Ex-ante competition rules for cloud services sees pushback from 60% stakeholders: CUTS study | Technology News

A majority of stakeholders have expressed concerns about bringing cloud service providers under the ambit of the proposed Digital Competition Bill (DCB), amid reports that the Centre is looking to revisit a digital competition law with ex-ante regulations to curb the dominance of tech giants such as Google, Microsoft, and Amazon.Over 60 per cent of feedback on including cloud services under the DCB was negative, according to stakeholder consultations and netnographic sentiment analysis the Consumer Unity and Trust Society (CUTS) International.This is 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, the policy research and consumer advocacy non-profit said.
Additionally, 30 per cent of the stakeholder feedback was positive, reflecting support for a more level playing field, curbs on self-preferencing dominant players, and stronger consumer trust through fairer market conditions. The remaining 10 per cent of views were neutral.
These figures were disclosed in one of two reports published CUTS on Wednesday, July 29, that looked to examine the competitive dynamics of India’s cloud services market and assess whether exing legal and regulatory frameworks are sufficient to address emerging concerns.
It comes at a time when the Indian government is looking to require companies in critical sectors such as energy, telecom, and banking to use Made-in-India sovereign cloud systems, The Indian Express had reported in April 2026.
The consideration was reportedly prompted a 2025 incident, where Microsoft abruptly blocked oil refiner Nayara Energy from its IT services. This is said to have raised concerns in New Delhi’s policy circles around the dependence Indian companies have on crucial digital infrastructure services offered foreign companies, and the need for them to build resilience against potential disruptions in the future.Story continues below this ad

Not-for-profit industry bodies such as Bharath Digital Infrastructure Association have also previously raised concerns of foreign-controlled digital infrastructure being vulnerable to potential ‘kill switch’ mechanisms.
‘Competition Act sufficient to address harms’
In a report titled ‘Competition Concerns in Cloud Services Market and Application of Indian Competition Law’, CUTS said that the exing Competition Act, 2002, empowers the Competition Commission of India (CCI) to curb and check most of the competitive concerns arising out of the cloud services market in India.
It further identified the following competition concerns in the cloud services market:
-Cloud credits and discounts: This includes low-value credits, committed discount spends, and volume-based discounts that create lock-in effects.Story continues below this ad
-Egress fees: Fees charged cloud service providers for customers to transfer data of their infrastructure, preventing them from switching to other platforms or pursuing multi-cloud strategy.
-Technical barriers and poor interoperability: They often lead to vendor lock-in, where users find it difficult to switch providers after their initial choice.
-Licensing restrictions: Unilateral terms in licensing imposed software vendors that could be restrictive for cloud providers.
-Tying and bundling: Tying is when the purchase of one product is conditioned on the mandatory use of another, while bundling is offering multiple products or services together at a discounted rate.Story continues below this ad
-Self-preferencing: It refers to when a platform favours its own products, services, or affiliates over those of competitors, particularly when it controls the infrastructure or marketplace where competition occurs.
-Data leveraging: It refers to the practice of dominant enterprises using their control over users’ personal and behavioural data to gain an unfair advantage in another market or suppress competition.
CUTs said that the above-mentioned, anti-competitive practices can be addressed under the exing Competition Act or through technological interventions, rather than broad ex-ante regulation like the proposed (DCB). The reports also warned that “premature regulatory intervention could have unintended consequences for innovation, investment and customer choice in India’s rapidly evolving cloud ecosystem.”
It noted that the Indian cloud services market does not appear to show “strong tipping characterics” like other online sectors such as e-commerce or food delivery. “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 report read. It advocated for an evidence-based approach to cloud regulation in order to enable growth of startups.Story continues below this ad
‘Adopt UK CMA’s approach’
In its second report titled ‘[Over] Regulating Cloud Services: A Case for Restraint’, CUTS urged the Indian government to take a leaf out of the UK’s competition watchdog approach and ensure that industry players adopt the same voluntary commitments to waive egress fees and improve interoperability in India as well.
“This approach would build on exing commercial momentum to deliver immediate, low-friction benefits to Indian enterprises without resorting to an ex-ante framework or direct competition enforcement,” it said.
Other such commitments made cloud giants like AWS and Microsoft in the UK include launching new interconnection products, adopting standards for AI agents, and enhancing multi-cloud management tools.
It also recommended continued market monitoring, periodic competition assessments, improved interoperability, and enforcement against demonstrable anti-competitive conduct.Story continues below this ad
CUTS further warned against overregulation of India’s cloud services market in the form of price controls. “High costs and opacity are concerns (84 per cent of businesses report overruns), but price caps would discourage investment, degrade quality, and ignore diverse pricing models,” it said. “Transparency and multi-cloud support are superior remedies,” it added.
Status of the draft Digital Competition Bill
In response to the Parliamentary Standing Committee on Finance’s report, the government-appointed Committee on Digital Competition Law (CDCL) submitted its report and draft Digital Competition Bill in February 2024.
To address practices like self-preferencing, tying, and bundling used large tech firms to expand market presence and dominance, the Bill proposed an ex-ante regulatory approach, where binding rules are set in advance for large or dominant players before any anti-competitive harm occurs.
The Bill proposed that for certain “core digital services” like search engines, and social media sites, the CCI should designate companies as “Systematically Significant Digital Enterprise (SSDE)” depending on various quantitative and qualitative parameters such as turnover, user base, market influence, etc.Story continues below this ad

In March 2024, the Minry of Corporate Affairs (MCA) placed the Bill in public domain for stakeholder comments, receiving over 100 responses. A few months later, the Minry of Electronics and IT held consultations during which tech firms, startups, and industry bodies raised concerns over the scope of ex-ante regulation and the proposed thresholds.
In 2025, the Centre withdrew the draft DCB after facing strong pushback from Big Tech firms and domestic start-ups, which argued that its wide regulatory ambit could stifle innovation and increase compliance burden.
The latest update is that a market study has been carried out MDI Gurgaon on behalf of the Minry of Corporate Affairs (MCA) with a focus on reviewing the proposed financial, user-based and qualitative thresholds for designating SSDEs. Notably, there is apparently no plan to scrap the ex-ante regulations altogether, according to a report Financial Express.