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India's drafting new competition law to target big digital

firms

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Top U.S lobby group urges India to rethink, fears business

hit

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Many Indian startups say law will create level playing

field

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Proposal comes as Amazon ( AMZN ), Google, Apple ( AAPL ) face India probes

By Aditya Kalra and Arpan Chaturvedi

NEW DELHI, May 28 (Reuters) - A U.S. lobby group

representing tech giants Google, Amazon ( AMZN ) and Apple ( AAPL ) has asked

India to rethink its proposed EU-like competition law, arguing

regulations against data use and preferential treatment of

partners could raise user costs, a letter shows.

Citing increasing market power of a few big digital

companies in India, a government panel in February proposed

imposing obligations on them under a new antitrust law which

will complement existing regulations whose enforcement the panel

said is "time-consuming".

India's "Digital Competition Bill" is on the lines of EU's

landmark Digital Markets Act 2022. It will apply to big firms,

including those with a global turnover of over $30 billion and

whose digital services have at least 10 million users locally,

bringing some of the world's biggest tech firms under its ambit.

It proposes to prohibit companies from exploiting non-public

data of its users and promoting their own services over rivals,

and also abolish restrictions on downloading of third-party

apps.

Companies deploy these strategies to launch new product

features and boost security for users, and curbing them will hit

their plans, the U.S.-India Business Council (USIBC), part of

the U.S. Chamber of Commerce, said in a May 15 letter to India's

Corporate Affairs Ministry, which is working on the law.

The draft Indian law is "much further in scope" than the

EU's, says the letter, which has not been made public but was

seen by Reuters.

"Targeted companies are likely to reduce investment in

India, pass on increased prices for digital services, and reduce

the range of services," it says.

The USIBC, which has asked India to reconsider the planned

law, did not respond to Reuters queries, and neither did the

Corporate Affairs Ministry, Apple ( AAPL ), Amazon ( AMZN ) or

Google.

With a population of 1.4 billion people and a growing

affluent class, India is a lucrative market for big tech

companies. Apple ( AAPL ) CEO Tim Cook said this month the company posted

a "revenue record" in India during the March quarter, when its

overall global revenue declined 4%.

The Indian panel says the new law is needed as a few

large digital enterprises "wield immense control over the

market". As in the EU, it is recommending a penalty of up to 10%

of a company's annual global turnover for violations.

The Competition Commission of India (CCI) has for years been

investigating big tech firms.

The CCI in 2022 fined Google $161 million, ordering it to

stop restricting users from removing its pre-installed apps and

allow downloads without using its app store. Google denies

wrongdoing and says such restrictions boost user security.

Amazon ( AMZN ) is also facing an antitrust investigation for

favouring select sellers on its India website, an allegation it

denies. Apple ( AAPL ), too, denies allegations but faces an

investigation for alleged abuse of its dominant position in the

apps market.

A group of 40 Indian startups, though, has come out in

support of the new Indian law, saying it can help address

monopolistic practices of dominant digital platforms and create

a level playing field for smaller companies.

There is no fixed timeline, but the Indian government

will next review feedback on the proposal before seeking

parliament approval with or without changes.