Introduction
The debate about how to constrain the market power of dominant digital platforms has generated a wide menu of potential remedies — from behavioural obligations (prohibiting specific practices) to structural remedies (breaking up integrated businesses) to regulatory requirements (mandating data sharing, API access, or protocol compatibility). Among these, interoperability has emerged as a particularly favoured remedy in European regulatory thinking, and is increasingly discussed in Indian competition policy circles as a structural response to platform dominance that falls short of full structural separation.
Interoperability — the ability of different systems, platforms, or applications to work together — is a familiar feature of many infrastructure industries. Telecommunications networks are required to interconnect, allowing subscribers of one network to call subscribers of another. Email operates on interoperable open standards (SMTP, IMAP) that allow users on different services to communicate. Banking systems are interoperable through clearing and settlement infrastructure. The policy argument for imposing interoperability obligations on dominant digital platforms is that the same logic should apply: a platform’s dominance, where it derives from network effects rather than technical superiority, should be contestable through interoperability that allows competing platforms to offer their users access to the dominant network’s users without the users being required to migrate.
Legal Framework
The Competition Act 2002 does not specify interoperability as a standard remedy. The CCI’s remedial powers under Section 27 include the power to direct the enterprise to discontinue and not re-engage in the conduct, impose penalties, and “pass such other orders or issue such directions as it may deem fit.” This open-ended remedial authority is broad enough to encompass interoperability orders if the CCI determines that interoperability is the appropriate remedy in a specific case.
The 2023 Amendment to the Competition Act introduced provisions specifically addressing interoperability in the context of digital markets. The amended Act empowers the CCI, when dealing with abusive conduct by enterprises with significant market power in digital markets, to require the sharing of data, interfaces, protocols, and APIs to enable interoperability with competing services. The implementing regulations for this provision are still being developed, and the precise scope of the interoperability obligation — what must be shared, on what terms, and with what security and privacy safeguards — has not been specified.
The Digital Personal Data Protection Act 2023 intersects with interoperability requirements: data sharing mandated for competition law purposes must still comply with data protection principles, including consent requirements and data minimisation obligations. The interface between competition-mandated data sharing and privacy law requires careful navigation.
CCI and Regulatory Developments
The CCI’s orders in the Google Android case included remedial directions with interoperability implications — specifically, the requirement that Google allow device manufacturers to install competing browsers and search engines as defaults. While this requirement is more properly characterised as a non-exclusivity obligation (Google cannot exclude competitors from distribution channels) than interoperability (competing services cannot access Google’s user data or network), it reflects the CCI’s willingness to issue structural remedies that reshape platform dynamics.
The RBI’s Account Aggregator framework and the NPCI’s Unified Payments Interface (UPI) represent the most successful interoperability implementations in India, though these were regulatory mandates rather than competition law remedies. UPI’s interoperability — requiring all participating payment service providers to access a common rails infrastructure — has transformed the retail payments market and significantly increased competition. The policy lesson from UPI is that interoperability, properly designed and mandated with appropriate governance, can be a powerful competition tool.
Contemporary Issues and Analysis
The design of interoperability requirements is technically complex and prone to implementation failure if the regulatory specification is insufficiently detailed. The EU’s experience under the DMA, which imposes interoperability obligations on gatekeeper platforms for messaging services, illustrates the difficulty: WhatsApp’s compliance with the DMA’s messaging interoperability requirement has been technically partial — allowing third-party messaging clients to access WhatsApp through APIs — but the user experience and security implications of interoperability have generated significant controversy. End-to-end encryption, which provides WhatsApp’s security model, is technically harder to maintain when third-party clients are permitted to join the network through APIs.
The network effects paradox in interoperability remedies is a structural challenge: interoperability is most valuable precisely in markets where network effects have produced winner-take-all outcomes, but it is also most difficult to implement in these markets because the dominant platform’s technical architecture may be optimised for internal network economics rather than external interoperability. Requiring interoperability imposes technical costs on the incumbent and may require the incumbent to invest in architecture changes that degrade performance or security. Whether these costs are proportionate to the competition benefits — and who bears them — is a key design question.
The data interoperability dimension is distinct from protocol or API interoperability. Data portability requirements — allowing users to transfer their data and social graph from one platform to another — are a weaker form of interoperability: they allow switching but do not allow simultaneous multi-homing. Full social graph interoperability would allow a user on a competing social network to communicate with their friends on the dominant network without either party needing to switch — this is significantly more powerful as a competition remedy but also significantly more technically and legally complex.
Comparative and International Perspective
The EU Digital Markets Act imposes interoperability obligations on designated gatekeepers in several dimensions: messaging services must interoperate with other messaging services at the user’s request; operating systems must allow installation of third-party apps from alternative app stores; and core platform services must allow business users to access data they generate on the platform. These obligations are among the most ambitious interoperability mandates in global digital regulation.
The UK’s Open Banking initiative — which required banks to provide API access to account data for authorised third-party providers — is the most successful large-scale implementation of interoperability as a competition remedy in financial services, demonstrating that interoperability can be implemented at scale with appropriate technical standards, governance, and regulatory oversight.
Practical and Policy Implications
For dominant platforms, the prospect of interoperability obligations is a powerful incentive to settle competition investigations through negotiated behavioural commitments — interoperability requirements imposed through settlements are likely to be better designed for the specific platform architecture than obligations imposed through adversarial enforcement. Google’s DMA compliance negotiations in Europe, and Amazon’s marketplace interoperability commitments, reflect this incentive.
For startups and competing platforms, interoperability requirements represent a potential levelling of the competitive playing field — but only if the interoperability implementation is technically meaningful rather than formally compliant but substantively useless. Regulatory engagement during the design phase of interoperability requirements is essential to ensure that the remedy achieves its competition objectives.
Suggestions and Reforms
The CCI should develop detailed technical specifications for interoperability obligations in digital markets, in consultation with the Ministry of Electronics and Information Technology (MeitY) and relevant technical experts. These specifications should address API standards, data format requirements, security and privacy safeguards, and governance mechanisms for managing interoperability disputes.
The CCI’s remedial practice should include a monitoring trustee mechanism for complex interoperability remedies — an independent technical expert mandated to oversee compliance with interoperability obligations and report to the CCI on implementation progress. This is standard practice in EU and US consent decree monitoring but has not been established in the CCI’s remedial toolkit.
Conclusion
Interoperability as a competition remedy has substantial promise for addressing digital platform dominance in a way that is less drastic than structural separation and potentially more durable than behavioural obligations. Its promise will only be realised, however, if the regulatory and legal framework is capable of specifying, monitoring, and enforcing interoperability in technically meaningful terms. India’s competition law framework now has the statutory authority to impose interoperability requirements; building the technical and institutional capacity to make those requirements work is the next challenge.
