Antitrust authorities, including the Competition Commission of India (CCI), are often accused of doing “too little” “too late” when it comes to digital markets. After all, the accusers argue, digital markets are “winner-take-all” and prone to quickly “tipping”, leaving just the winner with the spoils. “Be quicker, and be bolder”, is a refrain familiar to antitrust authorities, and the CCI is no stranger to this critique.
In fact, it is this critique that has animated the chorus for ex ante digital regulations globally, whether it is the (already in-effect) Digital Markets Act in the EU, or the (currently in consultation) Digital Competition Bill in India. Yet, as appealing as a call to broad regulatory action is, abandoning restraint altogether may not be the optimal antitrust position either. As it turns out, antitrust restraint is often vindicated by the market.
Take the Indian ride-sharing sector and recall the landscape pre-Covid. Uber and Ola were pioneers and leaders of app-based ride-sharing services in India. Allegations of abuse of dominance (specifically, predatory pricing) followed swiftly. In 2021, the CCI dismissed the case, unable to find any anticompetitive conduct by Uber or Ola. Per the critics, this was the CCI failing to act to restore competition in a market where the two big fish were destroying all minnows. Interestingly, these allegations had been first made all the way back in 2015. The CCI had dismissed them on a preliminary basis, but nevertheless had to re-examine them under the directions of the (then) Competition Appellate Tribunal. Moreover, in a separate proceeding, there was another set of allegations made against Uber and Ola in 2017, arguing that presence of common investors (mainly, SoftBank and TigerGlobal) across both was anticompetitive. The CCI dismissed this on a preliminary basis in 2018, noting that simply having common investors didn’t imply weakened competition, and further that there was no evidence of such weakened competition either. However, the CCI also did add that it would not hesitate in intervening later if it suspected such common investors had weakened Uber-Ola competition.Five years on, the picture looks rather different. Rapido, a Bengaluru startup that began as a bike-taxi service in 2015, has grown to roughly 74 million monthly active users, surpassing Ola and closing in on Uber. In fact, despite launching its 4-wheeler offering only in 2023, Rapido already accounts for close to 20% of the 4-wheeler ride-share segment in India. Taking two- and three-wheelers into account too, Rapido is closer to a 50% share of the overall ride-sharing sector. Uber has had to infuse significant capital in its Indian business to compete, while Rapido’s ability to raise capital has stayed robust. So, in a nutshell, you have a new competitor rapidly gaining market share, retaining the confidence of investors to raise money easily, an erstwhile market leader (Ola) turning into a laggard, and an incumbent firm scrambling to match competition. This is nearly a textbook example of a competitive market in action. A market that many declared hopelessly “tipped” years ago, is today anything but that. And all this occurred without any antitrust intervention. This story of the Indian ride-sharing market also has broader takeaways for antitrust enforcement and regulation more generally. Overall, we can see four key inter-related factors jump out.First is the role of multi-dimensional competition. Rapido’s most consequential innovation was perhaps not technological but contractual. Uber and Ola operated on a commission model, taking a certain percentage of every fare. Rapido replaced this with a subscription model where, for as little as nine rupees a day, a driver could access the platform and keep the entirety of the fare. This kickstarted the competitive flywheel – drivers earned more, which attracted more drivers, which cut wait times, which attracted more riders. Today, needing to stay competitive, both Uber and Ola have also adopted variants of the newcomer’s subscription approach. You can see how once a new market entrant exploited a different dimension of competition (flat-fee subscriptions, not commissions), whatever “entry barriers” had been presumed to exist, vanished. Of course, none of this is to say that this new business model – subscription over commission – will dominate forever. Quality is another dimension of competition, and one may even witness the return of a commission-driven approach which leans more on driver and car quality. After all, competitive markets run on trial and error, where firms try, fail, pivot, and try again. You have seen this dynamic of multi-dimensional competition play out in the case of Indian quick-commerce firms too. They undercut the more traditional e-commerce players by attacking the retail market from a novel angle, leaning into quickness of delivery over a massive inventory.
Second is the role of the entrepreneurial, enabling state. Notably, it was a confluence of government backed initiatives, the Open Network for Digital Commerce (ONDC), coupled with the state-backed UPI payment layer, that provided the base for the first attempt at disrupting the rideshare market. Namma Yatri, an open platform running on the ONDC network, showcased an alternative (subscription-based, zero-commission) rideshare model in Bengaluru. Rapido saw the virtue of this model and pushed ahead to scale it rapidly. Today, in Bharat Taxi, we see the state in its entrepreneurial role at a more national level. All this goes to show that sometimes the state can help promote market competition by leveraging its enabling, entrepreneurial role and not just its regulatory prerogative. ONDC and UPI have helped unlock greater competition in many other sectors, such as online retail. We see this entrepreneurial state, perhaps most strongly today, in the field of AI, where government initiatives such as the India AI Mission seek to complement private competition.
Third is the positive horizontal spillover of deregulation. Rapido did not begin by competing for cab rides. It began with bike-taxis, a product category that barely existed in organised form before 2015. Two-wheelers account for roughly three-quarters of registered motor vehicles in India, yet no central legislation governed bike taxis. State responses ranged from cautious tolerance to outright prohibition. Several state governments gave bike-taxi aggregators a de facto blessing, not through formal licensing but through quiet tolerance. This permissive stance allowed Rapido to build a customer base, a driver network, and a set of operational learnings in a category where it faced no meaningful competition from Uber or Ola. When Rapido eventually launched its cab service, it was not entering cold, but rather extending a warm platform into a new vertical. Lack of, or weaker, regulation of bike-taxis actually provided Rapido the impetus to shatter the cab-share duopoly. A similar dynamic is visible in the rise of quick-commerce which managed to grow rapidly in a relatively low-regulation space.
Fourth is the frictionless scalability and expansionability of digital features. Once Rapido had a functioning platform (an app with tens of millions of users, a driver fleet, a payments mechanism), adding new service categories was relatively easier. More akin to an exercise in software redesign than factory reconstruction. The incremental cost of extending the app to include other features such as cab-hailing, auto-rickshaws, and (most recently) food delivery is but a fraction of the cost of building those capabilities from scratch. As a more general takeaway, it shows how in digital markets, firms typically have the latent ability to pivot into adjacent business segments at scale and on competitive terms (e.g. from bike-taxis to cab-shares to food-delivery). You can also see this in the case of quick-commerce, where their set of offerings has expanded rapidly, from groceries to even consumer durables and electronics. This dynamic serves as a credible competitive threat disciplining incumbent firms in such adjacent business segments. Knowing this, we can see how mere market snapshots (e.g. revenue or volume shares over just a few years) in such digital markets can overstate dominance and tipping concerns.
We are perhaps witnessing, in real time, these factors coalescing together again to disrupt the food-delivery sector, a sector which has also seen constant calls for antitrust intervention. Once again, the market’s verdict may arrive well before the regulator’s. Rapido has recently launched its own food-delivery service, Ownly, which also operates on a zero-commission model for restaurants and a flat thirty-rupee delivery fee. There have, of course, been previous unsuccessful attempts to break into the food-delivery space, e.g., Uber Eats exited India in 2020, and Ola’s food ambitions never reached scale. So entry is no guarantee of success. But what distinguishes Ownly is its commission-free model, and its fleet composition (bikes, not cars, are the primary mode of food delivery in Indian cities, and Rapido’s network is strongly two-wheeler-based). Only time will tell if the ride-sharing story will also play out when it comes to food-delivery, but any competitive assessment today must recognize the dynamics in play.
In conclusion, while antitrust commentary is rich in cautionary tales of intervention that came too late, it is perhaps important to also highlight examples of antitrust restraint that proved wise. Rideshare and online commerce are not twin outliers, as this pattern of digital market disruption has been present since the very early days of digital platforms (anyone used Blackberry Messenger recently?). Such examples of seemingly “tipped” markets self-correcting over time should also inform any decision to proceed with (and the design of) ex ante regulations. None of this is an argument for across-the-board passivity in antitrust enforcement, but it is a call to avoid the temptation of abstractions over the concrete.
(Views are personal)
