Can CCI implement ‘hipster antitrust’ ideology without a change in laws?

In 2018, the lawyer Lina Khan — not even 30 years old at the time — spoke about a new movement in antitrust and competition law that she was key in spearheading: hipster antitrust. The movement was born out of greater scrutiny of the gatekeeping powers that big tech companies like Google and Amazon increasingly had, and a desire to hold them accountable for abusing their dominance.

In a matter of a few years, the movement has gained mainstream appeal not just in the US — where Khan now chairs the Federal Trade Commission — but also, surprisingly, in India. Over the last week, the Competition Commission of India fined MakeMyTrip, Oyo and Google hundreds of millions of dollars for abusing their gatekeeping powers.

On top of that, the orders contain very specific demands on how MakeMyTrip, Oyo and Google should run their digital businesses. This is especially visible in a few of the demands CCI has made of Google: allowing alternate payments for in-app purchases on apps distributed on Google Play, not requiring phone makers to install Gmail and other Google apps when licensing the Play Store to Android phones, and not dangling financial incentives to have Google search be the default on phones.

Google and Apple have spent a significant amount of resources to fight similar demands from antitrust regulators in other jurisdictions, like in the European Union. And those regulators have arguably been slower and more careful, such as by waiting for legislation like the Digital Markets Act to come into effect before imposing staggering antitrust orders.

The CCI, though, has reached the cutting edge of antitrust discourse in its orders much faster than its counterparts in other parts of the world. The only problem, however, is that it may not be able to enforce these orders, let alone collect on the fines it has imposed. The last time the Competition Act was amended was in 2007, fifteen years ago. At that time, smartphones were just starting to become available in the world, and Flipkart had not yet been founded (the amendment was passed in September, and Flipkart was founded in October).

As Business Standard pointed out on Monday, most of the CCI’s orders in 2018–19 were pending adjudication at the National Company Law Appellate Tribunal and at various High Courts in India at the time its latest annual report was released, and the CCI had received less than Rs 200 crore of fines it had imposed between 2017 and 2022. Over 35% of the CCI’s posts were vacant in March of this year, the publication reported.

Entrackr has reached out to the CCI for comment.

MakeMyTrip, Oyo and Google have all indicated that they will appeal these orders. One possible ground is the Supreme Court’s relevant turnover principle; in 2017, the commission was ordered to limit penalties for large conglomerates strictly to revenue that was earned through anticompetitive means, as opposed to overall corporate income.

In its order against Google forcing its own payment method for in-app purchases, the CCI dismissed this principle, arguing that “the entire platform has to be taken as one unit to account for the cross-market externalities between platform sides, and revenue generated therefrom has to be seen as a whole.” In other words, since Google is leveraging other parts of its business to dominate its hold over payment methods for in-app purchases, CCI is fining the entire business. It’s not clear if Google even makes over Rs 1,000 crore from in-app purchases in India.

Beyond this, though, a fundamental change — unbacked by any legislative amendment — is that the CCI has changed how it interprets the term “relevant market,” a key stepping stone to determine if a company is abusing its dominance. In 2020, for instance, hearing a complaint against Amazon, the commission dismissed the matter. It ruled that the relevant market in that case was the “market for services provided by online platforms for selling fashion merchandise in India.” There were other players in this market, CCI reasoned.

Over time, though, those relevant market definitions got narrow enough to pinch Big Tech firms. In Tuesday’s order against Google, for instance, the CCI determined that the relevant markets were those “for licensable OS [operating systems] for smart mobile devices in India,” “for app stores for Android OS in India,” and “for apps facilitating payment through UPI in India.”

Unnati Agrawal, a competition law partner at IndusLaw, wrote in May that the CCI earlier saw online and offline commerce as different distribution channels of the same market, but has now reinterpreted the concept to arrive at narrower markets, presumably in an attempt to better regulate antitrust in digital commerce.

“Surprisingly, within a year, the CCI shifted from its earlier stand and recalibrated market delineations, without any notable developments in the market dynamics,” Agrawal wrote. Conflicting interpretations in different judgment could represent “uncertainty as to the law of the land” is, she indicated. 

“In fast-moving digital markets, protracted litigation and delayed interventions could prove to be expensive or even futile,” CCI chairman Ashok Kumar Gupta said in an interview published on Tuesday. Gupta argued that existing legal provisions for competition were sufficient to take action against digital giants, a reflection of the evolving interpretation the CCI has started relying on.

“Given that CCI is still a young regulator, its market definitional practice is still developing,” Divyanshu Dembi, a Savitri Jindal scholar at the Jindal Global Law School wrote in the institute’s Digest for Competition and Innovation Laws. “The CCI is still prone to non-homogeneity and possible misapplication of robust competition law principles when it comes to defining [the] relevant market in multi sided markets.”

Moving fast and breaking things has helped Big Tech giants establish formidable dominance online, but it’s unclear if the same approach by an antitrust watchdog can effectively put an end to that domination.

Update (12:20 pm): Added quotation marks around ‘hipster antitrust’ in the headline for clarity.