Non-Dominance and Deception: A Case For Conduct Based Competition Regulations In India

[Tanya Sara George is a third-year law student at the Maharashtra National Law University, Mumbai.]

Introduction

The antitrust regime in India has primarily concerned itself with anti-competitive behaviour relating to pricing and production. These traditional pigeonholes, while a necessity, have given leeway for a new kind of anti-competitive practice, particularly within digital markets, leading to significant market distortions. Manipulative user interfaces (UI) or dark patterns are mechanisms that are used by companies to softly persuade their consumers into acting in a specific manner. These practices are often overt to an ordinary consumer and function by employing techniques that leverage the cognitive biases of the consumer to distort factors of the market. Further, despite driving existing competitors outside the market, these behaviours fail to fall within the lens of Sections 3 & 4 of the Competition Act, necessitating a rethinking of traditional definitions of anti-competitive behaviour, perhaps to include commercial psychological manipulation.

While existing literature has engaged with whether manipulative interfaces must be considered violative of competition law, it has failed to note that the existing provisions of the domestic antitrust law are inadequate to handle the same. Particularly, the heavy reliance on 'dominance' as a precondition for intervention renders regulatory action against manipulative interfaces illusory when such practices are deployed aggressively by non-dominant firms. This structural blind spot has significant implications for market contestability and consumer welfare. This article analyses the harm caused by dark patterns, arguing that they must be considered as anti-competitive behaviour regardless of dominance. Firstly, the author elaborates on dark patterns, their associated harms, and their usage in India. Secondly, the author argues that the traditional framework for competition law is ill-equipped to harbour this violation. Thirdly, the author compares this with the international framework to emphasize the flaws in the current approach. Lastly, the author argues that manipulative interfaces must be considered an antitrust violation under a new archetype altogether.

Dark Patterns, Harm and Adverse Anti-Competitive Effects

Dark Patterns are a form of UIs deliberately designed to confuse or manipulate users into making certain decisions. As elaborated upon by Kahneman & Tversky, human beings possess two systems of thinking. System 1 concerns unconscious, automatic and less intensive thinking. Alternatively, system 2 entails conscious, thought out and exerted thinking. Dark patterns exploit the first modus by manipulating the cognitive inertia to further the interests of the corporation rather than the individual consumer. This distorts the information available to the consumers and creates a wall of covert persuasion around their seemingly heuristic choices.

The anti-competitive harm from dark patterns stems not merely from individual consumer detriment but from the aggregate distortion of the competitive process. By systematically impairing consumers' ability to make informed decisions, dark patterns reduce the effective substitutability of products and services, thereby insulating enterprises from competitive pressures. This artificial stickiness suppresses free entry into the market, raises switching costs (albeit through non-pricing factors), and enables non-dominant firms to build entrenched consumer bases through manipulation rather than merit. Over time, this dynamic undermines the efficiency of the market, hampers innovation by insulating mala fide enterprises, and leads to outcomes that are fundamentally incompatible with the objectives of competition law.

Dark Patterns in India

India’s digital economy is expected to grow twice as fast as the overall economy. The government has found that a corollary to this rapid development is the ripening of dark patterns throughout this digital economy. As evidenced by a market study done by the CCI, the manipulative nature of dark patterns ‘locks in’ a consumer, which leads to them being far less likely to consider other players in the market. The study found that only a meagre 1% of subscribed users would be influenced to consider alternative competitive options, while other consumers stick to one entity due to manipulative tendencies.

Dark patterns are often deployed most aggressively during the growth phase of enterprises, precisely to achieve dominance. Agoda and Cleartrip have rapidly gained market share in India despite using manipulative tactics, and despite the presence of dominant enterprises such as MakeMyTrip and Goibibo. While they may have gained a significant market share today, this was a calculated strategy operationalised by inter alia, using manipulative UIs. Similarly, enterprises such as Shein and Fashion Nova, which witnessed drastic growth in their initial stages, have also considerably relied upon dark patterns. This is a clear example of how disruptive practices are employed by emerging enterprises in India to aggressively gain consumers.

Deficiencies in the Domestic Framework

Under the Competition Act, the use of manipulative interfaces falls under an anti-competitive practice or an abuse of dominance. Herein, the author would follow a two-pronged modus to demonstrate the deficiencies associated with taking either of these traditional mediums. Firstly, hypothetically, take that the use of manipulative consumer interfaces would be held as a Section 3 violation under the Act. Such a violation is premised on the bedrock of an agreement existing. That is, it can only be invoked when it concerns more than one enterprise. Thereby, a company actively utilising unfair practices would circumvent scrutiny regardless of creating an appreciable adverse effect on competition (“AAEC”) as there is no agreement persisting. In the case of Winzo games, the Competition Commission of India (“CCI”) found that Google had routinely issued false payment warnings when users dealt with Winzo rather than games available on Google Play. Herein, even in the lack of an agreement between parties, the Commission held that this amounts to anti-competitive behaviour. This decision exemplifies the need to move out of traditional requirements for an agreement, considering the often unilateral nature of such mechanisms.

Secondly, hypothetically, the same would be held as a Section 4 violation. Section 4, read in conjunction with the provisions of Section 19(4), unmistakably requires an entity to be ‘dominant’ within the jurisprudential definition to be invoked. While this section may prevent dominant entities from engaging in such practices, it fails to fulfil the overall objective of reducing anti-competitive behaviour in the market, as entities falling outside this ambit are then granted an implicit license to adopt such practices until they gain a large consumer base.

Supposedly, the draft Digital Competition Bill evinces a way forward through Section 12(1). This section holds that “A Systemically Significant Digital Enterprise shall not, directly or indirectly, use or rely on non-public data of business users operating on its Core Digital Service to compete with such business users on the identified Core Digital Service of the Systemically Significant Digital Enterprise.” As per Section 2(17) of the Bill, an SSDE is equivalent to a dominant enterprise. Therefore, this embodies the fallacy of relating manipulative consumer interfaces to Section 4 of the Competition Act, allowing it to function solely within cases concerning already dominant enterprises. The fundamental problem herein is that although the section is forethought on an ex-ante approach, this fallacy restores it to an ex-post approach as smaller players with aggressive strategies escape its ambit. Rather, the legislators could have looked at the broader ambit granted to offenders as under the Draft Guidelines for Prevention and Regulation of Dark Patterns. Herein, any person who designs, produces and publishes advertisements either by his own effort or by entrusting it to others would fall under the ambit of an advertiser capable of employing dark patterns. Considering competition law, it is unclear as to why the legislators have chosen to entrust this burden only upon dominant entities when the damages caused by any entity using the same are legally acknowledged domestically and internationally.

International lens

The Federal Trade Commission (“FTC”) of the US has sanctioned large players such as Amazon and Epic Games for using manipulative tactics in their UIs to gain a higher profit and impair competition. The Commission initially investigated these entities for deceptive practices such as tricking users into making unwanted payments and deceptive cancellation processes. This was done with the precursor of the deceptive practice being a violation under Section 5(a) of the FTC Act. Section 5(a) grants the Commission the authority to prevent unfair practices, while Section 5(1) illegalises deceptive or unfair acts affecting commerce. The FTC’s approach does not require the entity to hold a dominant market position. Instead, it lies in the nature of the conduct and its potential to harm consumers and distort market processes. This conduct-based approach allows for more pre-emptive interventions against manipulative practices, even when perpetrated by emerging firms, thereby resulting in better market regulation.

Domestic framework, on the other hand, while implicitly recognising the exclusionary effect that can be created by dark patterns in cases, has majorly viewed this within the bounds of Section 4. Consider the Winzo Games case, where the Commission noted the psychological effect that can be created by a payment warning. However, this was noted within the bounds of dominance. Similarly, in the case of Bharat Matrimony v Google Inc., the Commission again found that Google had engaged in a search bias technique to deceitfully garner more consumers, which is a clear example of a dark pattern in employment. Again, this fell within the bounds of an abuse of their dominance, rather than being recognised as an individual violation. Thus, while the Commission has noted the exclusionary effects that may be caused by a dark pattern, it fails to delineate how a dark pattern violation is established or what entities could engage in such behaviour.

Way forward & Conclusion

As earlier evinced, the present domestic provisions are inadequate to address the market distortions caused by the employment of dark patterns. Herein, the author proposes that manipulative user interfaces that exploit cognitive biases must be seen as a standstill competition law violation, without the necessity of an agreement. Further, the legislators have erred in only considering dominant enterprises within this ambit. Instead, such practices must be viewed as likely to cause AAEC in the market, regardless of dominance, as they are far more likely to restrict consumer autonomy, garner faux consumer support and lead to significant distortions to the market.

To operationalise this framework, the Act must introduce a prohibition against manipulative consumer interfaces that materially impair consumer autonomy, regardless of an enterprise’s dominance. Waiting for dominance to crystallise before regulatory intervention allows irreversible consumer harm and market distortion to take root. This would require the adoption of a conduct-based threshold rather than a dominance threshold. A bright line test could be developed to identify specific dark patterns that are presumptively anti-competitive. This article has sought to foreground an undertheorized dimension of anti-competitive behaviour that current Indian law fails to address adequately. In doing so, it challenges the orthodoxy that market power is a necessary precondition for competitive distortions and demonstrates the urgent need for a conduct-based standard that focuses on autonomy impairment and market dynamics at early stages. As Indian digital markets expand rapidly, the costs of regulatory inertia will be acute. Addressing manipulative interfaces as an autonomous antitrust violation is thus not merely a policy refinement; it is a necessary evolution to ensure that the competition regime remains fit for purpose in an increasingly behavioural marketplace.