India asserts itself on global tech deals

INTERNATIONAL DESK: India wants to have a seat at the table vetting overseas mergers and acquisitions as the country asserts itself on the global tech stage. If the country’s internet population is anything to go by, it is about time.

Earlier this week, India authorized its antitrust regulator to parse global deals by approving amendments to the competition law, which includes a requirement for companies with substantial business operations in the South Asian nation to seek antitrust permissions for all deals exceeding 20 billion Indian rupees ($244 million) in transaction value. Until now, the Competition Commission of India examined deals based on companies’ asset size and turnover.

The latest move follows a series of developments over the past year that might have gotten Google, Meta and Amazon worried about their future in the country. The giant tech firms now face heightened scrutiny if they try to expand their presence there through acquisitions. According to Anisha Chand, an antitrust lawyer with Indian firm Khaitan & Co, the intention of the amendments is to fill the perceived enforcement gap and stop key deals from falling through the cracks. She cited several landmark deals, including Facebook’s acquisition of WhatsApp and Microsoft’s buyout of LinkedIn, that weren’t vetted by the CCI despite India being one of their largest markets in terms of user base.

Amid rising hostility with big U.S. tech firms, especially with WhatsApp’s refusal to weaken encryption and its controversial privacy policy, Facebook’s deal to purchase the app would have been prolonged and probably a losing battle in India if it were to happen now. American investors and investment bankers who once concerned themselves only with U.S. or perhaps European regulatory hurdles to deal making now have another country’s views to weigh.

The new act will allow the watchdog to have a say on technology deals where traditional metrics such asset size don’t apply. Such measures have become archaic in the digital deal making space where deal value is often calculated based on competitive threat or likelihood of the firm dominating the market going forward. The change is in line with amendments made in Germany and Austria which now follow the deal value threshold. The U.S. has followed the practice for a while now. China too has been closely reviewing deals amid rising tensions with the U.S. In 2018, Qualcomm abandoned a $44 billion bid for Dutch chip maker NXP Semiconductors after Chinese regulators failed to approve it. It is only getting tougher.

India’s importance in the global technological landscape is likely to increase in the coming years. According to Redseer Strategy Consultants, at 780 million, India is home to the second-largest internet user base in the world—more than twice the entire U.S. population. It estimates that by 2030, the count will reach 1 billion, almost mirroring China’s number today. An average Indian also spends about 7.3 hours a day on their smartphone, which is one of the highest times in the world.

With rising importance, the face-off between the government and big tech companies probably will intensify as the country seeks to protect its homegrown players and consumers. Last week, an appeals court in India upheld a fine of about $160 million slapped on Google by the CCI for abusing its dominance in the Android ecosystem. Meta and Amazon are also under investigation by the regulator.

The freshly-amended law will mean India’s booming tech economy becomes one of the most hotly contested battlegrounds, with the government acting as a strict referee. It wasn’t entirely unexpected. (TWSJ)