BIG TECH

By Petar Pešić

December 2, 2020

Elmer Vergara

New rules on the horizon

The past few months have taken the world battling fiercely against COVID-19 but this has not prevented a notable progress in the field of antitrust and competition law. One of these changes has the potential to remodel the way this area of law will develop with the rise of Big Tech. The Competition and Markets Authority (CMA)  in the UK has published a market study alongside recommendations for new tools for the competition authority to make it more capable to address irregularities that may occur in the area of online platforms and digital advertising. Importance of this study grows further when we take into account that the EU is also considering adopting new rules for the online platforms. 

The two recommendations given to the UK Government are:

• Establishing an enforceable code of conduct to govern the behaviour of platforms funded by digital advertising that are designed as having strategic market status, giving a new competition agency all the tools needed to enforce and amend the code if the market situation so requires;
• Introduction of pro-competitive ex ante interventions including more control over data given to consumers and overall more choice for consumers to opt-out the data collection for advertisement and separation interventions.

The why?

Now, why is it required for competition authorities to have new powers in regards to online platforms and digital advertising? CMA believes that these firms (Google and Facebook being the focus of the study) are too big to be confronted in case of any anti-competitive behaviour with the powers that they currently have. They are also in a league of their own, with no competitors or with no serious threat to their market power in the UK. Study also reveals that without sharing algorithms or the processes behind the digital advertising, it is unlikely that any competitor would emerge because the barriers to entry are just too high.



The aftermath

It is yet to be seen whether the UK Government would adopt these recommendations or modify them in a certain manner, but this move should be important. It opens up a discussion on important issues for all of us. These companies have been able to make exponential growth on account of the data they are taking from all of us for free. Granted, they do give us the option of using these services for free. But their commercial position would be next to non-existent if they were not able to take advantage of the data they receive from us for advertising. Most of their profits, as the study revealed, comes from digital advertising. Giving us as consumers choice over whether we want our data to be in their system and used for digital advertising is something that could cause a shake-up in the way online platforms work. It could even derive a subscription fee similar to the ones existing on Netflix or Spotify. 

This is all something that will be followed in the coming months, but it appears that competition authorities did not grind to a halt due to the pandemic.