The proposed Consumer Protection (e-commerce) Rules, 2020 could impact super app strategies of many companies as rules on related parties, data sharing and cross-selling clauses could become a major hurdle.

As per the amendment, a related party or associated enterprise of an e-commerce marketplace which is directly or indirectly related to the marketplace will not be allowed as a seller on the platform.

For companies like Tata Digital – which has actively acquired controlling stakes in start-ups like 1MG, BigBasket and Curefit among others to build its super app services – this clause leaves several uncertainties and complexities. Separately, Tata’s other entities such as Tata Consumer Products, which has a 50:50 joint venture with Starbucks, wouldn’t be allowed to sell their merchandise and products through its app.

There are restrictions on cross-selling of services or products to the consumer too. Through cross-selling, e-commerce websites add related product suggestions to check out lists to increase revenue per order.

The proposed draft amendments to e-commerce rules tend to introduce disruptive measures which, if enacted in current form, would require existing marketplace entities to substantially restructure their business model and alter their current business practices. The ambit of proposed restrictions is also very wide.

The definition of e-commerce entities has now been made very expansive whereas restrictions are also placed upon ‘associated enterprises’ which are defined broadly with a low threshold of 10 per cent compared to a 26 per cent threshold under other laws including FDI Policy. While measures for ensuring adequate hygiene levels in conduct of marketplace business have been introduced under the FDI Policy in the past, it is worth noting that this time the Government is proposing to introduce restrictions under consumer protection laws.

The FDI Policy issue will directly impact companies like Amazon and Flipkart which are foreign conglomerate-owned entities. Amazon recently ended its long-standing joint venture with Narayana Murthy’s Catamaran Ventures, that ran Amazon’s largest seller Cloudtail.

A super app comes with multiple apps and brands under a company, offered within one umbrella app. Ever since Tata Group Chairman N Chandrasekaran said in 2020 that the conglomerate is working on a ‘super-app’, the term has garnered much interest and curiosity.