Introduction
Ever imagined why it is so convenient to sign up for a particular service on a digital platform while on the other hand it is much more difficult to withdraw from it? We notice similar patterns on multiple digital platforms, be it e-commerce websites or even e-learning platforms. Last month, the Federal Trade Commission (FTC) took action against Adobe for deceiving customers by hiding key information when they signed up for a subscription. The charges stated that the users were pushed to take up the “annual paid monthly” subscription without being informed of the cost that they would incur if they attempted to cancel the said subscription in the first year itself. The consumers added that the fact they need to continue the subscription for at least a year was not disclosed to them earlier.
Often referred to as dark patterns, such an approach is a manifestation of deceptive user interfaces that are used to gently persuade or trick customers into making certain decisions that they otherwise would not make. The underlying idea behind the use of such dishonest frameworks is to covertly influence consumer behaviour. Last year, the Central Consumer Protection Authority (“CCPA”) issued ‘Guidelines for Prevention and Regulation of Dark Patterns’, which enlisted 13 specific types of dark patterns. While there is no dearth of literature on how dark patterns violate consumer protection rights, their unique ability to disrupt fair market competition as an ‘unfair trade practice’ is an area that has received considerably less attention. In this piece, the authors argue, contrary to the conventional understanding of the issue as being merely confined to the domain of consumer protection, that dark patterns also raise competition concerns. Forming the central theme of this article, the authors maintain that dominant firms employing dark pattern techniques get an unfair advantage over their competitors and heavily impact fair market dynamics, and in doing so, they violate Section 4 of the Competition Act 2002, (“Act”.)
The Nefarious Craft of Manipulation: Intrusion of Dark Patterns into the Realm of Competition Law
The extensive use of dark patterns brings out two concerns: the well-known privacy concern and the lesser-known competition concern. Privacy concerns surface when these digital platforms gather more data than the user initially agrees to or when there is a compulsion on the user to provide additional information in order to enjoy the services that the platform offers. Along with violating consumer privacy, consent, and confidentiality, the meticulously designed user interfaces attract grave competition concerns for the digital market. Firstly, the not-so-consensually collected data is used to unfairly track consumer purchase behaviour and predict consumer actions. Secondly, as illustrated in the coming section, these data platforms use dark pattern methods to create a lock-in effect where the consumers are bound to follow certain mandatory steps if they want to avail of these services, which they subsequently go on to fulfil. Concomitantly, this lock-in effect created by the use of dark patterns disables consumers from exploring other available options in the market and discourages competition.
Traditionally, antitrust enforcement was restricted to regulating only price factors, allowing digital platforms causing no major price injuries to evade antitrust liability. Recently, the Ministry of Corporate Affairs rolled out the draft Digital Competition Bill (“Bill”) to tackle the unfair competition challenges posed by digital markets, which, unlike traditional markets, rely on data commodification and user attention, essentially categorized as non-price factors. One such non-price factor is Dark Patterns, which is equally anti-competitive in nature as any price factor.
Unveiling Global Perspective – How Regulators across the world are combating Dark Patterns.
Lately, digital platforms have started employing myriad dubious methods – few aimed at data collection—and other methods of manipulation to subconsciously coerce users to opt for their services. The antitrust watchdogs across the world have perceived dark patterns as a menace to the fair market when employed by those in the position to dominate. For instance, the Department of Justice (“DoJ”) filed an antitrust suit against Apple in March 2024. Out of the numerous allegations Apple was accused of abusing its dominant position by employing dubious techniques to restrict the interoperability of messages and apps between iPhone and Android users. The inclusion of a colour code by Apple (blue for iMessage and green for SMS) was a subtle way of creating a less favourable experience for non-iPhone users, persuading them to switch to iPhone applications. Similarly, in 2023, the Federal Trade Commission (“FTC”) investigated ‘Amazon’ for using a deceptive user interface that favoured enrolment for Prime subscriptions and made it difficult to cancel them. Similarly, the Competition Bureau of Canada (the “Bureau”) investigated Dufresne Group Inc. (“TDG”) and fined them CAD 3.25 million for employing dark patterns in their marketing practices. The UK’s Competition and Markets Authority (“CMA”) investigated ‘Emma Sleep Group’ for creating false urgency claims to make quick purchases, another dark pattern technique. These investigations reiterate that the antitrust regulators in most parts of the world are intolerant towards the use of dark patterns that can potentially distort fair market conditions.
Manipulation Meets Regulations: Dark Pattern vs. Section 4 of the Competition Act 2002
As previously expounded upon, mental traps coupled with deceptively designed interfaces are two facets of dark patterns through which it seeks to influence consumers to often act against their best interests. So far, India’s antitrust watchdog i.e., the Competition Commission of India (“CCI”), has not investigated a tech giant on dark pattern allegations. Nevertheless, by plying tempting deceptive designs, dark patterns act as a catalyst for a firm that wants to abuse its dominant position in the market. These tech giants can restrict market access, impose unfair conditions on the purchase of goods or services, and limit production, all of which are prohibited under different sub-sections of Section 4 of the Act. This section will discuss each one of these violations in detail.
For instance, Basket sneaking involves automatically adding extra products, services, and additional payable amounts for charity to a user’s cart at the time of payment without the user’s prior consent. An anti-competitive effect arises when a dominant firm imposes unfair terms and conditions on the purchase of primary goods and services by deceiving consumers into agreeing to certain conditions they originally did not intend to agree to, thereby violating Section 4(2)(a)(i) of the Act, which prohibits the imposition of unfair or discriminatory conditions on sale or purchase of goods. Similarly, the Subscription trap, which makes the cancellation process of a paid subscription largely impossible or a long-drawn-out process, has an anti-competitive effect by making it difficult for consumers to discover or switch to new products/services offered by competitors, restricting the growth of potential superior innovative alternatives, which is a clear violation of Section 4(2)(b)(ii) of the Act, that addresses restrictions on innovation and market development. Likewise, in Forced continuity, where consumers are obligated to buy additional goods or sign up for ancillary services to get the primary goods/services they originally intended to purchase, they are in clear violation of Section 4(2)(d) of the Act, which prohibits the imposition of supplementary conditions that have no connection to the subject of the contract.
Collectively, these dark pattern practices violate Section 4(2)(c) of the Act that addresses entry barriers, which in this case, are the tech giants employing such techniques to create significant entry barriers for competitors who are playing fairly. As a result, market participants who compete without deploying dark patterns may eventually be forced out of the market, solidifying their position of dominance.
How can the proposed Digital Competition Bill address Dark Patterns?
Recently, the Ministry of Corporate Affairs rolled out the draft Digital Competition Bill (“Bill”) proposing ex-ante regulations to tackle anti-competitive challenges posed by the digital market, which, unlike ex-post investigations, takes pre-emptive measures to sabotage anti-competitive activities. Both quantitatively and qualitatively, firms with a ‘significant market presence’ are categorized as Systemically Significant Digital Enterprises (“SSDE”). These SSDEs are expected to adhere to strict transparency guidelines concerning their terms and conditions, algorithms and data practices to ensure fair market activity. Through the demand for upfront disclosure of terms and conditions, the Bill aims to strike down the proliferation of dark pattern activities taking place covertly. Moreover, the Bill demands data portability and interoperability from SSDEs, thereby ensuring multiple choices for consumers to switch to. In effect, this counterbalances the lock-in effect created by the use of dark patterns.
Conclusion
The DoJ antitrust suit against Apple is a welcome step towards the regulation of dark patterns under the ambit of antitrust laws. Following this, antitrust regulators across the globe are now expected to strengthen their control to take care of the sweeping anti-competitive effects. Instances like hiding key information at the time of purchase, creating a false sense of urgency for products, and making the opt-out process difficult are just examples of how dark patterns manifest themselves. Frequent plying of these deceptive manipulation tactics has the effect of paralyzing the fair market, and India must catch up. With the proposal of the Digital Competition Bill in place, the legislature has demonstrated its intent to wipe out any anti-competitive practices by the digital players. Unfortunately, dark patterns employed by digital players have gone unnoticed by antitrust regulators despite their potential to distort the fair market. These dubious methods are an “unfair trade practice”, and the examination of dark patterns must move beyond the dual tests of privacy and consumer rights violation. The CCI, thus, must seek legislative efforts to formally recognize Dark patterns as an anti-competitive practice.
The post is written by Ritisha Sinha and Arnav Srivastava, 3rd year students of NLUD and RGNUL respectively.