The Narrative is a twice-monthly survey of key developments in Internet governance. This time we take up competition law activity against platforms, and the EU data governance initiative.
Competition policy and platforms
As Internet-driven platforms achieve ever-greater prominence and market power in the 21st century, antitrust actions are proliferating based on laws and politics forged during consolidations in the 19th century industrial economy. Actions are taking place in the U.S., China, Australia, India, the UK and the European Union.
In the U.S. there is strong bipartisan support for antitrust actions against the platforms, though the rationales of Republicans and Democrats differ. Republicans want to punish them for being biased media sources, while progressive Democrats target them for their bigness. In October, the House Judiciary Committee’s antitrust subcommittee released a comprehensive report on its investigation into competition in digital markets. Although the report highlights control exercised by tech giants over digital infrastructure and the data of sellers or consumers, it does not address the economic and political factors that have contributed to the rise of tech monopolies. Not long after publication of the report, the US Department of Justice filed a lawsuit against Google accusing the company of engaging in anti-competitive practices in search and search advertising. The lawsuit is the most aggressive challenge the DOJ has made against a tech giant since it accused Microsoft of anti-competitive practices in 1997. The US Federal Trade Commission has also been examining Amazon’s relationship with third-party sellers.
China is preparing to launch an antitrust probe into Google, based on complaints from Chinese smartphone maker Huawei that by cancelling its Android licence Google has caused “extreme damage” to Chinese companies. In India, one of Google’s most important markets outside of the U.S., the Competition Commission of India (CCI) is investigating allegations of Google hurting competitors by forcing smart TV manufacturers to use the Android operating system, or prohibiting them from developing modified versions of Android. The case is Google’s fourth major antitrust challenge in India: it has been fined nearly $21 million for “search bias” and abusing its “dominant position” in the market, and is being investigated for abusing its dominance to promote its payments app and reducing the ability of smartphone makers to choose any other operating system other than Android. The Australian Competition and Consumer Commission (ACCC) has released an issues paper seeking views and feedback on whether Apple’s App Store and Google Play Store stifle competition. Issues under consideration include the use and sharing of data by apps, the extent of competition between Google and Apple’s app stores, and pricing transparency. UK’s Competition and Markets Authority (CMA) is contemplating launching a formal investigation into Google’s ‘Privacy Sandbox’ initiative following complaints from Marketers for an Open Web (MOW), a coalition of technology and publishing companies, that the proposed changes take login, advertising and other functionalities off the open web and place them under Google’s control.
The European Union has also sought to enforce antitrust laws against large technology platforms. EC antitrust actions against Google started 10 years ago but aside from collecting very large fines have had little impact on market structure or market share. In November, EU regulators brought antitrust charges against Amazon alleging it had abused its dual role as a platform operator using non-public data from sellers who use its platform to spot popular products, then copy and sell them, often at a lower price. In a statement Margrethe Vestager, executive vice-president in charge of the EU’s digital policy said, “We must ensure that dual role platforms with market power, such as Amazon, do not distort competition…data on the activity of third-party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers.” Apart from pursuing Big Tech, EU is working on proposals to allow regulators to go after fast-growing companies before they are able to achieve the kind of market dominance enjoyed by Google and Facebook.
Echoing the trend of increasingly active antitrust enforcement in the digital sector, China has published antitrust guidelines. The guidelines cover both platform operators and sellers on platforms (platform players), and algorithms, technical tools, data and platform rules are included in assessment of market power and analyzing monopoly conduct. Notably, both digital platforms and data controlled by platform operators or players may be deemed as an essential facility which coupled with market dominance could entail obligations to grant access for competitors and users. The UK government has also announced the creation of a specialized unit – the Digital Markets Unit (DMU) to reign in Google, Facebook and other major platforms. Anchored within the CMA, the unit is expected to play a key role in shaping and enforcing a new code of conduct setting out the limits of acceptable behaviour by companies deemed to have “strategic market status.” The contents of that code have yet to be drawn up and the government has not specified what would qualify a company as having strategic market status.
From this survey one sees a highly varied and not always consistent set of rationales for antitrust action, including classical abuse of market power, political retribution, trade protectionism, reaction to US sanctions on China, and neo-Brandeisian revolts against bigness. The most applicable precedent for platform antitrust is the Microsoft case of the early 2000s. Although there are still differing opinions about the effects and remedy of that case, we would do well to learn from it.
EU data governance initiative
On 25 November, the European Commission released its Proposal for a Regulation on European Data Governance, to be known as the Data Governance Act. The Commission and supporters of the proposal see it as an attempt to avoid divergent and uncoordinated legislation from its member states, which could “intensify fragmentation [of data-related services] in the single market.” The four pillars of the proposal pertain to:
- A mechanism for re-using certain categories of protected public sector data which is conditional on respect for privacy and intellectual property rights (Chapter II)
- Limiting data sharing to “trusted intermediaries” (Chapter III)
- Creation of a platform for data voluntarily made available by individuals or companies for the common good; a.k.a. “data altruism” (Chapter IV)
- Creation of a European “Data Innovation Board” (Chapter VI)
Most of the interesting issues and controversies pertain to the trusted intermediaries in Chapter III. Critics of the proposal have called it “protectionist and discriminatory.” In an attempt to head off these claims, the EC “decided against imposing geographical restrictions” on data-sharing services, but still requires them to have a place of establishment in the EU, or at least “designate a representative” in Europe. Hosuk Lee-Makiyama, the director of the European Centre for International Political Economy (ECIPE), criticized the requirement that companies that share data must be established in Europe. “Not even China goes that far”, he said in a Politico article. Lee-Makiyama, like some US-based critics of the proposal, believes that the proposal violates WTO rules on trade in information services. The EC’s Internal Market Commissioner Thierry Breto, surprisingly, did not deny this but rather said in the same Politico article that “WTO rules that were drafted in the mid-90s might no longer be suitable for today’s data-driven world.”
Whether the Act is protectionist or not has diverted attention from a more fundamental issue, namely the economic feasibility of the so-called “trusted intermediaries” proposal. Trusted intermediaries are an interesting attempt by the government to dictate a market structure for data sharing that is completely different from the way major platforms currently operate. Margrethe Vestager, the European Commission’s executive vice-president for digital, said that the intermediaries “will have to comply with strict requirements to ensure their neutrality.” Neutrality, in Vestager’s opinion, “is only possible by way of a clear structural separation between the eventual data acquirer and the data intermediary.” Consequently, the draft regulation states “data sharing service providers act only as intermediaries in the transactions, and do not use the data exchanged for any other purpose.” Providers will be obliged to separate data sharing services from other commercial operations and will not be allowed to further monetize the data. Will it be possible to maintain structural separation? One is reminded of the ancient attempt in the U.S. to draw a line between “basic” and “enhanced” information and telecom services. It is unclear how many of the millions of acts of data sharing that occur in an increasingly digital economy will be affected by this requirement. It is unclear whether actors who are subject to it have incentives to participate in this scheme or to find ways to avoid it.
Another question arises: Are “trusted intermediaries” an attempt to better regulate data protection and sharing for the purposes of protecting individual rights, or is the new legal framework an industrial policy initiative that tries to hobble the American platforms so as to create European “national champions” in the data economy? Both rationales can co-exist, of course, but they can lead in different directions.
