CUTS urges CCI, Govt to probe anti-competitive practices in cloud markets
The government and the Competition Commission need to take steps to curb possible anti-competitive practices in the fast-growing cloud services market, according to reports released on Wednesday.
In two reports, the Consumer Unity and Trust Society (CUTS-International) said the Competition Commission of India could look at initiating a focused investigation into software licensing practices in relation to cloud services providers.
The study reports by CUTS-International recommend that the CCI may commission a market study for cloud services in India, arguing that it will not only enhance a better understanding of the market structure and practices, but also help in identifying areas of concern that merit interventions, including competition advocacy.
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 CUTS study strongly recommends that the Government of India or the CCI pro-actively engage with the industry to encourage them to extend the voluntary commitments they made to the UK Competition and Markets Authority, such as waiving egress fees and improving inter-operability, to the Indian market,” it stated.
This approach would build on existing commercial momentum to deliver immediate, low-friction benefits to Indian enterprises without resorting to an ex-ante framework or direct competition enforcement, the reports argued.
They concluded that most of the reported competition concerns in the cloud services market can be dealt with under the Competition Act, 2002.
The reports suggest that for easing technological barriers to competition, international cooperation may be mooted in the cloud services space.
Since cloud markets operate across borders, such cooperation can prevent regulatory fragmentation and help adopt balanced standards that include the interests of small cloud service providers, according to the reports.
Pradeep S Mehta, Secretary General, CUTS International, said, “Given that cloud services are the backbone of India’s fast-growing digital economy, any intervention in this market must be carefully designed to avoid overregulation and preserve innovation, competition, and growth”.
Ujjwal Kumar, Associate Director, CUTS International, “We need to guard against any over-regulation in the market. Our research suggests that competition concerns in cloud markets could better be addressed through evidence-led enforcement under existing competition law, including its newly added provisions on commitment and settlement, instead of prematurely bringing cloud services within the purview of a hard ex ante framework like DCB”.
The reports recommend continued market monitoring, periodic competition assessments, improved inter-operability, and enforcement against demonstrable anti-competitive conduct, while urging policy-makers to exercise regulatory restraint until robust India-specific evidence establishes the need for additional intervention.
