Tech Sector Remains Top Priority in Competition Policy and Enforcement

Major technology companies have been the focus of regulators around the world for a while now. Competition authorities, particularly in Europe, have started bringing an increasing number of cases against these companies. Just in June of this year the European Commission handed Google a record-breaking €2.42 billion fine for abusing its dominance in the search engine market. In this regard, Competition Commissioner, Vestager, has repeatedly been accused of an anti-US bias and disproportionately targeting US tech firms, an allegation which she has denied, stating that these cases are about “enforcement of fair competition” and “based on firm legal ground”.

Where is competition policy headed and what role will the tech sector play in the future? This was one of the questions posed by Politico’s Ryan Heath at the 2017 Web Summit. A high-calibre panel consisting of Terrell McSweeny from the US Federal Trade Commission, the President of the German Federal Cartel Office, Andreas Mundt, President of the Belgian Competition Authority, Jacques Steenbergen and University of Oxford Professor, Ariel Ezrachi, participated in a stimulating discussion on “Tackling Tech Giants and the Future of Competition Policy” (for a video link see here).

The panellists agreed that large tech companies will continue to be in the spotlight of competition policy and enforcement over the coming years. There was also a general consensus that the increased focus on large tech firms is less a matter of a honeymoon coming to an end, but more the result of authorities trying to keep up with changes in technology, market dynamics and competitive environments. According to Commissioner Sweeny, the general concern was that “people using power tech need to be accountable to brick and mortar laws and be able to explain how their tech works.” A question central to the discussions was therefore whether competition authorities will need (and possibly have already started) to push competition rules and enforcement beyond traditional boundaries in order to address the challenges posed by new technology markets.

Challenges faced by antitrust authorities in tackling major tech companies

The main challenge identified by the speakers was that of translating regulation that currently exists in the offline world into the online world in a sensible manner:

1. Theories of harm: In the majority of digital cases assessed by competition authorities, the theories of harm applicable will remain the same as they are today. There might be some instances, however, where slightly novel theories will have to be deployed or existing theories expanded. An example given in this context, was the role that fairness might play in the context of the digital economy. Both Steenbergen and Ezrachi noted European Competition Commissioner Vestager’s call for an increased emphasis on “fairness” in antitrust enforcement and acknowledged that the concept of “fairness” might be expanded to capture more digital activities (for a discussion of “fairness” as a potential theory of harm see here). This might be achieved, for instance, through a greater focus on exploitative abuses (i.e. abusive conduct which exploits consumers), a theory of harm that the European Commission has historically been reluctant to rely on.
2. Toolbox of competition authorities: Are competition authorities well-equipped to handle the challenges of digital competition? The consensus amongst the panellists was that they are. Competition authorities in the US as well as the EU (including at national level) are investing considerable time and resources into understanding new technologies and their effects on competition. Many authorities have set up task forces consisting of mathematicians and IT experts to analyse and fully comprehend digital markets / market dynamics. For instance, the German FTC has hired 30 IT experts and has set up an internal think tank dedicated entirely to tech issues.As noted by Steenbergen, in a fast-moving digital economy, competition enforcers face the challenge of taking decisions when the issues in questions are still relevant. Authorities often take a long time before they can reach a decision in a given case, which is largely driven by the need to respect the rights of defendants (in the Google Shopping case the European Commission took 7 years to render a decision). Keeping up with the ever accelerating speed of change is therefore something which competition authorities might struggle with.
3. Information gap: Competition authorities have extensive powers to extract necessary information from tech companies – they can issue requests for information, launch dawn raids and impose significant fines on companies that do not comply with their obligation to provide complete and accurate information. Nevertheless, there is often likely to be at least some information asymmetry between authorities and the companies who are in possession of the information. Especially, as we are moving to markets driven by algorithms and Big Data, this information gap is likely to widen.The shared feeling amongst the regulators on the panel was summarised well by Andreas Mundt: “We should not pretend that everything is new. Whilst there might be some new features and new parameters, competition law remains the same. We as competition authorities have in the past been able to deal with the challenges of change and will be able to deal with them now.” The consensus thus seems to be that competition authorities have the necessary powers and are equipped with the right tools and resources to tackle the challenges posed by the rise of technology firms.

Current focus on tech is here to stay 

The tech sector remains a top priority for competition agencies and policy makers worldwide and especially in Europe. Competition agencies are very active, bringing test cases with the aim of understanding and addressing these challenges in practice. Whilst in the US a debate is being held about the role competition authorities should play given the power of large tech firms, it is currently still difficult to say which direction the FTC will take. In the meantime, the European Commission has brought three cases against Google, two of which are still ongoing, with further cases rumoured to be in the pipeline. National authorities are also highly engaged, particularly in Germany, where the FCO published a preliminary assessment in its antitrust probe against Facebook at the end of last year.

As more cases are being brought and decisions being published, it will become clearer whether authorities will push antitrust rules and policy into new directions (e.g. by expanding on existing / developing new theories of harm) and what tools authorities will employ to keep up with the fast-paced developments in this area.

It therefore remains very important for technology companies to closely monitor developments in the antitrust sphere and actively participate in discussion with regulators (e.g. by commenting on consultations and other initiatives).