Issues with monopolies in the digital space: US has gone after Big Tech. That makes it easier for India

Source: This post on issues with monopolies in the digital space has been created, based on the article “US has gone after Big Tech. That makes it easier for India” published in “Indian express” on 30th March 2024.

UPSC Syllabus Topic: GS Paper 2– Polity- Statutory, regulatory and various quasi-judicial bodies

News: This article discusses the ongoing legal battle between Google and Indian firms. It highlights issues with monopolies in the digital space and the need for government intervention in antitrust matters. Recent US actions against big tech companies like Apple and Google are also mentioned.

What is the dispute between Google and Indian firms?

Indian app developers filed a complaint against Google, alleging abuse of its dominant market position.

The dispute centers on Google forcing developers to use its proprietary billing system in the Android and Play Store ecosystem.

Developers faced fees for choosing competitor billing systems.

Non-compliance led to Google removing their apps, but they were reinstated after public backlash.

The Competition Commission of India (CCI) is investigating these practices to see if they violate the Competition Act, 2002.

This issue highlights broader concerns about digital monopolies and market dynamics.

Why are digital monopolies problematic?

Digital monopolies, like Google, easily dominate due to rapid market control, unlike traditional businesses.

They reduce market efficiency, potentially harming consumer choices and prices.

These monopolies can suppress innovation by restricting market entry for new competitors.

Dominant firms set unfair terms for others, as seen with Google’s billing system demands.

Monopolies often lead to a lack of discipline among incumbents, slowing down corrective market forces.

They exemplify corporate excesses, sometimes necessitating taxpayer-funded bailouts.

Historical examples, like Standard Oil and American Tobacco, show similar issues with monopolies in non-digital sectors.

How has monopoly regulation evolved in the US?

Early 20th century: Strong actions against monopolies like Standard Oil Company, which was forced to split.

Post-war era: Decisive decisions against monopolies, like ALCOA in 1945 and American Tobacco in 1946, for violating the Sherman Act.

1970s onwards: A shift in antitrust enforcement following Robert Bork’s “Antitrust Paradox,” emphasizing consumer welfare over breaking up monopolies. IBM and Microsoft faced only minor repercussions for similar monopolistic behaviors during this period.

Recent change: Growing antitrust actions against tech giants, including a $5 billion EU fine on Google in 2018 for market power abuse.

Lina Khan’s appointment as FTC chair and lawsuits against Apple by the US Department of Justice signify a return to stricter monopoly regulation.

Why is this change significant?

The U.S. shift towards stricter antitrust enforcement sets a global precedent. The change in U.S. policy reduces geopolitical barriers for India to act against American tech giants. With U.S. tech firms facing home country action, India’s regulatory actions gain more legitimacy. This shift could embolden India’s Competition Commission (CCI) in its ongoing investigation against Google.

The U.S. cases, like the recent lawsuit against Apple, provide frameworks for India to address similar issues.

This global trend towards stringent antitrust enforcement can aid India in balancing market power and innovation.

Question for practice:

Examine the impact of evolving antitrust regulation on digital monopolies, focusing on the Google-Indian firms dispute and its global significance.