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    CCI chairperson on AI, algorithms and other competition challenges in the digital markets

    At the 15th annual day celebration of the Competition Commission of India (CCI), Chairperson Ravneet Kaur, spoke about the various challenges digital markets posed to the competition landscape in India.

    She called for developing, new analytical tools and regulatory frameworks and encouraged regulatory agility to address these unique challenges. Some of the challenges Kaur mentioned were:

    The effect of AI on competition

    While Kaur acknowledged that innovation and progress in Artificial Intelligence could have “pro-competitive potential” on digital markets, she warned that various competition concerns could arise from the use of AI. Thus, she stated that the CCI would partake in a “knowledge-building exercise to develop an in-depth understanding of the emerging competitive landscape, the development of ecosystems, and implications of AI applications for competition, efficiency, and innovation in key user industries.”

    Network effects

    Kaur also brought to attention the fact that certain digital platforms benefit from ‘network effects’ wherein the value of the service increases as more users join. This, she said, could increase “market concentration” which in turn can lead to a  “winner takes all scenario” where one or few companies can dominate the market.

    Effect of Algorithms on Competition

    Further, she spoke about the challenges posed to competition by algorithms on these platforms. She said that “opacity of algorithms” does not allow competition regulators to assess anti-competitive behaviour. “Issues like algorithmic collusion, where algorithms might implicitly coordinate prices or market strategies without explicit human direction pose novel challenges for us”, she said

    Data as a resource

    She stated that access to large amounts of data can create “competitive advantages” for larger platforms. This disproportionate access to data by certain companies can cause “data dominance”, which in turn can make it difficult for smaller digital enterprises to compete with them and create “insurmountable barriers to entry.”

    At MediaNama’s discussion on Decoding the Digital Competition Bill, few speakers disagreed with the assertion that access to large amounts of data by bigger players automatically tips the competition in their favor. Meghna Bal, Director of Esya Center pointed out during the discussion, “The advantage of data is that data can give you correlation, can’t give you causation. So, it’s not a guarantee that, “Oh, I see this is selling well, maybe I’ll come out with my own thing that it’s going to be a success.”  As an example,  Bal cited, the fact, that Zoom continues to perform well in the market despite the dominance of players like Google-owned Meet and Microsoft-owned Teams.

    Further, Deeksha Manchanda from Chandhiok and Mahajan, stated that data made available by larger digital platforms added to price transparency for customers, wherein customers can compare the prices of products, both physical and digital, before buying.

    Platform Neutrality

    In her speech, Kaur also spoke about how certain digital platforms provide access to a wide range of services and often favor their own services or products. She spoke about how this self-preferencing raises issues of platform neutrality, especially when the platforms also compete with the businesses that rely on their infrastructure.

    At Medianama’s discussion, Bal had argued that physical stores also put their affiliates’ products at eye level, similar to self-preferencing on digital markets. In fact, products are clearly labelled as sponsored on digital platforms, she explained.

    Additionally,  Vishwanath Pingali, Associate Professor of Economics, IIM-A said that these self-preferencing practices are vital to maintaining consumer trust. He said, “If I were to see something on a Play Store and I would say that this is certified by XYZ, there’s a bit of a comfort that I would get.” He also pondered if steering towards one’s own services was an abuse of the dominant position by a larger platform or an understanding that businesses “transact in trust.”

    Kaur also stated that she hoped, that, all stakeholders had actively participated in providing their comments on the Draft Digital Competition Bill.

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    The post CCI chairperson on AI, algorithms and other competition challenges in the digital markets appeared first on MEDIANAMA.

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