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The ‘revival’ of competition law in the age of Big Tech

24 September 2019

LLM student Sachin Nair, specialising in competition law, discusses the relationship between competition law and the emergence of Big Tech, and how this has led to a “revival” of this area of law in terms of its underlying policy goals. 

 

Big Tech (which refers to the major technology companies such as Google, Facebook, Apple and Amazon, that are said to possess excessive influence) has constantly been in the headlines, and often not for good reasons. 

Why has Big Tech been subjected to a constant barrage of criticism in recent years? And, how does competition law come into play?

From the data privacy scandal in early 2018 involving Facebook and Cambridge Analytica, to the recent 1.7 billion-US dollar fine levelled against Google by the EU Commission, it seems as though the tech giants are facing a concerted onslaught. Indeed, even across the Atlantic, there are bipartisan calls for more stringent antitrust enforcement against technology companies. It would thus appear that countries and governments are specifically turning to competition law as a tool to reign in Big Tech. 

Competition law policy goals

This would however be an oversimplification of the problems concerning Big Tech and it would be wrong to suggest that there has been a "revival" of the scope application and enforcement of competition law. Since its inception, competition law, which seeks to ensure that businesses play by the fair rules of competition in the marketplace for the benefit of consumers, has grown in recognition and application. About 130 countries now have a national competition regime with dedicated competition agencies to enforce these rules. 

The emergence of Big Tech does however raise questions about the adequacy of competition law to address the competition concerns around Big Tech in the digital age, and more importantly, the underlying goals that competition law seeks to achieve. In this respect, it could be argued that a revival of sorts has started to take root due, in no small part, to Big Tech.

Why all the hate? 

Why has Big Tech been subjected to a constant barrage of criticism in recent years? And, how does competition law come into play? In the midst of all the multi-million- and billion-dollar fines levelled against the tech giants, it easy for us to think that all the problems associated with Big Tech are similar, and it can sometimes be difficult to distinguish the different types of criticism levelled at Big Tech. 

The problems posed by the tech giants are myriad, and we can identify a couple that warrant them garnering significant media attention. The first is their alleged anti-competitive behaviour in the market which distorts and restricts competition. A good example being the recent multi-billion dollar fine levelled against Google by the EU Commission for abusive practices in online advertising.

Next, we have the data and privacy concerns: see Facebook and its long list of privacy scandals, the most notable being the case of the political data firm Cambridge Analytica being able to gain access to the data of millions of Facebook users before the 2016 US elections. In April 2019, around 540 million Facebook users' records were left unprotected on Amazon cloud servers.

There is also the issue of tax-avoidance: the EU Commission has brought cases against Amazon and Apple for allegedly flouting state aid rules, though this is hardly exclusive to Big Tech and the cases against them are not uncontroversial from a legal standpoint. These coupled with other concerns (e.g. Facebook and the proliferation of fake news, as well as more generally the harm associated with social media use) have made Big Tech an attractive target for politicians and critics alike. 

Competition law as the be-all and end-all?

What should be evident from this is that the issues posed by Big Tech do not fall neatly within the confines of competition law. Other areas of law will also come into play to address these distinct problems: data protection and privacy laws, corporate taxation rules, as well as other sector-specific legislation. The UK and the EU are considering levying a digital services tax against the tech giants. France will be the first country to introduce such a tax, while an ongoing consultation in the UK about social media regulations is also taking place. 

And where their conduct is anti-competitive, competition law steps in. Essentially, competition law deals with the competition concern. From this perspective, it is not a be-all and end-all to reign in the tech giants. 

One need only look at the list of cases brought by the EU Commission against them. While the argument that their respective market practices stifle competition to the detriment of consumers is not incontrovertible, it is clear that competition law has an essential role to play. That is not to say that competition law is not a significant tool to check the power of Big Tech.

First, the competitive concerns raised about the tech giants are a significant issue; indeed, many would argue that it is the biggest concern that they pose. Their amassed market power can enable abusive conduct on the market to stifle competition and competition law seeks to ensure that they be punished when this happens.

Second, and more interestingly, competition law could also be a means to dismantling the economic power and influence held by the tech giants. There has been talk about whether we should break up Big Tech. This is reminiscent of the break-up of the oil titans in the early 20th century and, closer to present day, the break-up of AT&T (the world's largest telecommunications company) in the 1980s. US Democratic senator and presidential candidate, Elizabeth Warren, is also calling for the break-up of Amazon, Google and Facebook. Whether this will happen is far from certain and whether this should be an approach to take is also highly debatable. 

A revival…. of sorts?

This brings us back to competition law itself. The emergence of Big Tech has undoubtedly raised questions about whether the rules formulated during the age of the industrial barons are adequate to deal with the competitive concerns of the digital age. A more fundamental question is whether there should be a rethink of the goals that competition law seeks to achieve, which has, since the 1980s, been consumer welfare. This is particularly true in the US, where the focus has been on economic efficiency, which roughly translates into price.

As one can imagine, it is difficult to argue that the tech giants are anti-competitive when the products they offer are essentially free or very cheap. Thus, should competition law also take into consideration broader policy goals like decentralisation, prioritising smaller and local businesses, and environmental and social considerations? 

 

Views expressed in our blogs are those of the authors and do not necessarily reflect those of the Law Society.

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About the author

Sachin Nair is an LLM student at King's College London, specialising in competition law

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