Online platforms – EU legislation to curtail future abuse of dominance?

4 Dec

On Monday, the FT carried an interesting piece (see https://on.ft.com/2Vw65HB ) quoting Margrethe Vestager, the bloc’s Competition Commissioner, on this subject. She referred to proposals (presumably the Digital Markets Act) which would be published ‘next week’ ‘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.’

There was also reference to a ‘pre-recorded interview to be aired on Tuesday’, but I can find no trace of it. However, the FT article, and an earlier speech by the EC President, Ursula Von der Leyen, give a good indication of what is envisaged.

Effectively, the Commission thinks a ‘backward looking’ competition policy regime – where a new digital platform has established ‘dominance’ in a market and ‘abused’ it in some way – is too slow. ‘The law’s delay’ may mean that (actual or potential) competitors have been excluded from the market by the time remedies can be set. So when digital platforms reach a certain size they will have new obligations – the examples given are data sharing with competitors and (from the Von der Leyen speech) ‘boundaries to the powers of gatekeeper platforms’.

Well, possibly, but it all sounds a bit odd. For a start, why should this new approach only apply to digital platforms? The backward-looking ex post nature of competition policy applies on a cross-sector basis. Perhaps the Commission thinks that the rapid pace of innovation causes particular problems in online services? But even so, why limit it just to online platforms? How are these to be defined? And how is the threshold size at which they might become a problem to be set? Then again, the examples given pose issues of their own – data sharing? – with whose consent? – can a ‘cost-related’ charge be levied?

But there is a more fundamental problem with the focus on online digital platforms. At least in their early stages, may of them are innovative and pro-competitive, shaking up existing industry structures which themselves are often none too competitive. Streaming services such as Netflix, for example, are challenging broadcasters who often have national monopoly or oligopoly positions to defend. And online platform business models require scale to work. How do you judge at what point the pro-competitive innovations offered by a new entrant change in some Jekell and Hyde way into anti-competitive abuses of a dominant position? Difficult enough on a case by case basis – but virtually impossible to put into a guidance framework that is much practical use.

To add to these difficulties, there is a potential protectionist slant as well, as most large online platforms are operated by US companies. So we may see the likes of Amazon & Google heading off to the WTO to share their tales of woe.

Sowe await the Digital Markets Act with interest. Commentators expect it may be published on 9th or 10th of December, along with the Digital Services Act. An early Christmas present for your favourite online platforms. Several of which you can of course search for latest developments.

(For more detail on this, see a an excellent piece by Meredith Broadbent in the Center for International and Strategic Studies – https://www.csis.org/analysis/digital-services-act-digital-markets-act-and-new-competition-tool)

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