The Bundle of All Fears: India’s Risky War on Integration
Good intentions make for lousy competition law when they are stapled to bad economics. That is the trouble with the new fashion in digital regulation: It treats integration as suspicion, product design as coercion, and innovation as something firms may pursue only after regulators decide it is sufficiently tidy.
The European Union’s Digital Markets Act (DMA) is the clearest recent example. The DMA did not emerge because economists suddenly discovered universal truths about digital markets. It reflects a specific regulatory judgment: that the costs of underenforcement in digital markets outweigh the risks of overenforcement, and that values like fairness and contestability can justify departing from effects-based analysis. Whether those tradeoffs make equal sense for countries like India is a very different question.
India’s Draft Digital Competition Law, still in gestation, appears poised to follow the same path. Both regimes treat tying and bundling by dominant digital platforms as presumptively illegal. Both impose categorical ex ante prohibitions on practices economists have long recognized as frequently efficiency-enhancing.
In doing so, both misunderstand not only the economics of digital markets, but also the basic reality of how digital products are built. The laws’ treatment of tying and bundling make that failure especially vivid. They also make it especially consequential for a country like India, whose economy increasingly depends on technological innovation and is now being reshaped by artificial intelligence (AI).