1. INTRODUCTION
In the past decade, the digital economy in India has seen a rapid growth bolstered by the ready accessibility of smartphones and internet connectivity. This digital growth has reached a stage attracting both benefits and concerns related to monopolistic practices and a lack of transparency. Big techs like Google, Apple, Facebook and Amazon (GAFA) have started to exercise unanimous power in the digital ecosystem through their expensive capital, infrastructure and great customer reach. This has created a quixotic atmosphere in the online news industry in India due to the absence of regulation for the ‘Big Techs’. Online News Publishers (ONPs) disseminate their news through big tech platforms such as Google and Meta where these serve as both ‘news aggregators’ and ‘advertising intermediaries’. However, the latter’s absolute monopoly in the digital sphere has led to an inevitable conflict between ONPs and tech giants, centred around a lack of transparency in the revenue-sharing model leading to “winner takes all” market system.
In light of the same, this article advocates the role of Competition Commission of India (CCI) as a third-party regulator to oversee the implementation of possible ex-ante measures that can be undertaken to formalise a system of checks and balances when it comes to online news published by Big Techs. Further, it highlights the potential detriment that an immediate transition to ex-ante regulations may cause to a burgeoning economy like India, underscoring the necessity for a middle path.
2. GRAVITY OF EX ANTE REGULATIONS IN THE DIGITAL MARKET
The Parliamentary Standing Committee of Finance unveiled its 53rd report on ‘Anti-Competitive Practices by Big-Tech Companies’, which stated that the unaided control of Big Tech and the proliferation of digital market have substantially distorted the competition by favouring their services over those of third parties. Pertinently, in XYZ v. Alphabet Inc. & Ors, CCI imposed a penalty of INR 937 crores on Google, having found that through its control over the Play store and Android Operating System, there was a denial of market access to other potential competing apps. This restricted the entry of third-party applications by persistently insinuating the use of Google Play’s Billing System (GPBS). It corresponded to the abuse of dominant position and Google was bludgeoned to comply with the directions of CCI.
These ensuing practices have shifted the concern of policymakers from ex-post measures in the competition law to ex-ante. Ex-ante measures are designed to identify and address the anti-trust issues in advance via regulatory interventions. Thus, the parliamentary committee has rightly emphasised the significance of identifying the ‘Systemically Important Digital Intermediary’ (SIDI), parallel to the classification of gatekeeper under the EU Digital Market Act. The committee has opined that SIDIs should be subject to ex-ante regulations based on their revenues, market capitalisation, and number of active businesses. SIDIs hold a significant share in the market, such that practices like self-Preferencing, deep discounting, bundling and tying prove to be an ease for their manipulation. Despite the existing provisions in the Competition Act 2002, India has drawn worldwide attention due to its antitrust concerns by Big Tech. Consequently, the need for regulation in the digital market has become inevitable to prevent a monopolistic atmosphere.
3. THE BIG TECHS AND ONP’s: AN INEXORABLE TUSSLE?
Amidst the digital media surge, online news consumption has soared. However, this growth hasn’t been equitable for key players: ONPs and Big Techs. ONPs collect, curate, and disseminate news, often using big tech platforms for distribution and monetization. In turn, big techs rely on ONPs to create engaging content that attracts users and keeps them on their platforms. This way, these two engage in a symbiotic relationship , facilitating an interdependent model. The business model of the online news industry, though based on interconnection, has also precipitated disputes among stakeholders, primarily revolving around a revenue-sharing discord. Big techs purportedly keep a larger portion of the revenue made from online advertisements and misuse their power by concealing the revenue generated from advertisements published on news websites. For instance, the UK CMA’s Online Platforms and Digital Advertising Study Report found that Google is a key player in ad-tech intermediary services which captures 40-70% of revenues in this sector. Leveraging its dominant position, Google unilaterally determines payment amounts and terms for content created by publishers.
In India, the Digital News Publishers Association (DNPA) alleged that ONPs only receive 51% of the revenue generated through digital advertisement by advertisers. This situation is particularly concerning for small and local ONPs, as they have to incur hefty expenses to research and curate the news using their resources and still don’t get adequate compensation.
Big Tech’s underpayment to ONPs forces them to accept unfair terms or lose platform access, exacerbating their vulnerability. Without fair compensation and the risk of losing platform access, local journalism risks extinction,. A reportpublished by Carnegie Endowment for International Peace links the decline of local journalism to rising ‘public mistrust’ and belief in ‘misinformation’. Furthermore, financial strains from unfair revenue sharing result in significant layoffs and operational cutbacks, impacting the socio-economic landscape in India, where the media sector employs numerous professionals.
4. WILL THE PARADIGM SHIFT ONTO EX-ANTE REGULATION CURE THE MONOPOLISTIC CONUNDRUM IN DIGITAL SPHERE?
The issue of Big Tech’s influence has been complexing worldwide. In 2021, Australia enacted the Treasury Laws Amendment Act, requiring Big Tech to negotiate fair compensation with ONPs—an ex-ante regulation. Similarly, Canada’s 2023 Online News Act, another ex-ante measure, established a bargaining regime to ensure news businesses are fairly compensated for their content. Interestingly, in India, the 53rd Parliamentary Report also recommends the SIDIs to enter into a fair negotiation with ONPs consistent with the provisions outlined in the Australian legislation.
While negotiation, as an ex-ante measure appears effective, it is imperative for India to meticulously identify and address potential loopholes to facilitate optimal solutions. For instance, even if Big Tech companies agree to pay a fixed percentage of revenue generated in their negotiations with small ONPs, the absence of regulations on ‘Search and Ranking Preferencing’ could still lead to a bias favouring large, well-known publishers. Users search using specific keywords on platforms, which then utilize algorithms to display similar results based on those queries. . Big Techs take advantage of such algorithms and manipulate the organic search results showing biased outcomes to the customers favouring and promoting themselves.
Thus, ensuring that regulation by CCI taking ‘centre stage’ becomes an absolute necessity. The CCI should appoint a ‘representative’ in the negotiations to prevent big tech from exploiting their ‘multidimensional presence’. They should ensure that the terms of the agreement and bargaining powers should not be prejudicial against the small ONPs, thereby facilitating the just and equitable revenue-sharing model. Additionally, regular compliance reports of the agreement shallbe mandated to ensure that the new business model aligns with the regulatory requirements. CCI may also regulate the digital ad buying and selling processes by encouraging big techs to ensure transparency and stability of ‘algorithmic information’.
5. LOCATING A MADHYAM MARG
Prima facie, the implementation of ex-ante measures to address this revenue-sharing discord and power imbalance may appear advantageous. However, Australia’s and Canada’s experiences show that rushing into ex-ante regulations led to Big Tech threatening to remove news content, creating serious issues. In India, local media outlets are already financially struggling, and independent fact-checking is scarce. The only official fact-checking body, the Press Information Bureau’s Fact-Checking Unit (PIB’s FCU), focuses solely on government-related news. In this scenario, rushing into regulations could worsen misinformation and further limit access to reliable news.
Therefore, it is imperative for countries like India to carefully strategize the rollout of the regulation based on a middle path; i.e. the combination of ex ante and ex post laws.
The Ministry of Corporate Affairs (MCA), in consultation with the Committee on Digital Competition Law (CDCL), assessed the necessity and feasibility of an ex-ante framework. They submitted the ‘Report of the Committee on Digital Competition Law‘ along with the draft Digital Competition Act as a part of the report. The report while recognizing the imperative for ex-ante competition intervention also realised the complementary relationship between ex-ante and ex-post enforcement. It states, “Ex-post competition enforcement is most effective when supplemented and reinforced by ex-ante regulation.”
India’s adoption of revenue-sharing negotiations between big techs and ONPs; thus, necessitates CCI intervention as a third-party regulator.
A balanced approach is needed so that India can realise the potential and the promise of digital media. It is crucial not only for the stability and growth of the digital economy but also for protecting employment within the media sector, maintaining media plurality, and supporting the socio-economic fabric of the nation. By addressing the country-specific impacts and the broader socio-economic repercussions, India can craft a regulatory framework that is both fair and forward-looking.
6. THE WAY FORWARD
The introduction and implementation of the ex-ante regulation will be a challenge in itself for a diverse economy like India. Solely, undertaking ex ante measures can curb innovation while implementing only ex-post measures can have devastating outcomes.
The imperative role of the CCI as a ‘third party regulator’ in regulating the dynamics between big tech and ONPs cannot be overstated. CCI should intervene by taking centre stage to carve out ‘a madhyam marg’ (a middle ground) based on a combination of both measures to regulate these big techs. Itshall proactively monitor the digital news market by assessing the market dynamics, identifying potential monopolistic behaviours and understanding the emerging trends. Also, advanced data analytics and artificial intelligence can be leveraged to track market activities, consumer preferences, and the impact of major players on the competition. Further, CCI shall implement the ex-ante measures to also ensure that “winner takes it all” market system is avoided by setting thresholds for market share, scrutinising mergers and acquisitions and imposing restrictions on practices leading to market monopolisation. Given the complexity of the aspects involved, focussing on a single aspect would be nothing more than ‘playingwhack-a-mole’. Lastly, it’s important to avoid the trap of the ‘Nirvana fallacy,’ where we assume that a specific regulatory approach is perfect just because it seems to improve the current situation. Instead, India should take a balanced and thoughtful path, learning from the experiences of other jurisdictions and carefully considering their approaches before fully adopting ex-ante measures..
