Any contravention of the law will attract a maximum penalty of 10% of the global turnover of the systemically significant digital enterprise (SSDE). Besides, separate penalties have been proposed for contraventions resulting from incorrect reporting and vicarious liability of key management persons.While identifying SSDEs, the panel has recommended that a mix of significant financial strength test (based on Indian and global market turnover, gross merchandise value) and significant spread test be taken. Entities with one crore end-users or at least 10,000 business users will be part of the significant spread test parameters.On the turnover in India, a threshold of Rs 4,000 crore has been suggested. But factoring in difficulty faced by CCI in obtaining India-centric data, global turnover of $30 billion has been proposed as the trigger in the law, while $75 billion is the suggested base market cap level. For entities that do not meet the quantitative criteria, a set of qualitative thresholds have also been recommended. While proposing a self-reporting mechanism, an entity will be designated SSDE for three years.The committee has also recommended a set of associate digital enterprises in case of entities providing core digital services as part of a group. So, the holding company can be designated SSDE, and other entities that are directly or indirectly providing core digital services can be classified as associate digital entities.”This will have a major impact on the big tech enterprises like Google, Apple, Amazon etc., as they will now also be subject to a separate regulatory regime. Such ex ante regulation could potentially stifle innovation by imposing burdensome regulations on tech companies. This could lead to unintended consequences, such as reduced consumer choice and higher prices,” said Vaibhav Choukse, a partner at JSA Advocates & Solicitors.
