New Delhi, Apr 3 (KNN) The Digital Competition Bill’s proposed provisions to limit data usage and prevent bundling of services by major digital platforms could adversely impact Micro, Small and Medium Enterprises (MSMEs), according to a study by the technology think tank Esya Centre.

The study recommends the Ministry of Corporate Affairs withdraw these two provisions, suggesting instead a “wait and watch” approach to learn from the European Union’s experience with its Digital Markets Act regulations.

According to the report, the bill fails to account for the “symbiotic relationship” between digital platforms and MSMEs. It warns the proposed restrictions could “jeopardise efficiency gains” as small businesses are forced to “recalibrate their online commerce and advertising” by diverting resources away from value creation.

“The MSME sector has been able to overcome challenges due to access to large digital platforms such as e-marketplaces and social media networks,” the report argues.

It cites Esya's survey showing 61 per cent of MSMEs believe limitations on targeted advertising by major platforms under the bill would negatively impact them.

The study highlights benefits MSMEs derive from bundled services letting customers use platform logins like Google or Facebook on e-commerce sites. “Limiting these services can become a make-or-break factor for many MSMEs,” it cautions.

While Section 15 aims to prohibit pushing bundled products, the report contends “bundling exploits cost and value synergies to drive down prices” and “unbundling may have the unintended effect of making these services more expensive.”

It attributes the “downplaying” of large platform complementarities to limited MSME participation in the Committee for Digital Competition Law's consultations.

The Esya Centre surveyed 300 business proprietors across India for the study.

(KNN Bureau)