The Takshashila Institution, organised a roundtable on ‘Governing Tech Platforms in India’, at its office, on Friday, January 24. A platform uses technology to connect two or more economic agents and facilitates exchanges that create value for both parties. Regulators are often two steps behind the rapid pace of innovation set by the market players, especially in the ‘new economy’. Regular sources of market power such as high entry barriers, predatory pricing, and mergers and acquisitions work slightly differently in platforms than typical market structures. The roundtable saw participation from policymakers, lawyers, economists with extensive experience in antitrust policy and legislation, as well as from venture capitalists and startup founders. The roundtable discussed a host of issues associated with platforms and the ‘new economy’, such as direct and indirect network effects, high switching costs, price parity clauses, vertical integration, and differentiated pricing structure between the two sides of the market.
The roundtable was divided into two parts with the first hour-long session focussed on defining the ‘relevant marketplace’. Cases of competition are taken up only after establishing dominance in the market and dominance can be established only after defining the relevant marketplace of operation. The participants discussed and tried to answer whether Uber operates in an app-based ride-hailing services marketplace or the urban transport marketplace.
The second session focussed on regulatory approaches to governing platforms. Within the context of the dominant approach to competition law being based on consumer welfare, the participants deliberated whether it made sense to consider both sides of the platform as consumers? The participants explored how data network effects leading to consumer lock-in can create significant barriers to entry. Would forced interoperability make sense, or would it end up causing harm to businesses? The panellists also talked about instances of price parity clauses being imposed in the UK and Europe and whether it would make sense to disallow it in India preemptively. These questions were followed by other important aspects such as vertical integration, predatory pricing, and new metrics to look at mergers and acquisitions.
The session ended with discussions about future steps that India should take to promote a competitive environment in India while maintaining a balanced approach that doesn’t disproportionately harm consumers, merchants, and businesses. Takshashila plans to come up with an approach that could achieve the above outcomes and maximise the potential of platforms in India as well as safeguard the interests of all the stakeholders.
The Takshashila Institution is an independent and non-partisan think tank and school of public policy. Takshashila offers 12-week certificate courses in Public Policy, Technology and Policy, and Defence and Foreign Affairs and a 48-week postgraduate programme in Public Policy.