Big Tech companies are global enterprises with assets spanning multiple countries. They generate substantial revenues and have a significant influence on the daily lives of their users. Many big tech firms began as disruptive startups, revolutionizing their respective industries by introducing innovative approaches to doing business. Over time, they grew into sizable and influential organizations, but without the corresponding political obligations.
GMAM Cartel
GAMAM represents the well-known big tech companies: Google, Amazon, Meta (formerly Facebook), Apple, and Microsoft. However, the characteristics of big tech extend beyond these companies alone, as there are numerous other firms following a similar trajectory.
Through their effective search engines, social networks, and cloud computing platforms, large tech businesses enable simple access to previously unreachable services, giving a wide range of personal and corporate solutions.
These organisations integrate big data and artificial intelligence to optimise services, giving personalised experiences and enhanced consumer happiness, thanks to numerous features arising from constant development.
Big tech supports innovation and extends product offers by investing heavily in research and development. Furthermore, they generate steady and profitable career possibilities, attracting top people with attractive compensation and enticing employee incentives.
Potential
- Amazon established the second Amazon web service (AWS) region in India in November 2022 and pledged a $4.4 billion investment in the South Asian market by 2030. According to Amazon, the second AWS data centre cluster would allow the company to provide “greater choice” in the nation and sustain around 48,000 full-time employees yearly. AWS, which dominates the Indian cloud industry, has numerous big clients.
- AWS will invest in Indian space businesses and collaborate with the Indian Space Research Organisation. Clint Crosier, director of AWS Aerospace and Satellite, described India as a pioneer in space missions and stated that AWS aims to assist the country in managing its space data through cloud computing.
- Apple is gradually broadening its production base to de-risk and strengthen its supply chain, and India has been a strong candidate. PLI incentives have bolstered India’s position. Furthermore, despite Covid waves, India’s steady output has impressed the iPhone manufacturer.
- Apple released the iPhone 14 model in September 2022 and began manufacturing it in India 10 days later. By making the move, Apple’s shrinking reliance on China was emphasised. JP Morgan analysts expect that by 2025, Apple will have expanded its production capacity in India to produce 25% of all iPhones.
- Google released ‘India Ki Udaan’ to commemorate the 75th anniversary of India’s independence. Google Arts & Culture’s effort honours the country’s accomplishments. Meanwhile, Google established a partnership with the Ministry of Culture.
- Google granted a $1 million donation to IIT Madras to establish a Centre for Responsible AI. The programme would leverage Natural Language Processing models to reduce bias and promote fair usage of AI, particularly in the Indian setting. Along with the Google for India2022 event, numerous similar activities were announced to develop a more inclusive, helpful, and secure internet for every Indian.
- Microsoft revealed plans to establish its fourth data centre zone in Hyderabad in March 2023. This area will be created with sustainable architecture and operations in mind, demonstrating Microsoft’s commitment to the environment as it sustainably offers scalable cloud services.
- Microsoft CEO Satya Nadella announced a partnership with Apollo Hospitals, a renowned healthcare Indian chain, to invest in a cardiac prognostic model built on data from South Asians at the Summit 2022 in India. He also stated that Apollo is developing a model with more accurate predictive power that would be provided as an API to any hospital worldwide through all of its installations.
- The Startup Hub of the Ministry of Electronics and IT reached a deal in September 2022 with the social network company META to create an accelerator programme that would award incentives to businesses developing services for the metaverse.
Anti-Competitive Practices
- Acquisitions and Mergers: Killer acquisitions, where large firms purchase valuable start-ups without being subject to merger control rules based on turnover, are a recurring issue in digital markets.
- Self-preferencing/platform bias: It refers to the practice of a company promoting its services or subsidiaries on its platform while also operating as a competitor on the same platform. This can be seen in cases where companies abuse their position as operators of application stores by granting preferential treatment to their applications in rankings, thereby disadvantaging competitors.
- Data usage: Digital firms gather extensive customer data, benefitting from network effects as more users join their platforms, resulting in increased data collection and company growth. However, there is a concern that such data may be misused for tracking and profiling customers. Additionally, organizations may utilize this data across various services they provide. While this benefits Big Tech companies and solidifies their market position, it creates obstacles for small and new companies attempting to enter or expand in the industry.
- Restricting Third-Party Applications: There are instances where entities restrict the installation or operation of third-party applications. One example is an operating system that prohibits users from using applications other than its own, like Apple’s restriction on installing third-party applications on the iPhone.
- Adjacency/Bundling and Tying: These practices arise when digital firms compel consumers to purchase related services by linking their main products or services to other complementary offerings. For example, a mobile operating system may promote the use of its search engine to its users. This bundling of services into a single package creates challenges for developers to establish fair fees for each service and limits their ability to explore alternative options. Consequently, it generates pricing asymmetry and results in the elimination of competition from the market.
- Anti-Steering: Anti-steering provisions employed by entities aim to hinder business users from migrating away from the platform and utilizing alternative options, thereby restricting choice. An example of this is application stores enforcing the use of their payment systems for application purchases. Such practices lead to anti-competitive exclusionary behaviour, limiting competition in the market.
Way Forward
- Digital Gatekeepers: India needs to identify the dominant entities in digital markets that have the potential to adversely impact competition. These entities should be classified as Systemically Important Digital Intermediaries (SIDIs), considering factors such as revenue, market capitalization, and the number of active businesses and end users. SIDIs should be required to submit an annual report to the Competition Commission of India (CCI) outlining the actions taken to meet their mandatory obligations.
- Regulating Digital Markets: Digital markets are internet-based platforms with many interconnected participants. Unlike physical markets, they have increasing returns to scale, meaning that as the platform grows, its performance improves. This is due to learning and network effects, where the platform becomes more valuable as more users join. As a result, dominant players can emerge rapidly in digital markets before regulations can be put in place to address anti-competitive practices. It’s important to assess competitive behaviour proactively to prevent market monopolization, rather than relying solely on evaluations after the fact.
- Digital Competition Act: To effectively address the dynamics of the digital market, India should improve its competition law. The current economic drivers in this market tend to favour a small number of players who dominate the entire ecosystem. As a solution, the Committee proposed the introduction of a Digital Competition Act, which would establish a fair, transparent, and competitive environment for the digital ecosystem.
- Strengthen Competition Law: To cater to the requirements of the digital market, India must strengthen its competition law. The prevailing economic factors in this market enable a limited number of players to establish dominance within the ecosystem. To tackle this situation, it is recommended that the government introduces a Digital Competition Act, which would ensure fairness, transparency, and competition within the digital ecosystem.
- Platform Neutrality: The absence of platform neutrality can have adverse consequences on downstream markets. To address this issue, it is suggested that Significant Digital Intermediaries (SIDIs) should not show preferential treatment towards their services over those of their competitors when facilitating access.
- Personal Data: To ensure privacy and user choice, Significant Digital Intermediaries (SIDIs) should refrain from processing the personal data of end users who utilize third-party services on their platforms. They should also avoid combining personal data from different core services or cross-utilizing it in separate platform services. End users should only be signed into other services after providing explicit consent through a specific choice presented to them.
- Competition Commission of India (CCI): To address anti-competitive practices in digital markets, the Competition Commission of India (CCI) should be strengthened. One proposal is to create a specialized unit within the CCI. This unit would monitor both established and emerging Significant Digital Intermediaries (SIDIs), make recommendations on SIDIs designation, and handle cases related to digital markets.
