Majority of stakeholders oppose bringing cloud services under Digital Competition Bill: Study

A majority of stakeholders are opposed to bringing cloud services under the proposed Digital Competition Bill, citing regulatory uncertainty, higher compliance costs, and potential risks to innovation and investment by startups, according to a report released on Wednesday.

CUTS International (Consumer Unity & Trust Society) released two reports examining the competitive dynamics of India's cloud services market and assessing whether existing legal and regulatory frameworks are sufficient to address emerging concerns.

Together, the reports caution that premature regulatory intervention could have unintended consequences for innovation, investment and customer choice in India's rapidly evolving cloud ecosystem.


Cloud services are IT tools and computing resources delivered over the internet by third-party providers. These primarily include Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS), allowing individuals and companies use storage, servers, and software on demand without the need to buy physical hardware.

The first report finds that existing provisions under the Competition Act, 2002 are capable of addressing almost all the reported competition concerns in the cloud services market, including practices such as cloud credits and discounts, tying and bundling, self-preferencing, data leveraging etc. under provisions of anti-competitive agreements and abuse of dominance on a case-by-case basis.

In other words, there are solutions available sans ex-ante regulation, it argues.

The second report, based on stakeholder consultations and netnographic analysis, assesses views on cloud services under the proposed Digital Competition Bill.

According to CUTS International, about 60 per cent of the stakeholders expressed negative feedback, mainly due to concerns about regulatory uncertainty, high compliance costs, and possible chilling effects on innovation and investment, especially for startups with thin margins.

Around 30 per cent of the feedback is positive, reflecting support for a more level playing field, curbs on self-preferencing by dominant players, and stronger consumer trust through fairer market conditions, CUTS stated.

The remaining 10 per cent is neutral and captures balanced views on international regulatory parallels and mixed expectations about the DCB's long-term impact.

The proposed Digital Competition Bill, which seeks to impose obligations on big tech firms with a global turnover exceeding USD 30 billion, was introduced in February this year by the Ministry of Corporate Affairs.

It seeks to put in place several obligations for large digital enterprises, including news aggregators, in efforts to ensure a level playing field and fair competition in the digital space.

It has since received mixed reactions from industry stakeholders, with strong opposition from big tech firms amid divided startups, but largely support for the draft and advocacy for its enactment.

Currently, the Competition Act primarily envisages an ex-post framework of intervention, wherein the CCI intervenes after the occurrence of anti-competitive conduct.