Regulating OTT Platforms: Rethinking Competition Law in India

Introduction

India’s entertainment industry has witnessed a significant increase in the use of OTT platforms, transforming the sector into a rapidly evolving and highly sought after industry. OTT platforms like Amazon Prime Video, Disney+ Hotstar, SonyLIV and JioCinema among others, have emerged as major players in the relevant market for OTT services within the meaning of Section 2(r) of the Competition Act, 2002. While the industry is booming, it has also intensified competition and raised significant regulatory compliance concerns. Cross market integration has created a complex web of vertical relationships enabling firms to bundle services, acquire exclusive content and simultaneously leverage user data and their respective network effects. Although such conduct falls within the theoretical ambit of the Competition Act, 2002, effective enforcement remains challenging in light of the data-driven and algorithmic nature of these markets. This article explores practices like self-preferencing and content foreclosure as emerging forms of anti-competitive conduct arising from technological growth in OTT platforms and analyses how these practices can be addressed in the future legislation governing digital markets.

Competition Concerns and Analysis of OTT platforms  

OTT platforms operate through a unique and complex model that shapes their platform power driven by control over delivery chains, telecom infrastructure, advertising and broadcasting. While both traditional and emerging forms of anti-competitive conduct are prevalent in the relevant market for OTT platforms, the latter are often more subtle, data-driven, and difficult to detect and regulate under existing competition law frameworks. The dominant practices in the OTT ecosystem include:

1.     Tying and Bundling

The traditional anti-competitive practices which are clearly outlined in the act are tying and bundling in Section 3(4)(a) and Section 4(2)(b) respectively. Tying refers to mandatory or compulsory selling one product with another while bundling refers to an option to purchase a product in a package. In the context of OTT platforms, several players in the relevant market offer streaming services only as a part of larger bundles. An example of cross market integration, particularly the e-commerce goods and products market and the market for OTT platforms can be seen from the practices of Amazon Prime Video which is an entertainment streaming service bundled with the Amazon Prime subscription. Although, tying and bundling are not inherently illegal and pose a threat only when they result in appreciable adverse effect to competition, in this case it becomes problematic since users are attracted to the e-commerce and delivery benefits and early shopping deals which may lead to consumer lock-in or exclusion of competitors. The issue of choice also arises where consumers are compelled to pay for an entire group of services even though they are only interested in one of those services. Such bundling arrangements combined with ecosystem level advantages may result in appreciable adverse effect due to the artificial barriers to entry for smaller OTT platforms.

2.     Content Foreclosure and Exclusive Deals

Content foreclosure happens when dominant OTT platforms acquire exclusive rights to popular content, thus blocking access for competitors and foreclosing competition in the market. A relevant illustration is the practice of exclusive content arrangements, such as Amazon Prime Video securing exclusive rights to certain Lionsgate Play titles and making them exclusively available on the Prime Video platforms. From a short-term cost–benefit and consumer welfare perspective, such exclusivity may appear efficient, as users are not required to subscribe to multiple platforms to access individual titles, however the broader competitive consequences are concerning. Such strategies risk diverting potential users from rival OTT platforms causing weakening consumer bases and declining revenues. This effectively causes reduction in platform diversity and less licensing opportunities, thereby contributing to market foreclosure for OTT platforms.

3.     Self-Preferencing and Platform Visibility

When platforms use their control over distribution channels to prioritize their own content, products or services either algorithmically or through user interface dominance, it is termed as self-preferencing. SonyLIV for instance has a significant presence in two relevant markets particularly television and the OTT platforms. This vertical structure helps cross-promote its own OTT content through its television channels and control advertisements and visibility which other players like MX Player or Eros Now do not enjoy. As a result, smaller platforms often become dependent on large conglomerates such as Amazon Prime Video for visibility and distribution, in the hope that such exposure will translate into increased subscriptions to their own services. This makes it difficult for competitors in the relevant market to compete  due to the exorbitant amounts of consumer acquisition cost and competition.

4.     Forced Monetization and Lack of Consent

Consumer welfare and user experience are adversely affected when users are required to pay higher prices to access the same services. Unilateral changes to pricing terms and their corresponding service models affect consumers at large. A typical example of this is the recent introduction of advertisements by Amazon Prime Video which came as a shock to consumers since the main motivation for users to consume content through OTT platforms is due to their ‘no advertisements’ features thereby providing uninterrupted content. The unilateral change in policy does not end there, users are expected to pay more so as to avail the no advertisements facility in Amazon Prime Video which may not immediately appear as an issue since the company is just attempting to increase their revenue, however in the long run it affects degradation of service quality post lock-in of consumers. This is a result of platforms misusing their influence by forcing users to comply with monetization strategies and could be an imposition of unfair or discriminatory conditions under Section 4(2)(a)(i) of the Act.

Way Forward

The existing Competition Act, 2002 can be purposively interpreted to address OTT related anti-competitive conduct by adopting an ecosystem-based assessment of dominance under Sections 4 and 19(4) of the Act which will account for data accumulation, network effects and cross market leveraging. Practices such as content foreclosure, self-preferencing and post lock in monetisation can be examined as exclusionary abuses even in the absence of price effects. Coordination with the new Digital Personal Data Protection framework is essential, as data driven advantage reinforces market power. Data has become key to competitive advantage in digital markets since OTT platforms depend on user data to personalize recommendations and enhance user engagement. Extensive data collection could enable a platform to steer consumer lock in and leverage across markets. Thus, effective enforcement requires parallel scrutiny of competitive harm and data concentration to prevent entrenchment of ecosystem dominance. Addressing cross subsidisation of content preferences by conglomerates would help tackle the misuse of platform advantage. For example, conglomerates like Reliance (through Jio) and Amazon (through Amazon Prime Video) may use profits from different verticals which would allow them to undercut subscription prices and drive out other smaller competitors from the market. Traditional antitrust tools do not assess this platform advantage however, these must be considered when assessing competition in multi market settings. Such conduct could be seen as predatory or exclusionary pricing strategies when assessed through revenue advantages and cross market data.

Conclusion

OTT platforms are often overlooked when it comes to concerns regarding competition law since the practices of these enterprises are currently unregulated within the Indian framework. The players in the OTT market use practices like cross market integration and forced monetization causing appreciable adverse effect on competition in the long run. These platforms are not to be viewed in isolation, rather as integral nodes in powerful ecosystems fueled by data. The evolution of harm today which is subtle, non-priced based and behavioral may cause broader economic harms like market saturation and entrenchment of entry barriers. These concerns must be considered in future legislations governing digital markets, in the context of OTT centric antitrust practices. Without such an interpretive shift, India risks entrenching irreversible ecosystem dominance in culturally and economically significant digital markets.

Authored by - Anushree Saxena

Edited by - Khushi Patel