India is currently examining whether it needs a separate law on competition in digital markets. While nothing has been decided yet, there has been ample discussion on what this act could possibly entail. One such topic of discussion focuses on ensuring non-discrimination.
“What do you mean when [you say] a particular enterprise has a certain level you need to be fair, reasonable and non-discriminatory? Now that is as broad as it can be, what is fair? What is reasonable, and what is non-discriminatory?” said Abir Roy, the co-founder of Sarvada Legal and a competition law expert when discussing platform transparency during the “Regulating Marketplaces: E-commerce and App Stores” panel at MediaNama’s MarketsNama conference last Friday. Roy believes that this demand for fairness and non-discrimination boils down to transparency.
What does it take to make a digital market transparent?
To become transparent towards sellers, digital markets need to tackle issues of search neutrality (a principle that search engines should have no editorial policies other than that their results are impartial and relevant) and self-preferencing (favoring the sale of your own products as opposed to competitors who might be using your e-commerce platform). But whether these issues can be tackled is a question in itself. “I think search neutrality is a misnomer, right? No search is neutral and then you can just go to the internet and just waffle around. It’s meant to get you to a certain outcome,” said panelist Rajnish Wahi, Senior Vice President at Snapdeal. He believes that there is nothing wrong with having a commercial motive for how search works.
He mentioned that the way to make platforms transparent is to make search useful by adding in search criteria (such as price, location and reviews) so that the user easily finds products that are relevant to their needs. Fellow panelist Gowree Gokhale, a legal associate at Nishith Desai Associates agreed with Wahi saying that as long as the user has a choice between going with a platform-recommended product and finding one by themselves, transparency can be maintained.
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How transparency expectations differ in digital markets vs physical markets
While self-preferencing is an important issue in digital markets, it isn’t limited to the virtual world. “You go to any supermarket; you’ll find private label products. How is that any different from e-commerce? Is [this] another difficult angle to approach this problem from? Is that not a platform? Is platform neutrality not required there?” said panelist Shruti Aji Murali, legal counsel at Axiom5 Law Chambers.
Gowree agreed saying, “I think what has happened over a period of time when it happens on digital, suddenly everything is bad. So, in a physical marketplace or a physical store, have you ever asked a shopkeeper, now you put a transparency, how much you are getting for this shelf space? Why are you keeping this here in front of me? Give me how much your margin you’re getting here and there. Have you ever, ever asked that question? The answer is no.”
Ensuring algorithmic accountability
Another way to ensure that platforms are transparent is by algorithmic accountability. This simply means that those designing flawed algorithms should be held responsible for it. “I think the question is worth asking, you know, is an algorithm fair? Is the way it ranks certain products or certain apps or certain restaurants? Is it focused on giving the consumer what they want?” Aji Murali mentioned.
But algorithmic accountability is a complicated process and can require reverse engineering of complicated algorithmic systems to understand their impact. This leaves room for the breach of a company’s intellectual property rights. Gowree, however, disagrees with IP concerns saying that no one is expecting companies to reveal their code in the name of algorithmic accountability. “What is being disclosed are what are the principles or you know on the basis of which you are putting this? Are you putting self-reference referencing? Are you saying location-wise? So, on what basis are your search results delivered if at all they are, you know, I’m not using any filters,” she says.
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Also read:
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- Is Ex-Ante Regulation Of Digital Markets A Bad Idea For India? #NAMA
- Here’s Why India Is Forming A Committee To Explore Separate Competition Law For Digital Markets
