Big tech faces EU’s antitrust scrutiny - Activate World

Big tech faces EU’s antitrust scrutiny

Washington is talking about antitrust regulation for big tech while Europe takes action.  European Union (EU) regulators have recently announced a number of actions against US tech companies, beginning with an investigation last month into chipmaker Broadcom over whether it uses exclusivity agreements to undermine competitors. Margrethe Vestager, the top EU antitrust official, said Amazon will be examined for possibly abusing its dual role as a seller of its own products and a marketplace operator. That announcement was followed by a major fine against Qualcomm.

Lunchtime Conversations:

  • Margrethe Vestager, the top EU antitrust official, argues that “technology is serving us as citizens, as consumers, and this is why we regulate. Not because we want to hold anyone down, but because we want our societies to work.” What can tech companies do to restore citizen’s trust in digital technology? 
  • In contrast to the EU’s approach, could dismantling big tech companies help foster innovation, consumer choice, and competitive markets? 
  • After the record $5 billion FTC fine, Facebook is now under scrutiny by EU antitrust regulators. What punitive actions could the European Commission take to bring needed changes if Facebook is punished?

Noteworthy: 

  • The European Commission has fined Qualcomm €242 million ($273 million) for violating EU antitrust laws by selling is 3G chipsets below cost in an attempt to keep a British competitor, Icera, out of the market. 
  • Google and Facebook Inc. together controlled 60% of mobile ad revenue and 51% of digital ad revenue globally in 2018, according to eMarketer. In the U.S., Apple Inc. has about 45% of the smartphone market; about 47% of all U.S. e-commerce sales go through Amazon.com Inc.
  • Regulators in the U.S. long ago stopped equating big with bad. (Standard Oil’s market share got as high as 88%late in the 19th century.) What’s illegal is for a monopoly to abuse its market power to prevent rivals from threatening its position. 

Storyline: 

The EU has led the antitrust charge for years, most notably against Alphabet Inc.’s Google, issuing $9.25 billion in fines against the search giant. Now antitrust scrutiny of technology titans is ratcheting up in the U.S., as well, with the Federal Trade Commission and Justice Department dividing up oversight of Amazon, Google, Facebook Inc. and Apple Inc.

EU law sets a lower standard for determining abuse of dominance by a company, so it is easier to run afoul of antitrust restrictions, as evidenced by Google’s three antitrust actions in as many years. The U.S. chose not to bring charges against Google for the same conduct the EU found illegal. EU enforcers also have been focused on big tech companies collecting consumers’ personal data. 

The General Data Protection Regulation that took effect in May 2018 gave regulators unprecedented powers to protect people from having their data misused by companies doing business in the EU. Already, Google has been fined 50 million euros ($56.8 million) for privacy violations — the highest such penalty ever in the EU. Google has appealed.

Some economists think it’s time to move past conventional antitrust enforcement to consider harmful effects from increased concentration such as lower private investment, weak productivity growth, rising inequality and declining business dynamism, or the rate at which firms enter and exit markets. They are joined by U.S. Senator Elizabeth Warren, a 2020 Democratic presidential candidate, who has proposed dismantling tech giants like Facebook and Google.

Big tech companies argue that their dominance is not absolute because barriers to market entry are low for new competitors. Google is fond of saying, Competition is just “one click away.”

Sources: BloombergBloomberg QuintMarketwatchWall Street JournalWired

Photo by Sara Kurf on Unsplash