CUTS International (Consumer Unity & Trust Society) has released two reports – Competition Concerns in Cloud Services Market and Application of Indian Competition Law and [Over]Regulating Cloud Services: A Case for Restraint – that examine the competitive dynamics of India’s cloud services market and assess whether existing legal and regulatory frameworks are sufficient to address emerging concerns. The report also finds only an Evidence-Based Approach to Cloud Regulation can enable Start Ups.
Together, the reports argue that while issues such as vendor lock-in, interoperability, egress fees, software licensing practices, self-preferencing and switching barriers merit continued scrutiny, they are best addressed through targeted, evidence-based enforcement under the existing Competition Act or through technological interventions, rather than broad ex-ante regulation like the proposed Digital Competition Bill (DCB). The reports caution that premature regulatory intervention could have unintended consequences for innovation, investment and customer choice in India’s rapidly evolving cloud ecosystem.
The first report finds that existing provisions under the Competition Act, 2002 are capable of addressing almost all the reported competition concerns in the cloud services market, including practices such as cloud credits and discounts, tying and bundling, self-preferencing, data leveraging etc. under provisions of anti-competitive agreements and abuse of dominance on a case-by-case basis. In other words, there are solutions available sans ex-ante regulation.
The second report, based on stakeholder consultations and netnographic sentiment analysis, assesses views on cloud services under the proposed DCB:
• Roughly 60% of the feedback is negative, mainly due to concerns about regulatory uncertainty, high compliance costs, the risk of arbitrary SSDE designations, and possible chilling effects on innovation and investment, especially for startups with thin margins.
• Around 30% of the feedback is positive, reflecting support for a more level playing field, curbs on self-preferencing by dominant players, and stronger consumer trust through fairer market conditions
• The remaining 10% is neutral and captures balanced views on international regulatory parallels and mixed expectations about the DCB’s long-term impact.
The report further notes that the Indian cloud services market does not appear to show the same strong tipping characteristics seen in some digital platform markets, especially marketplace-based sectors such as e-commerce, food delivery, and ride-sharing. This weakens a key rationale for an additional ex-ante framework, namely that ex-post competition law is too slow and reactive to prevent markets from tipping into entrenched dominance.
The CUTS study strongly recommends that the Government of India or the CCI proactively engage with the industry to encourage them to extend the voluntary commitments they made to the UK Competition and Markets Authority, such as waiving egress fees and improving interoperability, to the Indian market. This approach would build on existing commercial momentum to deliver immediate, low-friction benefits to Indian enterprises without resorting to an ex-ante framework or direct competition enforcement.
Sharing his views on the study, Pradeep S. Mehta, Secretary General, CUTS International, said, “Ensuring that any regulatory or policy intervention is optimal is sine qua non for ease of doing business, particularly for small and medium enterprises. Since its inception, CUTS has worked on the philosophy of “optimal regulation” and is running a strong programme on Regulatory Impact Assessment, which can be applied to both upcoming drafts and existing regulations. Given that cloud services are the backbone of India’s fast-growing digital economy, any intervention in this market must be carefully designed to avoid overregulation and preserve innovation, competition, and growth.”
Ujjwal Kumar, Associate Director, CUTS International, and author of these reports, also added, “Competition policy works best when it intervenes against demonstrable market failures rather than anticipated ones. Our research suggests that competition concerns in cloud markets could better be addressed through evidence-led enforcement under existing competition law, including its newly added provisions on commitment and settlement, instead of prematurely bringing cloud services with in the purview of a hard ex ante framework like DCB.”
The reports recommend continued market monitoring, periodic competition assessments, improved interoperability, and enforcement against demonstrable anti-competitive conduct, while urging policymakers to exercise regulatory restraint until robust India-specific evidence establishes the need for additional intervention.