The Framework

India’s Draft Digital Competition Bill would introduce an ex ante approach to regulating certain “systematically significant digital enterprises” (SSDEs). Rather than relying solely on ex post investigations, the bill proposes broad, per se prohibitions on conduct such as self-preferencing, bundling, and cross-use of data. Unlike the European Union’s Digital Markets Act (DMA), which sets industry-wide rules for designated companies, India’s bill envisions a company-specific approach, granting regulators latitude to craft distinct restrictions for each SSDE. Proponents of the bill claim the measure is necessary to guard against alleged market failure in India’s “dynamic” digital sector. They argue that incumbent platforms, thanks to economies of scale and network effects, can rapidly entrench themselves. However, India’s digital markets—home to a robust startup scene spanning e-commerce, fintech, edtech, and more—already demonstrate strong competitive dynamism, calling into question whether additional regulations are warranted.[1]

Implications for U.S. Technology Companies

The bill’s expansive definition of SSDEs, which prioritizes sheer size over a clear finding of market power, means many large U.S. technology companies will likely fall squarely under its scope. These firms would face strict, per se bans on common business practices like self-preferencing—where a platform integrates its own services for user convenience—and data sharing across product lines. Such an approach runs a high risk of chilling pro-consumer innovation. For instance, bundling digital services or allowing large-scale data insights often leads to user-friendly features and lower prices. By disallowing these efficiencies, India risks discouraging inward investment and diminishing opportunities for U.S. companies to build on and contribute to India’s flourishing startup ecosystem. This approach could also create tension in U.S.-India trade relations just as the two nations deepen ties to bolster technological leadership and counter China’s global ambitions.

How China Benefits

Strict rules on U.S. big tech companies open the door for Chinese digital platforms—which often benefit from direct state support and operate outside of similarly onerous domestic regulations—to gain ground in India’s market. While India clearly intends to target large foreign firms with the Bill, Beijing will likely seize on any reduction in U.S. competitiveness to advance its own technology sector abroad. Should U.S. firms retrench due to costly compliance burdens, Chinese rivals may look to capitalize, expanding their market influence and undercutting India’s broader goal of balancing against China’s growing techno-economic clout.

Endnotes