Industry experts say that the regulation will help new brands see an uptick in revenue, leading to fresh VC investments A host of brands, large conglomerates and the brands owned by e-commerce players appear first while searching for a product or service in the online marketplace. This not only hurts small players but also devoids consumers of free and informed choice, says GoI. In a bid to ensure algorithmic fairness for consumers and sellers of ecommerce companies, the government of India plans to make it mandatory for ecommerce firms to show search results of several sellers instead of displaying only certain brands, a report by ET stated. Showing preferred sellers in the search on ecommerce App and website doesn’t only limit the choices for consumers’ but discriminates the small sellers as well, feels the government. The centre also wants to restrict retailers from sharing consumers’ purchase behaviour data with anyone.   These proposals are part of the Open Network for Digital Commerce (ONDC) which may soon be launched by the Indian government in order to democratize the Indian e-commerce landscape. Once come into force, ONDC will be applicable to all online marketplaces such as Amazon, Flipkart, Meesho, Google PlayStore, Apple Store, cab aggregators and hotel aggregators.   The move is likely to hurt big brands that are owned by online marketplaces and conglomerates, industry experts say. Shashank Srivastava, Executive Director, Marketing & Sales, Maruti Suzuki Limited India, says, “While search engines like Google have to declare ‘sponsored’ products and services on top of their search results after a rule in this regard was brought into place, many online marketplaces don’t because of lack of a regulation in this regard”. He explains, “Many e-commerce companies throw up selected brands in search when consumers look for some product or service on their website or app. Those brands are either owned by ecommerce players or they have an informal alliance with them. This is unfair to consumers as they can’t make informed decisions.” Hence, some regulations are needed to ensure fair market practices in the ecommerce segment. This will help small businesses and startups to get the required visibility and a fair access to growth opportunities, Srivastava adds. Srivastava further says that the digital world is evolving fast and the government has to respond to the emerging challenges. The government has the responsibility to curb the monopoly in the consumer market. Globally, there is a movement for breaking up digital giants as they are designed to benefit a few players. As per an estimate, there are over 4,000 small and big e-commerce companies in India and more than 20,000 companies that provide services through e-commerce including travel, hotels, etc. The Indian e-commerce market touched US$ 46.2 billion in 2020, propelled by government policies that allow 100 percent foreign direct investment in B2B e-commerce and the Covid-19 pandemic that fast-tracked consumers’ transition to digital payments. By 2030, the e-commerce market in India is expected to reach US$ 350 billion, as per the government figures. In terms of ad spend, e-commerce is the second largest category that shells out ads worth Rs 3,000 crores annually, as per the Pitch Madison Annual Report 2022. The ONDC is being developed in response to protests from merchants, and sellers who are concerned about the growing dominance of larger players in India's digital commerce market, the government sources say. Amazon India Spokesperson says, “We remain committed to the Government’s vision of digitizing kiranas, local stores and creating opportunities for businesses across India by simplifying technology adoption to help local stores and businesses contribute to India becoming a $5 trillion economy. We look forward to engaging with the ONDC team to better understand the proposed model and if there is a role Amazon can play to better serve Indian customers and sellers.” Meesho and Flipkart choose not to respond to queries sent by e4m. Sahil Shah, Managing Partner, WATConsult, feels that the government’s intention is clear but there is no clarity on the execution as of now. According to Shah, “The fundamental of a marketplace model is that the highest rated products with the cheapest price with a fair amount of keyword relevancy win the search in a category. And the argument in my mind is that besides the marketplace owned companies, there are large conglomerates that also appear on top.” “Amongst all this, how will SMBs manage to fight the biggies, is a tough one to figure out. Also the best price and quality of the product is reaching the customer. This takes care of consumer interests at large, so the question of SMBs is for sure a secondary one. But we are also aware of how monopolies have an impact in the long term and thus, I am certain the government will come up with some solutions that will help the SMBs. It’s going to be a wait and watch game for now on how they do it,” Shah adds. Manthan Dhameliya, Owner, Kreeva, an ethnic wear e-commerce platform, says, “The Indian e-commerce ecosystem is flooded with new-age online businesses which are extensively dependent on the type of algorithm adopted by them & their user search results. Approximately 40-50% of top user search results are converted into sales.” “The formulation of an open and structured network of policies will be greatly helpful in getting customers on board the basis of your brand story. This is extremely important, especially for businesses working on independent algorithms where the search and data can be filtered according to your user engagement analytics,” adds Dhameliya. However, he feels that these guidelines won’t be that helpful for MSMEs as the majority of them use a third-party algorithm that is currently not much in their control. Siddharth Devnani, Co-Founder & Director, SoCheers, says "Enabling algorithmic fairness will have a massive impact on the ecosystem if implemented. Many new brands will see an uptick in revenue, leading to fresh VC investments coming in and a whole lot of encouragement for more players. It is, however, to be seen if and how it is rolled out.”