A plan by Kenya's consumer watchdog to oversee global technology companies such as Apple and Alphabet's Google risks stifling innovation and excluding some players from the Kenyan market, according to their lobby group.
The warnings come from the Computer and Communications Industry Association (CCIA), a powerful American lobby whose members include Amazon, Facebook parent Meta, and X.
The CCIA responded to a proposal in March by the Competition Authority of Kenya (CAK), which says the current legal environment lacks adequate consumer safeguards, thus necessitating a new law.
The CAK proposal, yet to be finalized, would subject such American companies operating in Kenya to the same supervision currently imposed on Kenyan firms like banks.
This would involve the watchdog inspecting compliance with laws on unfair or deceptive practices and privacy protections.
However, the US firms argue that the Draft Competition (Amendment) Bill, 2024 proposed by the CAK could have unintended consequences for the country's burgeoning digital economy.
"As the entire economy is moving towards digitalisation, creating a different set of rules for digital companies could create asymmetric results in the market, leading to ambiguity and inconsistency," the US lobby said in the letter seen by The Standard.
The lobby group warned that "an overly burdensome and heavy-handed regulation for digital markets could significantly hinder innovation and economic growth."
Global policy analysts have also raised concerns, arguing that the proposed regulations risk stifling the innovation and competition that digital platforms have brought to Kenyan consumers and businesses.
The Information Technology and Innovation Foundation (ITIF), a US-based nonprofit research institute, said the proposed law imposes rigid regulatory frameworks without a thorough understanding of evolving business models and market realities, which could backfire and hamper the growth of Kenya's digital sector.
It warned that the global nature of digital platforms means that overbearing regulatory measures in Kenya could discourage international technology companies from investing and operating in the country, limiting the flow of new ideas, services, and investment that have been critical to positioning Kenya as a leading technology hub in Africa.
Instead, the lobby suggests in another letter seen by The Standard, a more prudent approach would be to closely monitor market developments, identify specific competition concerns based on evidence, and then develop targeted, proportionate interventions.
This would ensure that any regulations address genuine problems without stifling the dynamism and benefits of Kenya's digital ecosystem.
CAK is currently reviewing public comments on the draft bill before finalising the legislation.
Several other American-backed technology groups have also warned that the new measures could undermine the country's booming tech sector and limit foreign investment.
Given the increasing importance of the digital sector in Kenya's economy, policymakers should avoid overly burdensome regulatory measures targeted at digital companies that can hinder innovation and the digital economy, noted the firms.
The focus should remain on fostering competition and innovation, particularly in the digital sector, to maintain Kenya's leading position in the continent's digital investment and innovation, they said.
