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E-economy challenging for participants, regulators: CCI

Feb '20
Pic: Shutterstock
Pic: Shutterstock
Creation of large online platforms by integrating online markets and their data collection advantage are among the challenges posed by digital economy to market participants as well as regulators, according to Competition Commission of India (CCI) chief Ashok Kumar Gupta, who recently said the challenge is to put in place a legal and regulatory framework with appropriate safeguards.

Speaking at an event organised by not-for-profit group CUTS International and CUTS Institute for Regulation and Competition, Gupta said there is an emergence of digital economy characterised by disruptive innovation.

CCI has sent three cases related to digital economy for detailed investigations in the last one year, he said. In cases involving dynamic competition, Gupta said the regulator thrives to strike a balance between short term static efficiencies and long term gains that arise from innovation, according to a news agency report.

Users are not paying money to these platforms, instead paying an ‘implicit price’ in the form of personal data, he noted.

A platform with a large base of users is able to attract more users and it is known as ‘user feedback loop’. On the other hand, it is able to explore user data to improve advertisement targeting, obtaining additional funds, investing in quality of service and is also able to attract more users. This is termed as ‘monetisation feedback loop’, Gupta said.

These make it difficult for a new entrant to compete against an incumbent with a large base of customers, he said.

"India's digital economy generates about $200 billion annually from existing digital ecosystems and will increase five-fold to $1 trillion by 2025. E-commerce in India is expected to reach $200 billion by 2026 from $28.5 billion in 2017," Gupta added.

Fibre2Fashion News Desk (DS)

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February 2020

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