A Study of Technological Advent and its Impact on Competition In India

Megha Rani Ahuja is an Advocate at, the High Court of Delhi Ganesh Kumar is an Assistant Professor, at Symbiosis Law School Hyderabad.
6 January 2023

Technology-based innovations and the dynamics of their commercialisation have piqued the interest of entrepreneurs and the business community. Compared to traditional "brick and mortar" markets, competition in the digital economy necessitates more attention. The two-way user community that links the service supplier and the consumer is a distinctive feature of the digital economy. The abuse of the dominant position in the digital market is becoming more widespread than in traditional marketplaces. One of the numerous variables contributing to the rise in abuse of the dominant position in the digital market is the lack of entry restrictions. Google is one such example criticised for stifling competition and innovation. Furthermore, Mergers and Acquisitions is a robust platform that can foreclose future markets and curb innovation; instead of competing on merits, it would leverage its market power and is likely to prevent others from competing on merits. The Whatsapp-Facebook merger, a landmark transaction, was regarded as a restriction of competition in the relevant market.
In a series of cases, the Competition Commission of India has highlighted blatant problems in identifying and interpreting the CCI’s jurisdiction after technological advancement. The paper will discuss anti-competitive aspects, the effects of mergers and acquisitions, and the privacy risks of the digital economy, with an emphasis on the Indian scenario.



As a result of technological advancements, the world has prospered in recent decades. Rapid economic progress in emerging economies has driven the rise of a global standard of living. Various technology company ventures have sprung up to grow emerging ideas and connect ideation to commercialisation in the twenty-first century. Lately, India has improved its position in the Global Innovation Index, moving from 48th place in 2020 to 46th place in 2021. According to Gartner, IT services will expand by 10.7%, up to $18.103 billion in 2021, up from 3% in 2020 (Talgeri 2021). Digital platforms are reshaping the connections between employees, employers, and customers every day. The reach of the silicon chip pervades practically everything we do, from online grocery shopping to finding a companion on a dating site.

As a result, technology is becoming a more significant component of competitiveness. The swift pace of technological development and cooperation requirements in effective globalisation makes it increasingly difficult for many emerging countries to compete.

The digital economy uses the Internet to enable and execute electronic commerce of commodities and services. It is an important engine of economic growth and a growing source of work for competition authorities. The digital economy comprises digital-technology-based markets that allow the electronic trade of goods. In recent years, the growth of the digital economy has been a crucial engine of economic growth. The change in the digital world has long-reaching repercussions on society that go far beyond digital technology. Mobile device development has considerably increased the reach of the Internet in society. As a result, competition authorities are more concerned about challenges in the digital economy.

Competition in significant digital marketplaces varies from competition in traditional markets in specific ways. Multi-sided markets, zero-priced platforms and network effects are all part of the digital market economy, complicating competitiveness [1]. Competition in the digital market economy is cyclical. Successful businesses obtain a dominant market position, but other companies may easily replace this dominance in the next cycle of innovations, thus making it temporary. In digital marketplaces, large-scale data collecting and analysis has become ubiquitous, potentially influencing anti-competitive results. Big data's influence on market power is decided case-by-case and depends on the product or service. Furthermore, the idea that "big is not bad" is an established principle of competition policy; it's especially true in the digital sphere because successful, genuine competition there leads to monopoly more frequently than in other industries.[2]

In two-sided marketplaces, network effects refer to a growth in the number of users on one side of the market and benefits customers on the other. For example, cab aggregation interfaces such as Uber and Ola will draw users to a service with a large network of drivers, lowering waiting time. An increase in users will automatically benefit drivers who operate on this platform. According to the basic principles of network effects, the company, website, or interface with the largest market share will be most successful in the long run. As a result, the company’s market share will increase significantly. Therefore, markets with strong network effects are sometimes called winner-take-all markets. (Stobierski 2020)

Using financial capital to provide subsidies to encourage customers is an effective way to develop market power. It is an appealing option for businesses with better financial capital and investment. Several online companies have used significant discounts, cash-back offers, and other programmes to lure prospective users and establish the network effect. Many companies sustained heavy losses in some cases for years and years. For example, in the first half of 2016, the global taxi firm ‘Uber’ lost Rs. 86.5 billion worldwide. In a similar vein, in March 2015, the Indian cab operator ‘Ola’ recorded a net loss of Rs.7.96 billion. The extent of these discounting techniques and the duration of time they have been practiced has established significant hurdles to competition. These actions appear to be part of a systematic competitive strategy. Capital has become a competitive tool over time. It raises questions that the market can ultimately benefit the player who, despite having the least innovative product or service, can secure more funding and attract more consumers in the early stages of development by using subsidies.

The government’s FDI rules, released in March 2016, focused attention on e-commerce enterprises’ pricing practices. The automatic foreign investment route would only be available to e-commerce platforms that avoided subsidies and were pointed out.[3]

The Competition Commission of India (hereinafter to be referred as “CCI”) has recently noted these concerns in a few cases. In Fast Track Call Cab Private Limited v. ANI Technologies Pvt. Ltd.,[4] CCI issued a prima facie order in April 2015, recommending a full investigation into the allegation that Ola engaged in abusive market practices in Bengaluru after receiving substantial funding from various investors.

Recently, following the CCI’s refusal in the case of Meru Travels Solutions Private Limited v. Competition Commission of India,[5] Competition Appellate Tribunal has ordered the CCI’s Director-General to initiate a similar probe against Uber’s monopoly in the radio taxi industry in Delhi NCR. Uber later took the case to the Supreme Court, saying that the Tribunal’s authority to request an inquiry was limited due to “jurisdictional inadequacy.” The Honorable Supreme Court of India dismissed the appeal, ruling that if a loss is suffered because of predatory pricing, Explanation (a)(ii) [6] Of Section 4 of the Competition Act, 2002 would prima facie be triggered since this would undoubtedly harm the appellant’s rivals or tilt the relevant market in its favour. [7]

This article assesses recent trends in India in the light of economic principles and competition law. It will go through the anti-competitive aspects, the effects of mergers and acquisitions, and privacy problems in the digital economy that come with them.

Relevant Market in the Digital Economy

Customers’ behaviour in digital markets differs significantly from that in traditional markets, as any competition law authority or jurist should be aware. The digital economy allows market players to spend substantially more on more incredible innovation and technical improvement than traditional markets.

As a result, describing the market is a crucial first step in shaping the discourse about competition and regulatory challenges. It is essential to establish if a business has market dominance or considerable market power, establish a framework for merger control and ex-post competitive analysis, and decide whether ex-ante regulatory action is necessary. The parameters defined by the appropriate market definition are frequently used to conduct competitive impact studies.

“Identifying the competitive limitations acting on a supplier of a certain product or service” is the fundamental goal of market definition (Mancini 2016). Under competition law, there is no need for ex-ante regulation if customers may easily switch to competitor products and services or if a company's actions are otherwise restrained by present or future rivals. The application of market-defining tools in practice is complex due to the intricacies of digital marketplaces. Competition authorities respond to concerns about the digital marketplace using procedures created for traditional (usually physical) products or services.

Defining relevant markets is extremely difficult because:

  • multi-sided platforms apply to multiple markets,
  • many internet services are free to use; therefore, relying on price-based indicators is risky, and
  • borders between markets are rapidly evolving.

While addressing the above difficulties, it has been found that several competition law authorities do not differentiate between two-sided transaction markets and non-transaction markets, which require different treatment in market determination. When reviewing the DoubleClick and Google merger, the European Commission characterised the relevant market as purely "online intermediation", ignoring the two-sided markets of browsing and movie streaming space (Gorp andBatura 2015, 52).

Consumers are drawn to e-commerce platforms because services are available at no cost. As a result, the basis of competitiveness vanishes, posing a difficulty. Traditional pricing-based SSNIP tests are inadequate because they ignore the interdependencies between product prices in multi-sided platforms. Several competition law experts argue that when some items aren’t priced, customers end up paying for them in other ways, such as through annoying ads, privacy, or the exploitation of their data as money.

End consumers may regard WhatsApp and Twitter, for example, as two distinct services. WhatsApp is a private one-to-one messaging platform, whereas Twitter is a one-to-many (often public) messaging platform. On the other hand, Twitter subscribers prefer to speak one-on-one via WhatsApp rather than one-to-many on Twitter, and Twitter loses that audience and money for the most part. As a result, WhatsApp controls Twitter’s income, despite WhatsApp’s profit margins being razor-thin. As a result, demand-side substitutability cannot always be used to evaluate whether or not digital services are competitors.

Another issue is that market identification devices create a very unvarying image of the relevant market space. It may make it increasingly challenging for competition authorities to understand digital markets’ dynamic and growing nature, resulting from enterprises trying to compete in the marketplace.

All considerations above indicate that establishing competitive boundaries requires a thorough assessment of business models and externalities on all sides of possibly multiple platforms. The limitation of relevant markets should be based on a digital platform’s ability to steal money from other companies, not its profit margin.

Assessment of Digital Abuse of Dominance

When competition authorities may overestimate market power when a market isn't adequately characterised. Even when competition authorities have correctly identified the relevant marketplace, it is difficult to demonstrate a dominant position in digital marketplaces. One must have market strength to hold a dominant position. Competition authorities usually employ quantitative metrics such as concentration ratios, market shares, pricing levels, and profit margins to determine market dominance. Because certain services are supplied free of cost, and some business models generate little or no money or profit, such static metrics are sometimes unattainable in digital markets. It is not to say that these businesses don't have market strength. These companies’ stock levels and takeover prices imply that they could create significant future profits.

Like defining the relevant marketplace, dominance in digital marketplaces is a concept that may (dynamically) evolve. Zoom, a video conferencing service, is an example of how rapidly a market position may shift.[8]

The present method for determining dominance is based on the consumer welfare standard. The standard assesses whether consumers benefit or suffer harm due to higher or lower pricing. The problem with this standard in the digital economy is that price evaluation of online platforms is unable to conduct due to quick price swings and tailored pricing enabled by algorithms. Moreover, prices may not be the most critical factor in a competition study that includes digital channels. Many services are supplied for free, but customers pay by contributing personal information. One needs a substantial and controlled understanding of operating independently in digital markets to gain dominance truly.

Anti-Competitive Conduct

Once a digital company's dominating position has been established, the next step is to examine whether its actions are anti-competitive. It is difficult to tell the difference between anti-competitive behaviour and conventional business strategies in the fast-paced world of digital markets. For example, the fact that Google controls the most lucrative portions of the Internet gives it the appearance of being a monopoly. Google’s monopoly is not the consequence of coercion or anti-competitive actions. However, it is the outcome of providing a high-quality service. As the Internet has a low barrier to entry, anyone can establish a business for very little money. Many well-funded rivals have tried to grab Google’s share of the market. Even Google was once a tiny start-up that fought multibillion-dollar multinationals like Yahoo and Microsoft in the struggle for Online search dominance. In 2014, Google generated over $60 billion in revenue, almost entirely from searches.

On the other hand, Google had a 75% market share in 2015. About 13 billion individuals use Google every month, with an average of 26 searches per person every year. This degree of ubiquity and domination is only found in a few commodities worldwide (The Investopedia Team 2015).

The anti-competitive approach is characterised as rival relations based on foreclosure or leverage rather than merit, resulting in harm to competitors and customers. When using the exact end-user pricing, the dominant firm's anti-competitive behaviour will be assessed by whether a rival with a comparable cost structure might compete.

Digital businesses compete by developing new business strategies and constantly establishing new markets. A potentially successful foreclosure approach in digital marketplaces is another anti-competitive aspect of buying the most dangerous (future) rivals while they are still tiny. This revolutionary notion is known as a pre-emptive merger. Pre-emptive intentions are indicated if the acquiring firm is already creating similar technology solutions close to the heart of the company’s earning strategy.

Amazon and Apple, for example, have expanded vertically into upstream and downstream industries, putting them in direct competition with app developers and dealers who use their interface. This expansion increases their potential to acquire more information and profitability, positioning them as protectors of the online businesses and application marketplaces they own. At any time, dominant platforms could use this position to engage in violent and discriminatory behaviour. Amazon, for instance, began as an online bookshop but has since expanded to sell music, audiobooks and other consumer goods, as well as produce and sell its brands that compete with other merchants in its marketplace, allowing the dominant platform to discriminate against both customers and competitors. Despite high charges of 6–50%, Amazon has become so crucial to merchants that many do most of their business on Amazon. Amazon’s quasi-monopoly status might lead to potentially abusive behaviour, such as price and retail discrimination against competitors (Gokce 2019, 4).

Spotify, an online music streaming service, filed a complaint with the European Commission in March 2019, arguing that by serving as both a player and a referee, Apple restricts freedom and stifles innovation, giving it an unfair advantage and placing other app developers at a disadvantage. Apple denied several Spotify app upgrades for utilising advertising content such as "Get three months now for $ 0.99” or “Get in, Get Premium.” However, Apple Music was allowed to use similar advertising content. The European Commission began a formal inquiry into Apple in April 2021. The European Commission has issued a Statement of Objections to Apple, stating that it believes Apple has abused its dominating position.

In a similar case, Google was penalised €2.42 billion by the European Commission in 2017 for abusing its dominant position by offering its products and services an “unfair competitive advantage”, claiming that Google gave “prominent placement in its search results only to its products and services, while demoting rival services.” According to the Commission, Google suppressed merit-based competition in comparison shopping marketplaces contravening European Union competition regulations. While marketplace domination is not unlawful in and of itself, “dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets,” according to the Commission. According to the ruling, Google must “adhere to the simple concept of treating rival shopping sites and its service equally.”

Effects of M&A on Big Digital Companies

A merger is a procedure of uniting two or more businesses to unify the distinct businesses’ assets and liabilities and structure them into a unified body. In most cases, the merging entities will cease to exist and combine into a single surviving body. In contrast, acquisition refers to purchasing all or maximum of assets of a business to take ownership of that business.

We observed 175 acquisitions between 2015 and 2017. Microsoft and Google were the most active in several acquisitions, with 52 and 40 instances, respectively, Facebook being the least engaged with 20 acquisitions and Google completing 187 acquisitions in total through 2021 (Gautier and Lamesch 2020).

About 15 years ago, Google, a subsidiary of Alphabet Inc., paid $1.65 billion for YouTube. In 2005, the Internet desperately needed a video hub, and Google launched Google Videos to fill the need. The site, however, garnered less popularity than YouTube, which had more social features. At the time of its purchase, YouTube was one of the world's fastest-growing websites. Google's stock hit very high shortly after the acquisition of YouTube in 2006, and it has been a component of Google's great success ever since. Google began selling display and video advertising alongside YouTube videos, resulting in higher income for the company.

In 2016, Microsoft formally acquired LinkedIn in an all-cash transaction valued at $26.2 billion. The acquisition of LinkedIn by Microsoft was intended to expand its business and combine it with Microsoft’s commercial technologies, such as Office 365. Microsoft supported the world’s largest and most popular social network by leveraging LinkedIn’s vast user base and its sales and distribution capabilities.

In the digital space, mergers and acquisitions (hereinafter to be referred as "M&A") need antitrust authorities reviewing agreements based on a full grasp of the marketplace. Disruptive inventions that disrupt established marketplaces must be thoroughly assessed, emphasising their pro-competitive implications and consumer advantages. If the primary purpose of an acquisition or merger is to acquire new data, which would increase post-merger data concentration, market foreclosure and the erection of entry barriers might occur, both of which would be illegal under competition law. To avoid stifling M&A activity, the regulator should assess the merger in terms of customer choice, innovation, and improving the quality of products and services while maintaining a careful balance (Uberoi 2018).

Rather than dealing with anti-competitive implications ex-post, competition authorities should aim to identify and mitigate any competitive limitations of mergers and acquisitions. It might be problematic when one company has monopolised the market.

Data Collection and Privacy in Mergers and Acquisitions

The massive amount of data generated every day due to the proliferation of services, products, and filters throughout the economy is a significant development. According to IBM, 90% of the world’s data has been created at 2.5 quintillion bytes each day in the last two years (Loechner 2016).

Data is a valuable resource for businesses. When large data sets are integrated and mined, new information emerges that could aid competitors or sellers in gaining a better understanding of and competitive advantage in the market.

In the digital shift, privacy has become a flashpoint. Personal data is being collected at an increasing rate without people’s explicit consent or for purposes not anticipated at the time of acquisition. Business enterprises now have unrestricted access to vast amounts of personal data and information. When companies collected data for business objectives a few years ago, consumers had considerable control over their supplied information. Today, things are different. Privacy has become a massive issue as a result of the digital revolution. People’s data is being collected at an alarming rate and used in ways that they did not intend when it was collected. Corporate entities now have access to vast volumes of personal information. Businesses formerly had limited access to information about customer behaviour since they depended solely on personal interaction. Still, today, big tech has access to an infinite amount of data about consumer behaviour that may be gathered by running data mining techniques on various data sets.

If mergers and acquisitions occur, competition authorities play a critical role in preventing market domination through mergers and acquisitions, particularly when privacy protection becomes an essential product feature.

The aspects that impact customers’ decisions in marketplaces, such as price, quality, and innovation, are the subject of competition law. In most cases, companies compete to acquire personal data, but only in a few instances do they set a price for that data. The data protection circumstances that clients are given may show quality, inventiveness, and variety.

Facebook announced the $19 billion purchase of WhatsApp in 2014. In considerable outcry over the deal’s privacy consequences, Facebook and WhatsApp promised nothing would change (Olson 2014). Competitive pressures and concerns about customer privacy were driving the acquisition.

The US Federal Trade Commission (FTC) received a complaint from the electronic privacy information centre opposing the merger, urging the FTC to block the transaction as long as WhatsApp misuses user data.

The FTC had addressed Facebook and WhatsApp in a letter alerting them of the importance of keeping the privacy promises they had made to WhatsApp users. According to the letter, if WhatsApp does not acquire users’ permission before amending its privacy policy, it may breach the FTC’s 2012 Consent Order, which is an unfair and deceptive practice.[9]

Facebook allegedly made commitments it did not uphold in the following situations, according to the FTC complaint:

  1. In December 2009, Facebook modified its website to allow users to make private information, such as their Friends List, public. They failed to notify customers of the impending change or get their prior permission.
  2. According to Facebook, users who install third-party apps will only have access to the information they require to function. However, the programmes had access to almost all of their users’ data, which they did not need.
  3. Facebook users were informed that they may limit data sharing to certain audiences, such as “Friends Only.” In fact, selecting “Friends Only” did not deter their information from being accessed with third-party programmes used by their friends.
  4. “Verified Apps” was a Facebook programme that provided security certification for participating apps. It turned out to be a bad idea.
  5. Facebook informed users that it would not utilise their personal information for advertising purposes. But it happened.
  6. According to Facebook, if individuals cancelled or deactivated their Facebook accounts, their photographs and videos would stay inaccessible. But even if users remove or deactivate their accounts, Facebook allows accessing their information.
  7. Facebook claimed to have observed the Safe Harbor Framework, which governs data transfers between the US and the EU. However, it did not work out.

Furthermore, in 2021, WhatsApp’s privacy policy change has also been an essential topic of discussion. WhatsApp, however, began exchanging user information and metadata with Facebook after a significant change to its privacy policy which was released in August 2016. Facebook purchased WhatsApp to prevent competition and improve its marketing system. Facebook does not make money directly via WhatsApp; instead, it ingeniously scans your communications and displays adverts relevant to your interests on your Facebook home page.

In the case of Shri Vinod Kumar Gupta v. Whatsapp Inc.,[10] CCI stated that it would not dive into privacy concerns because different regulations dealing with information technology cover it. In its recent market assessment of the telecom industry, CCI demonstrated a significant shift in thinking by noting that privacy may shape non-price competition. CCI gave a suo moto investigation order against Whatsapp. It states that unfair data collection and sharing could provide a market edge to dominant players, ultimately resulting in abuse of dominance.

Conclusion & Recommendations

Given all the characteristics of the online marketplaces and their implications for the competition regime, it is plausible to infer that the existing scope of competition legislation is insufficient to address the dynamic obstacles that have emerged due to digitalisation. Dr Sangeeta Verma, a member of CCI, spoke at the Sixth Edition of the National Conference on Economics of Competition Law about the need for new competition instruments, ex-ante regulation to complement ex-post antitrust, and the necessity for regulatory designs to address issues in the virtual environment.[11]

The CCI should examine zero-price platforms’ control over customer data on a case-by-case basis. When dealing with zero-price platforms, the CCI should consider the loss of data control as a distinct criterion. Users perceive that they cannot manage without digital space and that their options are limited; therefore, they accept the terms and conditions.

Competition law authorities must revise abuse of dominance evaluations and merger and acquisition controls and remedies to accommodate the distinct characteristics of digital spaces. In the 1990s, several developing nations began to enact competition laws with public interest provisions so that they might consider other development goals while implementing competition laws and, in particular, when examining mergers. To address the challenges brought by the digital economy, similar restrictions in competition laws may be necessary now. For example, the updated competition legislation in Germany incorporates some components of the digital marketplaces, such as platforms and free services, and new merger thresholds to catch mergers between internet enterprises. At the same time, a study by the House of Lords in the United Kingdom advises introducing a public interest test for data-driven acquisitions and mergers.

To tackle the problems provided by the digital economy and deal with the negative implications that digital platforms might have, competition authorities at the bilateral, regional, and international levels must collaborate and cooperate.

Megha Rani Ahuja is an Advocate at, the High Court of Delhi Ganesh Kumar is an Assistant Professor, at Symbiosis Law School Hyderabad.
6 January 2023