Competition Law Faces New Challenges From AI, Digital Platforms

Chennai: India's competition law framework is increasingly being tested by the rapid rise of digital platforms and artificial intelligence (AI), as traditional tools designed for conventional markets struggle to keep pace with technology-driven business models. Large networks of users, self-referencing by algorithms, and the speed at which platforms operate are also major challenges.

Competition law has historically relied on price-based assessments to determine market harm. However, these tools are becoming less effective in digital markets, where many services are offered free of cost to consumers.

"The traditional framework focused on pricing is difficult to apply in the current free-services model of digital platforms," said Aniket Ghosh, Partner – Competition Law and Data Privacy at King Stubb & Kasiva.

The emergence of strong network effects, algorithm-driven decision-making and the speed at which digital platforms operate have created fresh regulatory challenges for competition authorities worldwide.

While acknowledging that digital markets present unique challenges, Ghosh argued that the existing competition law framework remains broad enough to address most concerns. He cautioned against creating separate competition laws for digital platforms, saying innovation-driven markets require regulatory flexibility rather than additional compliance burdens.

According to Ghosh, anti-competitive conduct in India broadly falls into three categories—cartels, abuse of dominance and vertical restraints. Cartels and bid-rigging continue to be among the most common violations, particularly in public procurement. Abuse of dominance occurs when companies use their market power to impose unfair practices, while vertical restraints involve unfair terms imposed on suppliers or distributors by companies which have some significant presence in the market. Such practices are commonly seen among digital players.

Despite the evolving market landscape, Ghosh believes the Competition Commission of India (CCI) has largely succeeded in adapting to new challenges. "The CCI has evolved into a sophisticated regulator that balances enforcement with business realities and changing market conditions," he said.

He noted that competition investigations are inherently complex and time-consuming because the regulator must assess broader market impacts, gather evidence from multiple stakeholders and undertake economic analysis in addition to legal scrutiny. The Competition Act's recent amendments introducing settlement and commitment mechanisms are expected to help speed up dispute resolution.

On concerns about increasing market concentration and the emergence of large corporations, Ghosh argued that consolidation should not automatically be viewed negatively.

"Consolidation enables scale and often helps struggling businesses survive while preserving jobs," he said. Competition law, he added, is not designed to prevent companies from becoming large but to prevent anti-competitive conduct by dominant firms.

Addressing concerns that AI algorithms and vast pools of consumer data could make regulation more difficult, Ghosh said the CCI already possesses significant investigative powers, including the authority to summon information, compel production of documents and conduct raids through its investigative arm, the Director General.

"The CCI does not lack teeth. The bigger challenge is how quickly investigations can be completed," he said.

According to him, industrial policy aimed at creating national champions and competition policy focused on consumer welfare and market efficiency should remain distinct, with competition law continuing to prioritize consumer welfare, competition and freedom of trade.