[Draft] iamai submission to Committee on Digital Competition Law

Flawed premise for regulation: These recommendations are premised on the assumption that mere possession of data creates exclusionary effects. The more data an enterprise has, the more the extent of exclusion. In drawing a direct correlation between the number of datasets in possession of an entity and a perceived negative effect on competition, the Report ignores the fundamental nature of data and its use. Data collected by entities may not be unique, non-replicable, rivalrous and excludable. Data may not always contain actionable information and its usefulness may be for a limited time. New entrants may not need the exact same datasets that incumbents have, to create competing products. Importantly, the ability to combine and cross-use data from across applications has critical benefits to users and advertisers. Advertisers including small and medium businesses (including other digital startups) which have finite funding and need to spend carefully, are able to advertise more effectively with much lower spends. Users also benefit from more relevant content and from the constant innovation and improvement to products that is enabled by revenues generated from advertising.

(iii) Restrictions imposed on advertising services

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  Flawed premise for regulation: The Report states that advertising business of the Big Tech companies is “a monopolistic threat” but does not provide any data in terms of either advertising revenue or market share to support this sweeping factual assertion.
  

Similarly, the Report prohibits targeted advertising. Notably, the DPDP Bill does not prohibit targeted advertising (except for children). The Report overrides the DPDP Bill by recommending that SIDIs must not process personal data of end users for online targeted advertising. The brief reasoning provided in the Report is that SIDIs “own” the systems that connect buyers and sellers in the advertising space which gives them an “unfair edge”. The Report does not clarify what “unfair edge” is. Every intermediary or platform that connects users on different sides will own, fully or partly, the infrastructure or tools that facilitate the connection. This cannot be the basis of regulating specific entities in the absence of any specific conduct that distorts competition. A regulatory framework that penalises specific business models without assessing whether the business models are likely to harm competition, will lead to unintended consequences that can harm consumers and innovation. Also as mentioned above, advertisers specially small and medium businesses (including other digital startups) which have finite funding and need to spend carefully, are able to advertise more effectively and get recognition and are able to compete with much larger global companies with lower and efficient spends.

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