed that India's draft Digital Competition Bill (DDCB) 2024 could mark a shift away from the consumer welfare standard enshrined in the nodal competition law, the Competition Act, 2002. The DDCB’s regulatory parameters seek to regulate a wide array of entities which will undoubtedly impact a variety of digital industries, according to the Delhi-based Koan Advisory Group.

The public policy consultancy conducted a survey comprising 5,000 smartphone users across India to understand the consequences of the proposed DDCB Bill.

The study found that Indian consumers derive significant value from both the hardware and software components of their smartphones. According to the Koan Advisory Group, over 85 percent of Indians believe that the smartphone OS, its related software, hardware, and external peripherals are all essential value additions to their device.

The study, comprising 5,000 smartphone users across India, revealed that consumers view their phones as composite and versatile tools for communication, entertainment, productivity, and more.

Of the respondents surveyed, 87.8 percent find smartphone OS and software important, 88.2 percent prioritize hardware features like display, RAM, battery, and camera, and 87.3 percent consider external peripherals and after-sales services essential.

More than 90 percent of the respondents expressed satisfaction with the current functioning of their OS. They agree that it effectively maintains user security and privacy. 88 percent of the consumers said they were satisfied with preinstalled apps.

The Indian consumers also expressed that their smartphone apps function glitch-free and regularly update their smartphone software.

Further, the study discovered that app installations from SMS/WhatsApp/Telegram/Third-party links, etc., and internet browsers and websites are quite prevalent. Around 50 percent of the respondents use external sources to download apps. About 68 percent of respondents also use multiple app stores to download apps.

More than 70 percent of respondents rely on user-generated inputs such as ratings, reviews, and number of downloads for installing apps. More than 80 percent of respondents agree that preinstalled app stores are essential as they facilitate the discovery of secure and tested new apps and are easy to use, the study found.

According to the Koan Advisory Group, the seamless integration between hardware and software is fundamental to smartphones and enables collaboration between OS providers, OEMs, and app developers for compatibility across device features and apps. Besides, the synergy is also beneficial for consumers, who view smartphones as a single unit.

The study underscored that OS providers ensure compatibility and functional integration through licensing agreements that mandate manufacturers to implement standardized security protocols and use standardized APIs.

According to the Koan Advisory Group, the proposed ex-ante restrictions on tying, bundling, and self-preferencing, as outlined in the draft DDCB 2024, pose a threat to the existing security protocols and app standardization of OS providers. These restrictions, which could potentially view hardware and software integration of the smartphone as a bundle, may expose consumers to cybercrime, bugs, and malware, and disrupt their app experience due to incompatible OS apps.

Besides, the ex-ante restrictions proposed within the DDCB could negatively implicate consumer welfare and cybersecurity in India’s smartphone ecosystem, impacting all market participants, including consumers, app developers, and OEMs.

The DDCB’s restrictions also have implications for consumer privacy and security, crucial aspects of consumer welfare, especially in digital markets, it added.