Indian Start-Up Challenges Google Amid Antitrust Concerns

Concerns regarding antitrust regulations have resurfaced in India as a prominent gaming start-up has filed a complaint against Google with the Competition Commission of India (CCI). The complaint highlights allegations of monopolistic practices that hinder the growth and competitiveness of domestic businesses in the digital economy.

The roots of antitrust regulation can be traced back to the Sherman Act, championed by Senator John Sherman in 1890. He argued against allowing a single entity to dominate essential markets. The law established a framework for preserving competition in the United States and has inspired similar legislation worldwide, including in India. As technology continues to redefine markets, its influence on the production, transportation, and sale of goods has ushered in what is now known as the global digital economy.

India’s digital economy is thriving, contributing 11.74% to its GDP in the fiscal year 2022-23. This growth has been largely driven by the surge in technology start-ups, which increased from approximately 2,000 in 2014 to over 31,000 in 2023. The Indian government aims to leverage this momentum to achieve a $35 trillion economy by 2047. However, the dominance of foreign tech giants raises concerns reminiscent of Sherman’s original warnings.

In this context, the complaint from the gaming start-up underscores the challenges posed by monopolistic practices in the digital space. Google, which commands a staggering 95% share of the mobile operating system market in India, plays a pivotal role in the distribution and discovery of digital services, often to the detriment of local enterprises.

Discriminatory practices by such gatekeepers can severely limit the ability of Indian start-ups to compete. For instance, Google’s high transaction commissions on its payments ecosystem have negatively impacted the revenues of those reliant on its services. In response to these mounting concerns, Indian regulators have taken steps to address potential antitrust violations, including prohibiting Google from restricting app developers’ use of third-party payment systems.

The recent complaint by the gaming start-up accuses Google of abusing its dominant position through its Real Money Gaming (RMG) Pilot Program, which selectively allows certain types of gaming formats on the Play Store. Since its launch in September 2022, this program has granted preferential treatment to specific games like Daily Fantasy Sports (DFS) and rummy, while denying access to other gaming formats.

Notably, a DFS operator that dominated the market saw an astonishing increase of 55 million users within a year of joining the Pilot, illustrating the uneven playing field created by Google’s selective policies. The start-up’s complaint also indicates that advertising limitations imposed by Google have severely restricted its ability to promote its offerings effectively.

The implications of such market distortions are profound. They compromise India’s ambitions for a vibrant digital economy and ultimately disadvantage consumers by reducing competition and choice. The situation reflects broader trends observed in markets where antitrust issues remain unaddressed, as seen in the United States. Scholars have noted that increased monopolization there has raised the cost of doing business, resulting in fewer Initial Public Offerings.

As India aspires to enhance its position in the global digital landscape, fostering a competitive environment is crucial. The CCI’s investigation into these allegations represents a critical step toward ensuring fair practices and safeguarding the interests of home-grown start-ups.

Ultimately, the ongoing case serves as a reminder of the need for equitable opportunities in the digital economy. The legacy of John Sherman continues to resonate, urging regulators to act decisively against monopolistic behaviours that threaten innovation and growth in India. With the right measures in place, the country can cultivate a thriving ecosystem that benefits both consumers and entrepreneurs alike.