Module 4: Power

Regulation of platform power

This section is concerned with the concentration of power by large digital platforms in relation to online ecosystems, advertising, and the concentration of data. It examines whether such power is regulated through, for example, competition law or digital markets provisions.

Introduction to India Competition Regulation

The main features of competition regulation in India resemble familiar competition law concepts around the world: prohibition of abuses of a dominant position, merger control and wide ranging investigative powers. We explain these in more detail below. 

The current key piece of legislation is the Competition Act, 2002. Prior to this law, the relevant legislation was the Monopolies and Restrictive trade Practices (“MRTP”) Act, 1969. The 1969 law was the first Indian legislation to restrain abuse of market power and was focused on curbing monopolies. In contrast, the 2002 law takes a broader approach to promote competition. Further, the 2002 law was drafted in line with international developments and reflected India’s reforms of Liberalisation, Privatisation and Globalisation in the 1990s. More recently, the Competition Act was amended in 2023 to transform the law to address “a new era of economic development and consumer welfare” and address emerging digital market issues. 

The Indian government is also contemplating an ex ante regulatory framework potentially modelled on the European Commission’s Digital Markets Act (DMA), to apply to ‘systemically important digital intermediaries’ (SIDIs). This is in the draft Competition Bill, 2024 and would complement the existing competition law regime in India.

Constitutional Basis for Regulation

Competition regulation in India is based on a constitutional basis. The Constitution of India says: 

Article 38:  (1) The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life.

Article 39:  The State shall, in particular, direct its policy towards securing:  (b)  that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; (c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;

Overview of the Competition Act (2002)

According to India’s competition regulator, the 2002 law “follows the philosophy of modern competition laws”. Under the Competition Act, anti-competitive agreements and abuse of dominance are considered as potential impediments to free and fair competition in the markets. Penalties are imposed when the regulator concludes an enterprise has engaged in anticompetitive practices resulting in appreciable adverse effect on competition (AAEC). 

Scope: The territorial scope of the Competition Act is interestingly not the entire state. It extends to the whole of India except the State of Jammu and Kashmir (section 1(2)). There is significant history surrounding this distinction, dating back to the Partition of India. 

Regulator: The Competition Act establishes the Competition Commission of India (CCI). The CCI is a quasi-judicial body responsible for the administration of the Act.

The key substantive regimes of the Competition Act are: 

1. anti-competitive agreements (section 3); 
2. abuse of dominance (section 4); and 
3. regulation of combinations (merger control) (sections 5-6).  

Anti-competitive Agreements

There is a general prohibition of anti-competitive agreements which cause or are likely to cause an appreciable adverse effect on competition within India (s 3(1)). The Indian law includes examples that are presumed to have an appreciable adverse effect on competition and those which may have such as effect: 

Examples from 3(4) - may be prohibited	Examples from S3(3) - presumed adverse effect on competition and therefore prohibited
Tie-in arrangement	Directly or indirectly determines purchase or sale prices
Exclusive dealing agreement	Limits or controls production, supply, markets, technical development, investment or provision of services
Exclusive distribution agreement	Shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way
Refusal to deal	Directly or indirectly results in bid rigging or collusive bidding
Resale price maintenance

United States

Introduction

The United States (US) has generally been less eager to pursue competition or antitrust enforcement against digital platforms in comparison to the European Union. Additionally, the US is perceived as having a lax approach to antitrust in stark contrast to most other jurisdictions. However, in late 2020, a sterner approach towards antitrust arose in the US with the filing of complaints by the Department of Justice (DOJ) and several states against Google. This has been followed by further actions indicating that antitrust enforcement in the realm of digital platforms is a growing priority for the Biden administration, such as Executive Order 14036, also known as the Executive Order on Competition. Regarding platforms, the order specifically encourages the Federal Trade Commission (FTC) and the DOJ to use their powers under antitrust law to “challenge prior bad mergers that past administrations did not previously challenge” in, amongst others, the tech sector.

Basis of Antitrust in the United States

The FTC describes the basic antitrust law framework in the United States through referencing the triad of the Sherman Act, FTC Act, and Clayton Act.

The Sherman Act is a foundational US antitrust law passed in 1890. It emphasizes the importance of free competition and prohibits unfair monopolies. Generally, the Act prohibits anti-competitive agreements and conduct that (attempts to) monopolize the given market. It empowers the DoJ to enforce the Act. The basis of the notion of protecting competition is not to prevent monopolies in of itself, but the potential adverse impact of monopolies on consumers. 

Congress passed two additional antitrust laws in 1914, including the FTC Act and the Clayton Act. The former created the FTC and the Clayton Act addresses unlawful mergers and acquisitions. The FTC Act also bans unfair means of competition and unfair or deceptive acts or practices. Violations of the Sherman Act also count as violations of the FTC Act, thus allowing the FTC to enforce against violations under the Sherman Act. The Clayton Act prohibits mergers and acquisitions when the effect “may be substantially to lessen competition” or “tend to create a monopoly.” The Clayton Act was amended by the Robinson-Patman Act of 1936 to prohibit discriminatory prices, services, and allowances.

Both the Sherman Act and Clayton Act were amended by the Hart-Scott-Rodino Antitrust Improvements Act. Most importantly, it required that companies intending to undertake a significant merger or acquisition must notify the government in advance. Additionally, it created a means for private parties to sue for triple damages under the Clayton Act for harms caused by conduct which violates either the Sherman or Clayton Act.

States often also have their own antitrust laws, though these three acts form the basis for antitrust law in the United States.

Past and current approaches to antitrust in the tech sector

Previous antitrust cases including Microsoft in 1998 were brought by the DOJ on the basis of ‘regular’ antitrust law, with no specific digital market provisions. Microsoft was a key case wherein the DOJ considered that Microsoft was using exclusionary practices to maintain its monopoly in the operating systems (OS) market. This posed further problems as Microsoft tied its web browser, Internet Explorer, to its dominant OS which had anticompetitive effects particularly for its main competitor, Netscape, whose competing browser was considered by the DOJ as a basis for a potential competing OS. 

Though this case managed to open up the market, antitrust enforcement in the tech sector in the US has been lacking, in part due to the laissez-faire understanding of consumer welfare underpinning US antitrust law. For example, the FTC undertook an investigation of Google in 2013 regarding self-preferencing practices. However, the FTC ultimately closed the investigation as the self-preferencing could be understood as an improvement for users. Additionally, the judicial atmosphere seemed to be against regulating these platforms; Monti claims cases would have in any case met “defendant-friendly courts.”

Enforcing antitrust against digital platforms seemed more palatable in 2021, when two (ongoing) cases were brought against Google. However, this still mostly uses normal avenues of antitrust enforcement against the firm, rather than tech-specific provisions. For example, one of the cases addresses Google’s anti-competitive practices in the general search market. The DOJ claims that Google’s monopolisation of both the search and its advertising markets are closely linked, letting the DOJ address anti-competitive effects on both sides of the market. 

Despite the lack of specific tech sector provisions, certain legal innovations are occurring. For example, in the Google complaints, the DOJ identified a connection between a decrease in consumer choice and the lack of data protection and privacy for consumers. It identifies that“companies such as Google that offer low data protection can harvest more data that will allow them to cement their dominant position.” This facilitates demonstrating anticompetitive effects on consumers from behaviour specific to the tech sector, without necessarily relying on a specifically tailored provision.

From general antitrust to specific platform regulation: shifting regulatory approaches

The House Committee on the Judiciary, after a 16-month investigation, released a 450-page report in 2020 asserting platforms’ anticompetitive conduct. This signalled a shift towards antitrust enforcement against big platforms followed by an increased legislative fervour to regulate platforms and prevent anti-competitive behaviour. In 2021, numerous Bills were proposed in the US to address digital platforms as part of the bipartisan legislative agenda "A Stronger Online Economy: Opportunity, Innovation, Choice," which was created after the House Committee on the Judiciary’s investigation.

American Choice and Innovation Online Act, H.R. 3816, 117th Congress, 11 June 2021. Newest version:: H.R. 3816, 117th Congress, 21 December 2022.

Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act of 2021, H.R. 3849, 117th Congress, 11 June 2021. Newest version:: S.2521, 118th Congress, 26 July 2023.

Ending Platform Monopolies Act, H.R. 3825, 117th Congress, 11 June 2021.

Platform Competition and Opportunity Act of 2021, H.R. 3826, 117th Congress, 11 June 2021. Newest version: S.3179, 117th Congress, 4 November 2021.

Competition and Antitrust Law Enforcement Reform Act of 2024, S.4308, 118th Congress, 9 May 2024.

Monti highlights that these legislative efforts represent a shift for the US from a relatively lax approach to an “accelerated enforcement of antitrust law.” However, questions remain from a legal procedural perspective as the Bills do not delineate their relationship with the backbone of the US’s antitrust framework, the Sherman Act, at this stage in the legislative process.

All Bills (excluding the ACCESS Act) use certain thresholds to determine which platforms and tech companies fall under its obligations. These thresholds include:

• At least 50,000,000 US-based monthly active users, or 100,000 US-based monthly business users
• Market capitalisation of over $600 billion.

These conditions are cumulative. Platforms fulfilling these conditions are referred to as “covered platforms” in the relevant Bills. The DOJ and FTC must designate a platform as a “covered platform.”

The American Choice and Innovation Online Act

The American Choice and Innovation Online Act is an attempt to prevent platforms and large tech companies from “abusing their market power to harm competition, online businesses, and consumers,” according to the senators pushing this Bill.

The Bill would prohibit platforms from self-preferencing, intentionally disadvantaging other firms’ products or services, using non-public data from a business user to provide itself an advantage, and interfering with pricing decisions set by another business user. Such prohibitions are found in Section 2(a) and (b) of the Bill. It envisions empowering the FTC and DOJ to oversee enforcement of the law.

Note that Section 2(c) outlines affirmative defences wherein such behaviour may fall under the Bill if the covered platform can show through “clear and convincing evidence” that their conduct falls under the listed exceptions. The first is when the conduct does not actually harm the competitive process, the second is when the conduct was tailored, necessary, and the least discriminatory way possible to either prevent a violation of or comply with federal or state law, or protect user privacy or other non-public data. Lastly, the conduct may also fall under an exception if the covered platform can show it increases consumer welfare.

Section 2(f) outlines remedies for when covered platforms are found in violation. Violating platforms can be fined up to 15% of their total US revenue for the previous calendar year, or 30% of the revenue affected by the unlawful conduct during the relevant period. These may be followed by various other remedies in addition.

Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act

The ACCESS Act aims to promote competition through reducing consumer switching costs between online communications services, primarily through requiring interoperability between services. The Bill addresses large communications platforms, and large communications platforms providers, defined in Section 2(7) and (8). A large communications platform is one that generates income “directly or indirectly from the collection, processing, sale, or sharing of user data,” and has more than 100,000,000 monthly active users in the US. Providers are those that provide such a platform.

The Bill establishes a general duty for providers to maintain tools to allow for the secure transfer of user data to either a user or a competing communications provider in a commonly used, accessible format (Section 3(a)). It requires any competing provider to secure received data (Section 3(b)). This duty does not apply when a large communications platform provider provides a service that does not generate income from data.A general duty of interoperability between communications platforms is also proposed in Section 4. Model technical standards for interoperability will be published no later than 180 days after date of enactment by the Director of the National Institute of Standards and Technology (Section 6(c)). 

The FTC will oversee enforcement (Section 6(e)). Violations will be treated as an unfair and deceptive act under Section 18(A)(1)(B) of the FTC Act 15 U.S.C. 57(A)(1)(B) (Section 6(f)(1)).

Ending Platform Monopolies Act

This Bill proposes to promote competition and economic opportunity in digital markets through removing conflicts of interest resulting from “dominant online platforms’ concurrent ownership or control of an online platform and certain other businesses.”  It would be unlawful for covered platforms to “own, control, or have a beneficial interest” in a business other than their platform that uses the covered platform to:

• Sell or provide its products or services (Section 2(a)(1),
• Offers a product or service that the covered platform requires a business user to use to access the covered platform or for preferential status on the covered platform (Section 2(a)(2)),
• Or causes a conflict of interest (Section 2(a)(3)), which covers situations expounded on in Section 2(b)(1) to (2). This includes when a covered platform’s ownership of another business incentivises the covered platform to advantage their own products or services, or disadvantage competitors’ products or services.

The FTC and DOJ are in charge of enforcement, and a violation will be considered an unfair method of competition under Section 5 of the FTC Act 15 U.S.C. 5 (Section 3(b)). Civil penalties are present based on revenue of the calendar year or duration of the unlawful conduct, with an opportunity for civil litigation by the FTC to seek relief (Section 3(c) and (d)).

Platform Competition and Opportunity Act

The Bill seeks to promote competition and economic opportunity by establishing certain acquisitions by dominant online platforms as unlawful. Section 2 establishes a general presumption of unlawfulness of covered platforms acquisition of the whole or any part of stock or share capital of another person engaged in commerce and equivalent activities, or the whole or any part of their assets (Section 2(a)(1) and (2)). For an acquisition to be lawful, the covered platform must provide clear and convincing evidence the acquisition falls under one of the exclusions in Section 2(b), which, most interestingly, include that the acquired assets do not compete with the covered platform or “constitute nascent or potential competition” or enhance the covered platform’s ability to maintain its market position. Competition must be understood in this Act also as competition for a user’s attention (Section 2(c)).

Additionally, the Bill recognises that acquisitions resulting in additional data may increase the market position or the ability to maintain the market position of a covered platform (Section 2(d)).

Competition and Antitrust Law Enforcement Reform Act of 2024

The Bill aims to reform antitrust laws to better protect competition through amending the Clayton Act’s standards for unlawful acquisitions, deterring exclusionary conduct (particularly for dominant firms – Section 2(a)(5), and enhancing the DoJ and FTC’s enforcement powers.

The Bill has a starting point that the Clayton Act’s effectiveness has been diluted and must be restored, and that enforcement powers and budgets have not grown in pace to current antitrust concerns. Section 4 addresses unlawful acquisitions and outlines sweeping amendments to the Clayton Act to increase its scope and reduce barriers to proving an anticompetitive effect from a merger. For example, Section 4(b)(1) states Section 7 of the Clayton Act should be amended to replace the threshold of “substantially to lessen” competition to “to create an appreciable risk of materially lessening” competition. 

Additionally, it adjusts merger thresholds in a way that seems to address specific risks arising from big tech firms. Such firms often acquire small startups and integrate those services, flying under the radar of merger and acquisition regulation due to the low market share of the acquired startup. The Bill, in Section 4(3)(6)(B)(ii) provides that a court should review an acquisition when “the person acquiring or the person being acquired has assets, net annual sales, or a market capitalisation greater than $100,000,000,000.” 

Regarding exclusionary powers, Section 10 proposes to amend the Clayton Act by inserting a Section 26A on exclusionary conduct. This would include a presumption that exclusionary conduct presents an appreciable risk of harming competition when the person(s) acting have either (A) a market share greater than 50% as a seller or a buyer in the relevant market, or (b) otherwise has significant power in the market. Additionally, when a defendant operates a multi-sided platform business, it does not require establishing that the exclusionary conduct presents an appreciable risk of harming competition on more than one side of the multi-sided platform.

Responses to Proposed New Regulatory Approaches

Of course, the approaches of some of these Bills are more radical than others on their impacts on big tech firms. None of these bills have been passed and it is now unpredictable to determine which will pass in the wake of Trump’s 2024 election win, and the Republican control more generally over numerous federal institutions. Additionally, big tech Chief Executive Officers (CEOs) have been reported sidling up to Trump, with Elon Musk’s endorsement the strongest, possibly hoping for Trump to extend tax cuts to big corporations implemented during his first term.