E-commerce policy draft tightens rules for Amazon, Facebook, but, friendly to local startups

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Published: July 4, 2020 6:08 PM

The government has been working on the policy for at least two years amid calls to reduce the dominance of global tech giants like Amazon.com Inc., Alphabet Inc.’s Google and Facebook Inc.

The proposed rules would also mandate government access to online companies’ source codes and algorithms, which the ministry says would help ensure against “digitally induced biases” by competitors.

India’s latest e-commerce policy draft includes steps that could help local startups and impose government oversight on how companies handle data. The government has been working on the policy for at least two years amid calls to reduce the dominance of global tech giants like Amazon.com Inc., Alphabet Inc.’s Google and Facebook Inc. Under rules laid out in a 15-page draft seen by Bloomberg, the government would appoint an e-commerce regulator to ensure the industry is competitive with broad access to information resources. The policy draft was prepared by the Ministry of Commerce’s Department for Promotion of Industry & Internal Trade.

The proposed rules would also mandate government access to online companies’ source codes and algorithms, which the ministry says would help ensure against “digitally induced biases” by competitors. The draft also talks of ascertaining whether e-commerce businesses have “explainable AI,” referring to the use of artificial intelligence.

India’s roaring digital economy, with half a billion users and growing, is witnessing pitched battles in everything from online retail and content streaming to messaging and digital payments. Global corporations lead in each of these segments, while local startups have sought help from a sympathetic government that recently banned dozens of apps backed by Chinese technology giants.

The ministry will offer the draft policy for stakeholder comments on a government website.

There’s a tendency among some of the leading companies to exercise control over most of the information repository, the draft said.

“It is in the interest of the Indian consumer and the local ecosystem that there are more service providers” and that “the network effects do not lead to creation of digital monopolies misusing their dominant market position,” it said.

On the issue of where data is stored, the draft leaves open the question of which e-commerce platforms would have to keep information locally.

“Government, in consultation with relevant stakeholders, will define the categories of e-commerce that would require mirroring or localization,” the draft said.

Hosting data overseas has been a sticking point in previous drafts, which sparked criticism for being heavy-handed in helping local startups at the expense of others.

E-commerce companies will be required to make data available to the government within 72 hours, which could include information related to national security, taxation and law and order, it said.

The draft policy also said e-commerce platforms would be required to provide to consumers the details of sellers, including phone numbers, customer complaint contacts, email and addresses. For imported goods, the country of origin and value of work done in India should be clearly specified, the policy said.

Also, foreign e-commerce companies providing live streaming services that use payment tokens should be regulated to ensure that users route such transactions through formal and regulated payment channels, it said.

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