Competition Law and Competition Governance in Public Digital Exchanges

1. Introduction

Public digital exchanges are digital infrastructures designed to enable multiple independent participants—consumers, businesses, service providers, governments, financial institutions, logistics providers or other platforms—to discover, transact, exchange data, authenticate users, make payments or access services through interoperable digital networks.

Examples include open digital commerce networks, public payment infrastructures, internet exchanges, open mobility networks, digital identity ecosystems, public data exchanges and interoperable government-backed digital platforms.

Their competition-law significance is unusual because the exchange may not itself function like an ordinary commercial platform. A public digital exchange can simultaneously be:

• an infrastructure provider;
• a market coordinator;
• a rule-maker;
• a data intermediary;
• an interoperability layer;
• a standard-setting institution; and
• a gateway through which private competitors reach consumers.

Consequently, competition governance must prevent the exchange from becoming a bottleneck controlled by one participant, while also preventing participants from using the common infrastructure to coordinate prices, divide markets or exclude rivals.

India's digital-competition experience is particularly relevant. The Competition Commission of India (CCI) has increasingly examined network effects, data advantages, platform dependence, interoperability, self-preferencing, tying and leveraging. The Committee on Digital Competition Law also concluded that traditional ex-post enforcement may be insufficient where digital markets can rapidly tip toward durable dominance.

2. Meaning of a Public Digital Exchange

A public digital exchange can be understood as:

A digitally enabled, multi-sided and interoperable infrastructure through which independent market participants interact according to common technical, access, governance and transactional rules.

Its architecture generally contains:

1. Participants – buyers, sellers, service providers and intermediaries.
2. Common protocols – technical rules enabling interoperability.
3. Identity layer – authentication and verification.
4. Discovery layer – enables participants to locate counterparties.
5. Transaction layer – facilitates ordering, contracting or settlement.
6. Data layer – creates and transfers information.
7. Payment/settlement layer – where applicable.
8. Governance layer – establishes participation and conduct rules.

The competition problem therefore shifts from merely asking:

"Who has the largest market share?"

to asking:

"Who controls the rules and infrastructure through which competitors must interact?"

3. Competition-Law Framework

In India, the principal framework is the Competition Act, 2002, particularly:

Section 3

Addresses anti-competitive agreements, including:

• price fixing;
• market allocation;
• output restrictions;
• bid rigging;
• certain vertical restraints.

Section 4

Addresses abuse of dominant position, including:

• unfair or discriminatory conditions;
• unfair or discriminatory prices;
• limiting markets;
• denial of market access;
• leveraging dominance from one market into another;
• tying and bundling.

Sections 5 and 6

Govern combinations and potentially problematic acquisitions involving digital infrastructure, data assets and network businesses.

Section 19

Provides the investigative gateway for information and references concerning competition concerns.

Section 26

Provides the principal investigation mechanism.

Section 27

Provides remedial powers following findings of infringement.

The CCI's digital-market cases demonstrate that non-price competition, data, access, interoperability and platform architecture can be competition parameters.

4. Why Public Digital Exchanges Create Special Competition Problems

A. Network Effects

A public exchange becomes more valuable as participation increases.

For example:

More sellers → more consumers → more sellers → more data → better service → still more users

This creates positive network effects.

But network effects can also produce market tipping.

A dominant exchange may become difficult to challenge even where another operator has a technically superior product.

B. Interoperability

Interoperability is often the foundation of public digital infrastructure.

If Exchange A can communicate with Exchange B, consumers and businesses can switch more easily.

If interoperability is denied:

Closed network → switching costs → reduced contestability → increased dependency

Competition law may therefore treat interoperability as a competitive issue where access is essential to effective competition.

5. Access to Essential Digital Infrastructure

One of the most important issues is whether a public digital exchange constitutes an essential facility or unavoidable gateway.

A dominant infrastructure operator may possess:

• unique digital infrastructure;
• authentication systems;
• transaction rails;
• technical standards;
• essential databases;
• identity systems;
• payment connectivity.

If competing businesses cannot realistically operate without access to the infrastructure, discriminatory or unjustified denial of access may substantially impair competition.

The CCI's 2024 investigation involving the National Internet Exchange of India (NIXI) illustrates the relevance of access and infrastructure questions. Extreme Infocom alleged discriminatory conditions and denial of market access in relation to Internet Exchange Point services. The CCI ultimately closed the matter under Section 26(2), but the case is significant because it directly concerned a digital infrastructure layer facilitating interconnection between ISPs and content providers.

6. Self-Preferencing

A public digital exchange may operate alongside commercial participants.

This creates a serious conflict if the infrastructure operator also supplies services on the exchange.

For example:

Exchange operator → controls ranking + operates its own seller/service → preferential visibility

Potential concerns include:

• preferential ranking;
• preferential API access;
• preferential data access;
• lower transaction fees;
• preferential authentication;
• faster technical integration;
• discriminatory dispute resolution.

The central competition question is whether the exchange's governance rules are neutral and consistently applied.

7. Data Advantage

Public digital exchanges generate enormous amounts of data.

This may include:

• transaction data;
• consumer preferences;
• search behaviour;
• supplier information;
• pricing information;
• geographic information;
• demand forecasts;
• performance metrics.

If the exchange operator uses participant-generated data to compete against those participants, it can create a data-enabled conflict of interest.

This is particularly important where competitors are required to disclose commercially valuable information as a condition of participating.

8. Data Portability

Data portability can enhance competition by reducing switching costs.

For example:

Consumer data → Exchange A → portable format → Exchange B

Without portability:

Consumer data → locked into Exchange A → switching costs → weaker competition

Therefore, competition governance may require:

• machine-readable data;
• API portability;
• reasonable authentication procedures;
• interoperability standards;
• protection against discriminatory data access.

9. Algorithmic Governance

Public digital exchanges increasingly depend upon algorithms for:

• ranking;
• matching;
• fraud detection;
• dynamic pricing;
• allocation;
• recommendation;
• dispute resolution;
• access control.

Algorithmic governance creates two major competition risks.

First: algorithmic discrimination

An algorithm may systematically favour particular participants.

Second: algorithmic coordination

Multiple competitors may use the same algorithm or common data infrastructure, potentially reducing independent decision-making.

The traditional competition-law question of whether firms have independently determined their conduct therefore becomes more complicated in algorithmically coordinated markets.

10. Price Transparency and Collusion

Public digital exchanges can improve competition through transparent prices.

However, excessive transparency can also facilitate coordination.

For example:

Competitor A sees Competitor B's price immediately → adjusts price → B observes adjustment → repeated reactions

A public exchange should therefore distinguish between:

• transparency necessary for consumer choice; and
• commercially sensitive information that facilitates coordinated conduct.

Governance may require:

• delayed publication;
• aggregated information;
• anonymisation;
• access controls;
• restrictions on competitor-level historical data.

11. Platform Neutrality

A public digital exchange should ideally operate according to principles of platform neutrality.

Important principles include:

Equal access

Comparable participants should receive comparable access.

Non-discrimination

Technical and commercial rules should not favour selected participants without objective justification.

Transparency

Participants should understand ranking, access and participation rules.

Interoperability

Participants should be able to interact using common standards.

Contestability

The exchange should not unnecessarily prevent alternative exchanges from developing.

Accountability

Governance decisions should be subject to review.

12. Six Major Case Laws and Their Relevance

The following cases are not all cases concerning a "public digital exchange" in the narrow sense. They are important analogical and doctrinal precedents for competition governance of digital exchanges.

Case 1: In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users, CCI, Case No. 01/2021

The CCI examined WhatsApp's 2021 privacy-policy update and its relationship with Meta's broader ecosystem.

The case was important because the CCI examined:

• data collection;
• data sharing;
• network effects;
• dominance;
• unfair conditions;
• leveraging;
• competition in adjacent markets.

The CCI subsequently imposed a monetary penalty of ₹213.14 crore and behavioural remedies in its 2024 decision.

Relevance to public digital exchanges

The case demonstrates that data governance can itself become a competition parameter.

A public exchange therefore needs rules preventing its infrastructure or data advantages from being converted into exclusionary market power.

Case 2: Harshita Chawla v. WhatsApp Inc. & Ors., CCI, Case No. 15/2020

The CCI examined competition issues concerning consumer communication services.

The case illustrates the importance of:

• network effects;
• functionality;
• interoperability;
• switching;
• ecosystem characteristics.

The CCI's order recognised that consumer communication services could have different competitive characteristics depending upon functionality, device compatibility and operating-system availability.

Relevance

Public digital exchanges similarly operate through multi-sided network effects.

Competition analysis must therefore examine the actual functionality and ecosystem rather than treating every digital service as interchangeable.

Case 3: Federation of Hotel & Restaurant Associations of India v. MakeMyTrip India Pvt. Ltd., CCI Case No. 14/2019

The CCI examined the conduct of online travel platforms, including issues involving:

• market access;
• preferential arrangements;
• parity obligations;
• platform dependency;
• exclusionary effects.

The CCI's decision is an important Indian digital-platform precedent.

Relevance

A public exchange could impose standard contractual conditions on participants.

Competition concerns arise if those conditions:

• prevent multi-homing;
• restrict participation in competing exchanges;
• impose discriminatory parity requirements;
• prevent suppliers from offering different terms elsewhere.

Case 4: Delhi Vyapar Mahasangh v. Flipkart Internet Pvt. Ltd. & Ors., CCI Case No. 40/2019

This matter concerned competition allegations relating to e-commerce platforms.

The case is significant for understanding:

• platform-based markets;
• marketplace structures;
• preferential treatment;
• seller-platform relationships;
• online distribution.

The CCI's record identifies the matter as an antitrust proceeding concerning Flipkart and related entities.

Relevance

A public digital exchange should not transform itself into a gatekeeper that controls both the infrastructure and competing commercial activity without appropriate safeguards.

Case 5: National Restaurant Association of India v. Zomato Ltd., CCI Case No. 16/2021

The CCI considered competition concerns surrounding online food-delivery platforms.

Issues included:

• platform dependence;
• commission structures;
• exclusivity;
• preferential treatment;
• access to customers;
• data and platform relationships.

The case forms part of the CCI's developing digital-platform jurisprudence.

Relevance

Public digital exchanges can similarly create dependency relationships between infrastructure and participating businesses.

Competition governance should therefore distinguish legitimate platform fees from discriminatory or exclusionary conditions.

Case 6: Samir Agrawal v. Competition Commission of India, Supreme Court of India

This case concerned allegations of price coordination involving Ola and Uber.

The important conceptual issue was whether algorithmic platforms necessarily eliminate independent decision-making or can facilitate coordinated pricing.

The proceedings concerned two-sided platforms connecting drivers and riders through mobile applications.

Relevance

Public digital exchanges may make competitor interaction easier.

Consequently, the infrastructure should be designed so that legitimate interoperability does not become a mechanism for cartel coordination.

Case 7: Google LLC v. Competition Commission of India, NCLAT, 2023

The Google Android case is another major precedent for digital ecosystems.

The CCI identified several relevant markets, including:

• licensable operating systems for smart mobile devices;
• app stores for Android smart mobile operating systems;
• general web search;
• non-OS-specific mobile browsers;
• online video hosting platforms.

The CCI found Google dominant in the relevant markets and addressed multiple forms of alleged abusive conduct.

Relevance

The case illustrates ecosystem leveraging.

A public digital exchange similarly needs safeguards against using dominance in one infrastructure layer to gain an unfair advantage in another market.

13. Competition Governance Model

A sound governance model can be represented as:

Public Digital Exchange

↓

Open Technical Standards

↓

Non-Discriminatory Access

↓

Interoperability

↓

Data Governance

↓

Transparent Algorithms

↓

Participant Neutrality

↓

Competition Monitoring

↓

Independent Dispute Resolution

↓

CCI / Sector-Regulator Oversight

14. Governance Rules for Public Digital Exchanges

1. Open-access rule

Participation criteria should be objective and publicly available.

2. Non-discrimination rule

Equivalent participants should receive equivalent treatment unless a legitimate, transparent justification exists.

3. Interoperability rule

The exchange should facilitate technically reasonable interoperability with competing systems.

4. Data firewall

The exchange should separate:

infrastructure data

from

commercial competitive intelligence.

5. Algorithmic accountability

Important algorithms should be subject to:

• audit;
• explainability requirements where appropriate;
• anti-bias testing;
• governance review;
• documentation.

6. Anti-self-preferencing mechanism

Where the exchange operator also participates commercially, governance should prevent unjustified preferential treatment.

7. Multi-homing

Participants should ordinarily be able to participate in competing exchanges unless restrictions have a legitimate technical or security justification.

8. Switching

Exit should be practically possible.

This may require:

• data portability;
• API portability;
• common standards;
• interoperable identity;
• reasonable termination procedures.

15. Public Digital Exchange and Essential Facilities

The essential-facility question can be structured as follows:

Step 1

Is the infrastructure genuinely difficult or impossible to duplicate?

Step 2

Is access necessary for effective competition?

Step 3

Does the operator possess substantial market power?

Step 4

Has access been denied or restricted?

Step 5

Is there an objective justification?

Step 6

Could access be provided without undermining security, reliability or legitimate technical requirements?

If the answers point toward exclusionary conduct, competition authorities may consider whether a remedy is necessary.

16. Public Digital Exchanges and Merger Control

Competition governance must also examine acquisitions involving:

• digital identity providers;
• payment infrastructure;
• API providers;
• cloud infrastructure;
• data exchanges;
• interoperability providers;
• digital marketplaces.

A transaction that appears small in terms of conventional turnover may nevertheless involve strategically important infrastructure or data.

This explains the growing policy interest in ex-ante digital competition regulation in India. The Committee on Digital Competition Law specifically raised concerns that conventional ex-post enforcement can be too slow for rapidly tipping digital markets.

17. Public Interest Versus Competition

A public digital exchange may pursue legitimate objectives such as:

• financial inclusion;
• universal access;
• lower transaction costs;
• digital inclusion;
• interoperability;
• consumer protection;
• public-service delivery.

These objectives do not automatically exempt the exchange from competition scrutiny.

The appropriate approach is to distinguish:

legitimate public-interest design

from

unnecessary exclusionary restrictions.

For example, a security requirement may legitimately restrict access where necessary. But a technically unnecessary restriction that protects an affiliated commercial participant may raise competition concerns.

18. Role of the Competition Authority

Competition authorities should monitor:

Structural issues

• concentration;
• ownership;
• vertical integration;
• network effects.

Behavioural issues

• discriminatory access;
• tying;
• bundling;
• exclusivity;
• self-preferencing.

Data issues

• data portability;
• data access;
• data aggregation;
• data exploitation.

Technical issues

• interoperability;
• APIs;
• standards;
• algorithmic governance.

Transactional issues

• mergers;
• acquisitions;
• strategic investments;
• joint ventures.

19. Possible Remedies

Where competition problems are established, remedies could include:

Behavioural remedies

• equal-access obligations;
• non-discrimination;
• transparent ranking;
• data-use restrictions.

Technical remedies

• open APIs;
• interoperability;
• portability;
• technical standards.

Structural remedies

In exceptional circumstances:

• separation of infrastructure and commercial operations;
• divestiture;
• ownership restrictions.

Governance remedies

• independent oversight;
• audit committees;
• transparency reports;
• competition compliance programmes.

20. Key Legal Issues for Future Public Digital Exchanges

21. Emerging Concept: Digital Public Infrastructure as a Competition Asset

A particularly important development is the movement from firm-centred competition to infrastructure-centred competition.

Traditional competition law often asks:

Which undertaking has market power?

Public digital exchanges require an additional question:

Which infrastructure determines the conditions under which market participants can compete?

This changes competition governance from merely controlling dominant firms to also ensuring that digital market architecture remains contestable.

22. Six Core Principles

The competition governance of public digital exchanges can therefore be reduced to six principles:

1. Openness

Participation should generally be open on objective terms.

2. Neutrality

Infrastructure governance should not arbitrarily favour affiliated commercial interests.

3. Interoperability

Digital systems should be capable of interacting where technically and economically appropriate.

4. Data fairness

Participant-generated data should not automatically become a weapon against the participants who generated it.

5. Contestability

Users and businesses should be capable of switching or multi-homing.

6. Accountability

Rules, algorithms and access decisions should be capable of meaningful review.

23. Conclusion

Competition law in public digital exchanges is fundamentally about preserving competitive neutrality within shared digital infrastructure.

The principal risks are not limited to conventional price fixing. They include:

• infrastructure foreclosure;
• discriminatory access;
• self-preferencing;
• data exploitation;
• algorithmic coordination;
• interoperability restrictions;
• excessive switching costs;
• ecosystem leveraging;
• exclusionary standards; and
• strategic acquisitions of critical digital infrastructure.

The Indian cases involving WhatsApp, Google, MakeMyTrip, Flipkart, Zomato, Ola/Uber and NIXI demonstrate how competition law is progressively adapting to markets where data, network effects, algorithms and digital infrastructure determine competitive conditions.

The central governance objective is therefore:

Public digital infrastructure should enlarge the space in which businesses compete, rather than becoming the mechanism through which competition is controlled.