The paper examines the infrastructural roles played by privately held digital platforms, and the consequent power that such a position allows them to wield in India. Unfortunately, there have been many instances in which this power has been abused in the country. Inspired by the essential facilities doctrine and the growing trend of competition adjacent measures emerging in other jurisdictions, the paper makes a case for the regulation of digital platforms that have assumed infrastructural properties in India.
In a bid to regulate these platforms, however, the Indian state must be cognizant of preserving the benefits of scale and positive coordination effects that powerful digital platforms engender. In breaking up a platform structurally we may lose out on the network effects and the efficiencies they do generate. The paper thus calls for leaning in on earlier applications of EFD for regulating utilities in India and combining it with sector specific regulations of platforms, like in other geographies.
- Certain powerful digital platforms are starting to mimic infrastructures because of their scale, the downstream activities they enable, their indispensability and the social value they foster. Regulators around the world are looking for ways to check the growing power of these platforms.
- In regulating such platforms, however, we must be cognizant of retaining their benefits. The value of a digital platform grows with every additional user - in splitting up the facility we may decrease the value of network effects and lose out on the advantage and efficiency of scale.
- Legally there have been two suggested ways of regulating infrastructures while retaining scale. These are a) ex-post, competition law solutions, via the essential facilities doctrine- EFD and b) ex-ante, sector specific solutions.
- EFD is applied under the abuse of dominance provisions of competition law and has been read by the courts in the US and EU to prevent gatekeeper actors from: leveraging their dominance in one market onto another which they are non-dominant, obliging competitors to duplicate the gatekeeper’s facilities, and to enforce open and non-discriminatory access to the gatekeepers facilities.
- EFD could thus be useful for the regulation of digital platforms. But,, one is also limited by the law’s high thresholds of defining the relevant market and establishing dominance within the market. Unfortunately the way digital platforms function is not appropriately captured by these thresholds.
- Other jurisdictions such as EU, Germany, China and the UK have embarked on instituting competition plus ex-ante regulations. These regulations take forward the spirit of EFD, for instance the anti-leveraging requirement, without being bound by its strict thresholds. Hence, these legislations hold important lessons for how India can apply the spirit of EFD to digital platforms.
- Utilities regulations in India already encompass features of EFD. Combining these past legislative forays with the features of emerging regulations from other jurisdictions could hold important lessons for India as it seeks to manage powerful digital platforms.