Biden nominates another Big Tech enemy, this time to lead the DOJ’s antitrust division

The Biden administration tripled down on its commitment to reining in powerful tech companies Tuesday, proposing committed Big Tech critic Jonathan Kanter to lead the Justice Department’s antitrust division.

Kanter is a lawyer with a long track record of representing smaller companies like Yelp in antitrust cases against Google. He currently practices law at his own firm, which specializes in advocacy for state and federal antitrust enforcement.

“Throughout his career, Kanter has also been a leading advocate and expert in the effort to promote strong and meaningful antitrust enforcement and competition policy,” the White House press release stated. Progressives celebrated the nomination as a win, though some of Biden’s new antitrust hawks have enjoyed support from both political parties.

The Justice Department already has a major antitrust suit against Google in the works. The lawsuit, filed by Trump’s own Justice Department, accuses the company of “unlawfully maintaining monopolies” through anti-competitive practices in its search and search advertising businesses. If successfully confirmed, Kanter would be positioned to steer the DOJ’s big case against Google.

In a 2016 NYT op-ed, Kanter argued that Google is notorious for relying on an anti-competitive “playbook” to maintain its market dominance. Kanter pointed to Google’s long history of releasing free ad-supported products and eventually restricting competition through “discriminatory and exclusionary practices” in a given corner of the market.

Kanter is just the latest high profile Big Tech critic that’s been elevated to a major regulatory role under Biden. Last month, Biden named fierce Amazon critic Lina Khan as FTC chair upon her confirmation to the agency. In March, Biden named another noted Big Tech critic, Columbia law professor Tim Wu, to the National Economic Council as a special assistant for tech and competition policy.

All signs point to the Biden White House gearing up for a major federal fight with Big Tech. Congress is working on a set of Big Tech bills, but in lieu of — or in tandem with — legislative reform, the White House can flex its own regulatory muscle through the FTC and DOJ.

In new comments to MSNBC, the White House confirmed that it is also “reviewing” Section 230 of the Communications Decency Act, a potent snippet of law that protects platforms from liability for user-generated content.

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Google fined $592M in France for breaching antitrust order to negotiate copyright fees for news snippets

France has hit Google with a fine of half a billion euros after finding major breaches in how it negotiated with publishers to remunerate them for reuse of their content — as is required under a pan-EU reform of digital copyright law which extended neighbouring rights to news snippets.

The size of the fine is notable as it’s over half of the entire $1BN news licensing pot that Google announced last October — when it said it would be paying news publishers “to create and curate high-quality content” to appear on its platforms.

At the time, the move that looked intended to shrink Google’s exposure to legal mandates to pay publishers for content reuse by pushing them to accept commercial terms which give it broad rights to ‘showcase’ their content.

France’s watchdog has now called out — and sanctioned — the practice.

The half a billion euro penalty is also notable for being considerably more than Google had already agreed to pay French publishers, according to Reuters — which reported, back in February, that the tech giant had inked a deal with a group of 121 publishers to pay them just $76M over three years.

France’s competition authority said today that it’s applying the sanction of €500 million ($592M) against the tech giant for failing to comply with a number of injunctions related to its earlier, April 2020 decision — when the watchdog ordered Google to negotiate in good faith with publishers to remunerate them for displaying their protected content.

Initially, Google sought to evade the neighbouring news right by stopping displaying snippets of content alongside links it showed in Google News in France. But the watchdog found that was likely to be an abuse of its dominant position — and ordered Google to stop circumventing the law and negotiate with publishers to pay for the reuse in good faith.

The Autorité de la Concurrence is not happy with how Google has gone about this, though.

A number of publishers complained to it that the negotiations were not carried out in good faith and that Google did not provide them with key information necessary to inform payments.

The Syndicate of magazine press publishers (SEPM), the Alliance de Presse d’Information Générale (APIG) and Agence France Presse (AFP) made complaints in August/September 2020 — kicking off the investigation by the watchdog and today’s announcement of a major penalty.

Further fines — of up to €900,000 per day — could be headed Google’s way if it continues to breach the watchdog’s injunctions and fails to supply publishers with all the required information within a new two-month deadline.

In a press release detailing its investigation, the Autorité said Google sought to unilaterally impose its global news licensing product, aka ‘Showcase’, under a partnership the tech giant calls Publisher Curated News — in negotiations with publishers — pushing for the legal neighbouring right to be incorporated as “an ancillary component with no separate financial valuation”.

Publishers requests to break out copyright remuneration negotiations were denied, per the watchdog’s investigation.

It also found Google “unjustifiably” reduced the scope of negotiations with regard to the scope of income derived from the display of protected news content — with Google telling publishers that only advertising income from Google Search pages posting news content should be taken into account in determining the level of remuneration due.

The authority found this exclusion of income from other Google services and all indirect income related to this content to be in breach of the copyright law and its earlier compliance order.

Google also “deliberately circumscribed” the scope of the law on neighboring rights by excluding titles that do not have a Political and General Information certificate — which the watchdog couched as a “bad faith” interpretation of the code on intellectual property.

It also found the tech giant sought to exclude press agencies from renumeration related to their content when used by third party publishers — highlighting that as another breach of its April 2020 decision, by further noting: “The French legislator has been very explicit on the need to include press agencies.”

In another finding, it said Google had only provided publishers with “partial” and “insufficient” information for a “transparency assessment of renumeration due”; and further accused the tech giant of delaying until just a few days before the injunction deadline to provide it — so of being “late” too.

The authority’s investigation highlights compliance problems with another injunction — related to an obligation of neutrality in how protected content is presented on Google’s platforms — with the watchdog writing on that: “The strategy put in place by Google has thus strongly encouraged publishers to accept the contractual conditions of the Showcase service and to renounce negotiations relating specifically to the current uses of protected content, which was the subject of the Injunctions, under penalty of seeing their exposure and their remuneration degraded compared to their competitors who would have accepted the proposed terms. Google cannot therefore claim to have taken the necessary measures to prevent its negotiations from affecting the presentation of protected content in its services.”

Another injunction sought to prevent Google from seeking to leverage its dominance by offsetting remunerations paid to publishers for the neighbouring rights.

On this the watchdog also took issue with its approach — noting that its Showcase product requires publishers to make not just snippets of their content available for display on Google’s platforms but “large extracts” and even whole articles.

It also found that Google linked participation in the Showcase program to subscription to another service called Subscribe with Google (SwG) — enabling it to link negotiation on neighboring rights with the subscription of new services that could financially benefit its business.

Under a subhead which denounces what it found as “extremely serious practices”, the authority goes on to accuse Google of “a deliberate, elaborate and systematic strategy of non-compliance” — and of continuing an already years-long “opposition strategy” to the principle of neighbouring rights; and then, after they’d been baked into EU and French law, seeking to “minimize the concrete scope of those rights as much as possible”.

Google has, the authority asserts, sought to use a global strategy to close down publishers’ ability to negotiate for remuneration for their content reuse at a national level — using its Showcase product as a cloak for “avoiding or limiting as much as possible” payments to publishers; and, simultaneously, seeking to use negotiations on neighboring rights as an opportunity to obtain access to new content by press publishers that could allow it to collect additional income, such as from subscriptions to press titles.

“The sanction of 500 million euros takes into account the exceptional seriousness of the breaches observed and that the behavior of Google has further delayed the proper application of the law on neighboring rights, which aimed to better take into account the value of content from publishers and news agencies included on the platforms. The Authority will be extremely vigilant about the correct application of its decision, as non-execution can now lead to periodic penalty payments,” added the watchdog’s president, Isabelle de Silva, in a statement (which we’ve translated from French).

The half a billion euro fine and the warning to Google that its practices will attract daily fines if it persists in ignoring the injunctions put the tech giant on notice that the detail of commercial deals won’t be allowed to fly under the radar in France.

Any more attempts to shape a self-serving version of ‘compliance’ are likely to attract further sanction from the watchdog — which also recently applied a number of interoperability requirements on Google’s ad business (and slapped it with a $268M fine), also acting on complaints from publishers.

While anything Google agrees to in France on the neighbouring rights issue is likely to set the bar for what it can achieve with commercial deals elsewhere — at least in other EU markets, where the copyright extension also applies (once it’s been transposed into a Member State’s national law).

In a statement responding to the authority’s sanction, Google expressed disappointment with the outcome of the investigation — claiming to have acted in good faith throughout negotiations with publishers:

“We are very disappointed with this decision — we have acted in good faith throughout the entire process. The fine ignores our efforts to reach an agreement, and the reality of how news works on our platforms. To date, Google is the only company to have announced agreements on neighbouring rights. We are also about to finalize an agreement with AFP that includes a global licensing agreement, as well as the remuneration of their neighbouring rights for their press publications.”

The tech giant went on to suggest that the authority’s decision is “primarily” related to negotiations in France which took place between May and September 2020, further claiming it has continued to engage with publishers and press agencies since then to find “solutions”.

By way of example it pointed to a January 2021 framework agreement inked with the Alliance de la Presse d’Information Générale — which it claims covers every IPG title (Information de Presse Générale) in a “transparent and non-discriminatory way”. It also pointed to agreements it has inked with other publications in the market, including Le Monde, Courrier International, L’Obs, Le Figaro, Libération, and L’Express.

Google also reiterated its confident it can sign a global licensing agreement with Agence France Presse — which it said it also wants to include remuneration of neighbouring rights for press publications from the agency.

“Our objective remains the same: We want to turn the page with a definitive agreement,” it added, saying it would take the French Competition Authority’s “feedback into consideration and adapt our offers” and that: “We are already engaging with press publishers and agencies beyond IPG, by covering publications that are recognised by the CPPAP as ‘online press services’, and we reiterate our offer to have an independent third party in a position to evaluate our offers and allow us to base our discussions on facts.”

Other major fines for Google in France in recent years include the aforementioned $268M for adtech abuses last month; $120 for dropping tracking cookies without consent back in December; $166M in December 2019 for opaque and inconsistent ad rules; and $57M for privacy violations in January 2019.

Beyond the EU, Australia recently passed a law which requires tech giants, Google and Facebook, to enter mandatory arbitration with publishers for reuse of their content if they fail to agree commercial terms on their own.

Its law has attracted considerable attention worldwide as legislators grapple with how to rein in powerful tech platforms and ensure the sustainability of traditional news businesses whose revenues have been hit by the Internet-driven shift to digital publishing.

The UK’s Competition and Markets Authority has, for example, described Australia’s backstop of mandatory arbitration if commercial negotiations fail as a “sensible” approach — at at time when the government is working on shaping an ex ante regulation regime to enable competition authorities to pro-actively tackle abuses by platforms with strategic market power.

Ahead of Australia’s law being passed, Google had warned that it might have to close its services in the country if legislators went ahead and also suggested the quality could degrade or that it may have to start to charge for products. In the event, it did not shut up shop down under.

The tech giant was also an active lobbyist against the EU’s plan to extend digital copyright to cover snippets of news content — and, as recently as 2019, it was vowing never to pay for news.

A few years later it announced the $1BN pot to pay publishers to licence content. But Google’s eventual bill for its ad business piggybacking upon others’ journalism may be rather larger than that.

#antitrust, #australia, #competition-law, #copyright-law, #europe, #european-union, #france, #google, #google-news, #le-monde, #media, #showcase

Biden’s sweeping executive order takes on big tech’s ‘bad mergers,’ ISPs and more

The Biden administration just introduced a sweeping, ambitious plan to forcibly inject competition into some consolidated sectors of the American economy — the tech sector prominent among them — through executive action.

“Today President Biden is taking decisive action to reduce the trend of corporate consolidation, increase competition, and deliver concrete benefits to America’s consumers, workers, farmers, and small businesses,” a new White House fact sheet on the forthcoming order states.

The order, which Biden will sign Friday, initiates a comprehensive “whole-of-government” approach that loops in more then twelve different agencies at the federal level to regulate monopolies, protect consumers and curtail bad behavior from some of the world’s biggest corporations.

In the fact sheet, the White House lays out its plans to take matters to regulate big business into its own hands at the federal level. As far as tech is concerned, that comes largely through emboldening the FTC and the Justice Department — two federal agencies with antitrust enforcement powers.

Most notably for big tech, which is already bracing for regulatory existential threats, the White House explicitly asserts here that those agencies have legal cover to “challenge prior bad mergers that past Administrations did not previously challenge” — i.e. unwinding acquisitions that built a handful of tech companies into the behemoths they are today. The order calls on antitrust agencies to enforce antitrust laws “vigorously.”

Federal scrutiny will prioritize “dominant internet platforms, with particular attention to the acquisition of nascent competitors, serial mergers, the accumulation of data, competition by ‘free’ products, and the effect on user privacy.” Facebook, Google and Amazon are particularly on notice here, though Apple isn’t likely to escape federal attention either.

“Over the past ten years, the largest tech platforms have acquired hundreds of companies—including alleged ‘killer acquisitions’ meant to shut down a potential competitive threat,” the White House wrote in the fact sheet. “Too often, federal agencies have not blocked, conditioned, or, in some cases, meaningfully examined these acquisitions.”

The biggest tech companies have regularly defended their longstanding strategy of buying up the competition by arguing that because those acquisitions went through without friction at the time, they shouldn’t be viewed as illegal in hindsight. In no uncertain terms, the new executive order makes it clear that the Biden administration isn’t having any of it.

The White House also specifically singles out internet service providers for scrutiny, ordering the FCC to prioritize consumer choice and institute broadband “nutrition labels” that clearly state speed caps and hidden feeds. The FCC began working on the labels in the Obama administration but the work was scrapped after Trump took office.

The order also directly calls on the FCC to restore net neutrality rules, which were stripped in 2017 to the widespread horror of open internet advocates and most of the tech industry outside of the service providers that stood to benefit.

The White House will also tell the FTC to create new privacy rules meant to guard consumers against surveillance and the “accumulation of extraordinarily amounts of sensitive personal information,” which free services like Facebook, YouTube and others have leveraged to build their vast empires. The White House also taps the FTC to create rules that protect smaller businesses from being pre-empted by large platforms, which in many cases abuse their market dominance with a different sort of data-based surveillance to out-compete up-and-coming competitors.

Finally, the executive order encourages the FTC to put right to repair rules in place that would free consumers from constraints that discourage DIY and third-party repairs. A new White House Competition Council under the Director of the National Economic Council will coordinate the federal execution of the proposals laid out in the new order.

The antitrust effort from the executive branch mirrors parallel actions in the FTC and Congress. In the FTC, Biden has installed a fearsome antitrust crusader in Lina Khan, a young legal scholar and fierce Amazon critic who proposes a philosophical overhaul to the way the federal government defines monopolies. Khan now leads the FTC as its chair.

In Congress, a bipartisan flurry of bills intended to rein in the tech industry are slowly wending their way toward becoming law, though plenty of hurdles remain. Last month, the House Judiciary Committee debated the six bills, which were crafted separately to help them survive opposing lobbying pushes from the tech industry. These legislative efforts could modernize antitrust laws, which have failed to keep pace with the modern realities of giant, internet-based businesses.

“Competition policy needs new energy and approaches so that we can address America’s monopoly problem,” Sen. Amy Klobuchar, a prominent tech antitrust hawk in Congress, said of the executive order. “That means legislation to update our antitrust laws, but it also means reimagining what the federal government can do to promote competition under our current laws.”

Citing the acceleration of corporate consolidation in recent decades, the White House argues that a handful of large corporations dominates across industries, including healthcare, agriculture and tech and consumers, workers and smaller competitors pay the price for their outsized success. The administration will focus antitrust enforcement on those corners of the market as well as evaluating the labor market and worker protections on the whole.

“Inadequate competition holds back economic growth and innovation… Economists find that as competition declines, productivity growth slows, business investment and innovation decline, and income, wealth, and racial inequality widen,” the White House wrote.

 

#amazon, #america, #biden, #biden-administration, #big-tech, #broadband, #competition-law, #congress, #department-of-justice, #executive, #facebook, #federal-communications-commission, #federal-government, #federal-trade-commission, #google, #government, #healthcare, #internet-service-providers, #lina-khan, #president, #tc, #white-house, #youtube

Amazon and Google face UK CMA probe over fake reviews

The UK’s competition watchdog, the CMA, has opened another investigation into Big Tech — this one targeted at Amazon and Google over how well they handle (or, well, don’t) fake reviews.

The Competition and Markets Authority has taken an interest in online reviews for several years, as far back as 2015.

It also went after eBay and Facebook back in 2019 to try to squeeze the trade in fake reviews it found thriving on their marketplaces. After continuing to pressure those platforms the watchdog was given pledges they’d do more. Albeit, in the case of Facebook, it took until April 2021 for it to take down 16,000 groups that had been trading fake reviews — and the CMA expressed disappointment that it had taken Facebook over a year to take meaningful action.

Now the CMA has Amazon and Google in its sites, both of which control platforms hosting user reviews — saying it will be gathering evidence to determine whether they may have broken UK law by taking insufficient action to protect shoppers from fake reviews.

Businesses that mislead consumers or don’t take action to prevent consumers being misled may be in breach of UK laws intended to protect consumers from unfair trading.

The CMA says its investigation into Amazon and Google follows an initial probe, which it started in May 2020, which was focused on assessing several platforms’ internal systems and processes for identifying and dealing with fake reviews.

That work raised specific concerns about whether the two tech giants have been doing enough to:

  • Detect fake and misleading reviews or suspicious patterns of behaviour. For example, where the same users have reviewed the same range of products or businesses at similar times to each other and there is no connection between those products or businesses – or where the review suggests that the reviewer has received a payment or other incentive to write a positive review.
  • Investigate and, where necessary, remove promptly fake and misleading reviews from their platforms.
  • Impose adequate sanctions on reviewers or businesses to deter them and others from posting fake or misleading reviews on their platforms – including those who have published these types of reviews many times.

The regulator also said it’s concerned that Amazon’s systems have been “failing adequately to prevent and deter some sellers from manipulating product listings” — such as, for example, by co-opting positive reviews from other products.

And, well, who hasn’t been browsing product reviews on Amazon, only to be drawn up short by a reviewer earnestly referring to product attributes that clearly bear no relation to the sale item in question?

While the user reviews that pop up on, for example, Google Maps after a search for a local business can also display ‘unusual patterns‘ of 5-starring (or 1-starring) behaviour…

Commenting on its investigation into concerns that Amazon and Google are not doing enough to combat the problem of fake reviews the CMA’s CEO Andrea Coscelli had this to say, in a statement:

“Our worry is that millions of online shoppers could be misled by reading fake reviews and then spending their money based on those recommendations. Equally, it’s simply not fair if some businesses can fake 5-star reviews to give their products or services the most prominence, while law-abiding businesses lose out.

“We are investigating concerns that Amazon and Google have not been doing enough to prevent or remove fake reviews to protect customers and honest businesses. It’s important that these tech platforms take responsibility and we stand ready to take action if we find that they are not doing enough.”

Amazon and Google were contacted for comment.

A Google Spokesperson sent us this statement:

“Our strict policies clearly state reviews must be based on real experiences, and when we find policy violations, we take action — from removing abusive content to disabling user accounts. We look forward to continuing our work with the CMA to share more on how our industry-leading technology and review teams work to help users find relevant and useful information on Google.”

An Amazon spokesperson also said:

“To help earn the trust of customers, we devote significant resources to preventing fake or incentivized reviews from appearing in our store. We work hard to ensure that reviews accurately reflect the experience that customers have had with a product.  We will continue to assist the CMA with its enquiries and we note its confirmation that no findings have been made against our business. We are relentless in protecting our store and will take action to stop fake reviews regardless of the size or location of those who attempt this abuse.”

In a blog post earlier this month, Amazon — likely aware of the CMA’s attention on the issue — discussed the problem of bogus online reviews, claiming it “relentlessly innovates to allow only genuine product reviews in our store”; and offering up some illustrative stats (such as that, in 2020 alone, it stopped more than 200M “suspected fake reviews” before they were seen by any customers, mostly via the use of “proactive detection”).

However the blog post was also heavily on the defensive — with the ecommerce giant seeking to spread the blame for the fake reviews problem — saying, for example, that there’s an “increasing trend of bad actors attempting to solicit fake reviews outside Amazon, particularly via social media services”. 

It sought to frame fake reviews as an industry-wide problem, needing a coordinated, industry-wide solution — while reserving its heaviest fire for (unnamed) “social media companies” (cough Facebook cough) — and suggesting, for example, that they are the weak link in the chain:

We need social media companies whose services are being used to facilitate fake reviews to proactively invest in fraud and fake review controls, partner with us to stop these bad actors, and help consumers shop with confidence. It will take constant innovation and partnership across industries and law enforcement to fully protect consumers and our honest selling partners.”

Amazon’s blog post also called for coordinated assistance from consumer protection regulators “around the world” to support its existing efforts to litigate against “bad actors”, aka “those who have purchased reviews and the service providers who provided them”.

The company also told us it has won “dozens” of injunctions against providers of fake reviews across Europe — adding that it won’t shy away from taking legal action. (It noted, for example, a lawsuit it filed on June 9 with the London Commercial Court against the owners of the websites, AMZ Tigers and TesterJob — seeking a prohibitory injunction and damages.)

In light of the CMA’s investigation being opened now, Amazon’s blog post calling for regulatory assistance to support litigation against purveyors of fake reviews looks like a pre-emptive plea to the CMA to swivel its gaze back onto Facebook’s marketplace — and check back in on how the trade in fake reviews is looking over there.

We reached out to the CMA to ask whether its investigation into Amazon and Google will dig into the role that review trading groups hosted elsewhere, such as on social media platforms, may play in exacerbating the issue and will update this port with any response.

The CMA has been increasingly active in regulating Big Tech as it dials up attention on digital markets to prepare for planned UK reforms to competition law that look set to usher in an ex ante regime for dealing with competition-denting platform power.

The watchdog has a number of other open investigations into Big Tech — including into Google’s planned deprecation of tracking cookies. It also recently initiated a market study into Apple and Google’s dominance of the mobile ecosystem.

Given the watchdog’s focus on major platforms — as well as its long standing interest in fake reviews — it’s interesting to speculate whether iOS maker Apple may not face some UK scrutiny on this issue.

Concerns have also been raised over fake ratings and reviews on its App Store.

Earlier this year, for example, iOS app developer, Kosta Eleftheriou, filed suit against Apple — alleging it enticed developers to build apps by claiming the App Store is a safe and trustworthy place but that it doesn’t protect legitimate developers against scammers profiting from their hard work.

The CMA already has an open investigation into Apple’s App Store. So it will be paying close attention to aspects of the store, saying back in March that it would be investigating whether Apple imposes unfair or anti-competitive terms on developers — which then ultimately result in users having less choice or paying higher prices for apps and add-ons.

For now, though, the watchdog’s attention toward the fake reviews issue has been publicly focused elsewhere.

#amazon, #app-store, #big-tech, #cma, #competition-and-markets-authority, #competition-law, #ecommerce, #europe, #fake-reviews, #google, #social-media, #social-media-platforms, #tc, #united-kingdom

Apple’s App Store to face scrutiny in Germany as FCO opens ‘market power’ proceeding

Germany’s competition authority, the FCO, has completed its Big Tech GAFA ‘bingo’ card by opening a proceeding against Apple.

As with similar investigations already opened this year — into Amazon, Facebook and Google — the proceeding will determine whether or not the iPhone maker meets the threshold of Germany’s updated competition law.

The 10th amendment to the law, which came into force in January, enables the Bundeskartellamt to intervene proactively against the practices of large digital companies — if they are determined to have “paramount significance for competition across markets” and in order to prevent them from engaging in anti-competitive practices.

Discussing the key new provision to the Competition Act (aka, the GWB Digitalisation Act and specifically Section 19a) — in a panel discussion last week, the FCO’s president, Andreas Mundt, explained that the competition law update had been influenced by its experience with a long running (and pioneering) case against Facebook’s superprofiling of Internet users.

The upshot is that German competition law now has a theory of harm which entwines competition law and data protection — albeit, in the case of Apple, its tech empire is typically associated with defence (rather than abuse) of user privacy.

But the comprehensive amendments to German antitrust law are broadly targeted at Big Tech, with the goal of keeping markets open, fostering innovation and putting a stop to any abusive behavior, via provisions the FCO will be able to order — such an banning or restricting self-preferencing and bundling; or stopping giants tying products together to try to muscle into adjacent markets; or preventing them blocking interoperability and data access to try to lock out rivals, to name a few.

A mix of provisions are likely to be deployed, as tech giants are designated as addressable under the law, depending on the specifics of each case and the particular ecosystem business. So how it will operate in practice remains to be seen. So far the FCO is still in the process of determining (in each case) whether it can apply the law against GAFA.

For the Apple proceeding, Mundt said in a statement today that its operation of the App Store will be a “main focus” for the investigation because he said it “enables Apple in many ways to influence the business activities of third parties”.

“We will now examine whether with its proprietary operating system iOS, Apple has created a digital ecosystem around its iPhone that extends across several markets,” he added. “Apple produces tablets, computers and wearables and provides a host of device-related services. In addition to manufacturing various hardware products, the tech company also offers the App Store, iCloud, AppleCare, Apple Music, Apple Arcade, Apple TV+ as well as other services as part of its services business. Besides assessing the company’s position in these areas, we will, among other aspects, examine its extensive integration across several market levels, the magnitude of its technological and financial resources and its access to data.”

The FCO also noted that it has received a number of complaints against Apple “relating to potentially anti-competitive practices” — such as one from the advertising and media industry against Apple restricting user tracking with the introduction of its iOS 14.5 operating system; and a complaint against the exclusive pre-installation of the company’s own applications as a possible type of self-preferencing prohibited under Section 19a GWB.

“App developers also criticise the mandatory use of Apple’s own in-app purchase system (IAP) and the 30% commission rate associated with this,” it added in a press release. “In this context, the marketing restrictions for app developers in Apple’s App Store are also addressed. The latter complaint has much in common with the European Commission’s ongoing proceeding against Apple for imposing restrictions on the streaming service Spotify and accordingly preferencing its own services. Where necessary, the Bundeskartellamt will establish contact with the European Commission and other competition authorities in this regard. So far, no decision on initiating a further proceeding has been taken.”

Apple was contacted for comment on the FCO’s proceeding and it sent us this statement, attributed to a spokesperson:

Apple is proud to be an engine for innovation and job creation, with more than 250,000 jobs supported by the iOS app economy in Germany. The App Store’s economic growth and activity have given German developers of all sizes the same opportunity to share their passion and creativity with users around the world while creating a secure and trusted place for customers to download the apps they love with the privacy protections they expect. Germany is also home to Apple’s largest engineering hub in Europe, and a new €1BN investment in our European Silicon Design Center in Munich. We look forward to discussing our approach with the FCO and having an open dialogue about any of their concerns.”

Once issued by the FCO, a ‘paramount significance’ finding lasts for five years — while any legal challenges to orders made under Section 19a are intentionally expedited, with appeals going direct to Germany’s Federal Court of Justice (which is given exclusive competence). The goal being to avoid long drawn out litigations, as has occurred in the FCO’s case against Facebook’s superprofiling — which had legal questions referred to the CJEU back in March, some five years after the Bundeskartellamt began looking into Facebook’s data practices.

The coming months and years could be highly significant to how GAFA is able to operate in Europe’s largest economy — and, likely by extension, further afield in Europe and beyond as a number of jurisdictions are now paying active attention to how to regulate Big Tech.

Back in March, for example, the UK’s Competition and Markets Authority opened its own probe into Apple’s App Store. Simultaneously it’s working on reforming national law to create a ‘pro-competition’ for regulating tech giants.

While, last December, European Union lawmakers proposed the Digital Markets Act — also aiming to tackle the power market of so-called ‘gatekeeper’ platforms.

The FTC appointing Lina Khan as chair also appears to signify a change of direction on tech antitrust over in the US.

#andreas-mundt, #antitrust, #apple, #apps, #big-tech, #bundeskartellamt, #competition-law, #europe, #fco, #germany, #platform-regulation, #policy

Perspectives on tackling Big Tech’s market power

The need for markets-focused competition watchdogs and consumer-centric privacy regulators to think outside their respective ‘legal silos’ and find creative ways to work together to tackle the challenge of big tech market power was the impetus for a couple of fascinating panel discussions organized by the Centre for Economic Policy Research (CEPR), which were livestreamed yesterday but are available to view on-demand here.

The conversations brought together key regulatory leaders from Europe and the US — giving a glimpse of what the future shape of digital markets oversight might look like at a time when fresh blood has just been injected to chair the FTC so regulatory change is very much in the air (at least around tech antitrust).

CEPR’s discussion premise is that integration, not merely intersection, of competition and privacy/data protection law is needed to get a proper handle on platform giants that have, in many cases, leveraged their market power to force consumers to accept an abusive ‘fee’ of ongoing surveillance.

That fee both strips consumers of their privacy and helps tech giants perpetuate market dominance by locking out interesting new competition (which can’t get the same access to people’s data so operates at a baked in disadvantage).

A running theme in Europe for a number of years now, since a 2018 flagship update to the bloc’s data protection framework (GDPR), has been the ongoing under-enforcement around the EU’s ‘on-paper’ privacy rights — which, in certain markets, means regional competition authorities are now actively grappling with exactly how and where the issue of ‘data abuse’ fits into their antitrust legal frameworks.

The regulators assembled for CEPR’s discussion included, from the UK, the Competition and Markets Authority’s CEO Andrea Coscelli and the information commissioner, Elizabeth Denham; from Germany, the FCO’s Andreas Mundt; from France, Henri Piffaut, VP of the French competition authority; and from the EU, the European Data Protection Supervisor himself, Wojciech Wiewiórowski, who advises the EU’s executive body on data protection legislation (and is the watchdog for EU institutions’ own data use).

The UK’s CMA now sits outside the EU, of course — giving the national authority a higher profile role in global mergers & acquisition decisions (vs pre-brexit), and the chance to help shape key standards in the digital sphere via the investigations and procedures it chooses to pursue (and it has been moving very quickly on that front).

The CMA has a number of major antitrust probes open into tech giants — including looking into complaints against Apple’s App Store and others targeting Google’s plan to depreciate support for third party tracking cookies (aka the so-called ‘Privacy Sandbox’) — the latter being an investigation where the CMA has actively engaged the UK’s privacy watchdog (the ICO) to work with it.

Only last week the competition watchdog said it was minded to accept a set of legally binding commitments that Google has offered which could see a quasi ‘co-design’ process taking place, between the CMA, the ICO and Google, over the shape of the key technology infrastructure that ultimately replaces tracking cookies. So a pretty major development.

Germany’s FCO has also been very active against big tech this year — making full use of an update to the national competition law which gives it the power to take proactive inventions around large digital platforms with major competitive significance — with open procedures now against Amazon, Facebook and Google.

The Bundeskartellamt was already a pioneer in pushing to loop EU data protection rules into competition enforcement in digital markets in a strategic case against Facebook, as we’ve reported before. That closely watched (and long running) case — which targets Facebook’s ‘superprofiling’ of users, based on its ability to combine user data from multiple sources to flesh out a single high dimension per-user profile — is now headed to Europe’s top court (so likely has more years to run).

But during yesterday’s discussion Mundt confirmed that the FCO’s experience litigating that case helped shape key amendments to the national law that’s given him beefier powers to tackle big tech. (And he suggested it’ll be a lot easier to regulate tech giants going forward, using these new national powers.)

“Once we have designated a company to be of ‘paramount significance’ we can prohibit certain conduct much more easily than we could in the past,” he said. “We can prohibit, for example, that a company impedes other undertaking by data processing that is relevant for competition. We can prohibit that a use of service depends on the agreement to data collection with no choice — this is the Facebook case, indeed… When this law was negotiated in parliament parliament very much referred to the Facebook case and in a certain sense this entwinement of competition law and data protection law is written in a theory of harm in the German competition law.

“This makes a lot of sense. If we talk about dominance and if we assess that this dominance has come into place because of data collection and data possession and data processing you need a parameter in how far a company is allowed to gather the data to process it.”

“The past is also the future because this Facebook case… has always been a big case. And now it is up to the European Court of Justice to say something on that,” he added. “If everything works well we might get a very clear ruling saying… as far as the ECN [European Competition Network] is concerned how far we can integrate GDPR in assessing competition matters.

“So Facebook has always been a big case — it might get even bigger in a certain sense.”

France’s competition authority and its national privacy regulator (the CNIL), meanwhile, have also been joint working in recent years.

Including over a competition complaint against Apple’s pro-user privacy App Tracking Transparency feature (which last month the antitrust watchdog declined to block) — so there’s evidence there too of respective oversight bodies seeking to bridge legal silos in order to crack the code of how to effectively regulate tech giants whose market power, panellists agreed, is predicated on earlier failures of competition law enforcement that allowed tech platforms to buy up rivals and sew up access to user data, entrenching advantage at the expense of user privacy and locking out the possibility of future competitive challenge.

The contention is that monopoly power predicated upon data access also locks consumers into an abusive relationship with platform giants which can then, in the case of ad giants like Google and Facebook, extract huge costs (paid not in monetary fees but in user privacy) for continued access to services that have also become digital staples — amping up the ‘winner takes all’ characteristic seen in digital markets (which is obviously bad for competition too).

Yet, traditionally at least, Europe’s competition authorities and data protection regulators have been focused on separate workstreams.

The consensus from the CEPR panels was very much that that is both changing and must change if civil society is to get a grip on digital markets — and wrest control back from tech giants to that ensure consumers and competitors aren’t both left trampled into the dust by data-mining giants.

Denham said her motivation to dial up collaboration with other digital regulators was the UK government entertaining the idea of creating a one-stop-shop ‘Internet’ super regulator. “What scared the hell out of me was the policymakers the legislators floating the idea of one regulator for the Internet. I mean what does that mean?” she said. “So I think what the regulators did is we got to work, we got busy, we become creative, got our of our silos to try to tackle these companies — the likes of which we have never seen before.

“And I really think what we have done in the UK — and I’m excited if others think it will work in their jurisdictions — but I think that what really pushed us is that we needed to show policymakers and the public that we had our act together. I think consumers and citizens don’t really care if the solution they’re looking for comes from the CMA, the ICO, Ofcom… they just want somebody to have their back when it comes to protection of privacy and protection of markets.

“We’re trying to use our regulatory levers in the most creative way possible to make the digital markets work and protect fundamental rights.”

During the earlier panel, the CMA’s Simeon Thornton, a director at the authority, made some interesting remarks vis-a-vis its (ongoing) Google ‘Privacy Sandbox’ investigation — and the joint working it’s doing with the ICO on that case — asserting that “data protection and respecting users’ rights to privacy are very much at the heart of the commitments upon which we are currently consulting”.

“If we accept the commitments Google will be required to develop the proposals according to a number of criteria including impacts on privacy outcomes and compliance with data protection principles, and impacts on user experience and user control over the use of their personal data — alongside the overriding objective of the commitments which is to address our competition concerns,” he went on, adding: “We have worked closely with the ICO in seeking to understand the proposals and if we do accept the commitments then we will continue to work closely with the ICO in influencing the future development of those proposals.”

“If we accept the commitments that’s not the end of the CMA’s work — on the contrary that’s when, in many respects, the real work begins. Under the commitments the CMA will be closely involved in the development, implementation and monitoring of the proposals, including through the design of trials for example. It’s a substantial investment from the CMA and we will be dedicating the right people — including data scientists, for example, to the job,” he added. “The commitments ensure that Google addresses any concerns that the CMA has. And if outstanding concerns cannot be resolved with Google they explicitly provide for the CMA to reopen the case and — if necessary — impose any interim measures necessary to avoid harm to competition.

“So there’s no doubt this is a big undertaking. And it’s going to be challenging for the CMA, I’m sure of that. But personally I think this is the sort of approach that is required if we are really to tackle the sort of concerns we’re seeing in digital markets today.”

Thornton also said: “I think as regulators we do need to step up. We need to get involved before the harm materializes — rather than waiting after the event to stop it from materializing, rather than waiting until that harm is irrevocable… I think it’s a big move and it’s a challenging one but personally I think it’s a sign of the future direction of travel in a number of these sorts of cases.”

Also speaking during the regulatory panel session was FTC commissioner Rebecca Slaughter — a dissenter on the $5BN fine it hit Facebook with back in 2019 for violating an earlier consent order (as she argued the settlement provided no deterrent to address underlying privacy abuse, leaving Facebook free to continue exploiting users’ data) — as well as Chris D’Angelo, the chief deputy AG of the New York Attorney General, which is leading a major states antitrust case against Facebook.

Slaughter pointed out that the FTC already combines a consumer focus with attention on competition but said that historically there has been separation of divisions and investigations — and she agreed on the need for more joined-up working.

She also advocated for US regulators to get out of a pattern of ineffective enforcement in digital markets on issues like privacy and competition where companies have, historically, been given — at best — what amounts to wrist slaps that don’t address root causes of market abuse, perpetuating both consumer abuse and market failure. And be prepared to litigate more.

As regulators toughen up their stipulations they will need to be prepared for tech giants to push back — and therefore be prepared to sue instead of accepting a weak settlement.

“That is what is most galling to me that even where we take action, in our best faith good public servants working hard to take action, we keep coming back to the same questions, again and again,” she said. “Which means that the actions we are taking isn’t working. We need different action to keep us from having the same conversation again and again.”

Slaughter also argued that it’s important for regulators not to pile all the burden of avoiding data abuses on consumers themselves.

“I want to sound a note of caution around approaches that are centered around user control,” she said. “I think transparency and control are important. I think it is really problematic to put the burden on consumers to work through the markets and the use of data, figure out who has their data, how it’s being used, make decisions… I think you end up with notice fatigue; I think you end up with decision fatigue; you get very abusive manipulation of dark patterns to push people into decisions.

“So I really worry about a framework that is built at all around the idea of control as the central tenant or the way we solve the problem. I’ll keep coming back to the notion of what instead we need to be focusing on is where is the burden on the firms to limit their collection in the first instance, prohibit their sharing, prohibit abusive use of data and I think that that’s where we need to be focused from a policy perspective.

“I think there will be ongoing debates about privacy legislation in the US and while I’m actually a very strong advocate for a better federal framework with more tools that facilitate aggressive enforcement but I think if we had done it ten years ago we probably would have ended up with a notice and consent privacy law and I think that that would have not been a great outcome for consumers at the end of the day. So I think the debate and discussion has evolved in an important way. I also think we don’t have to wait for Congress to act.”

As regards more radical solutions to the problem of market-denting tech giants — such as breaking up sprawling and (self-servingly) interlocking services empires — the message from Europe’s most ‘digitally switched on’ regulators seemed to be don’t look to us for that; we are going to have to stay in our lanes.

So tl;dr — if antitrust and privacy regulators’ joint working just sums to more intelligent fiddling round the edges of digital market failure, and it’s break-ups of US tech giants that’s what’s really needed to reboot digital markets, then it’s going to be up to US agencies to wield the hammers. (Or, as Coscelli elegantly phrased it: “It’s probably more realistic for the US agencies to be in the lead in terms of structural separation if and when it’s appropriate — rather than an agency like ours [working from inside a mid-sized economy such as the UK’s].”)

The lack of any representative from the European Commission on the panel was an interesting omission in that regard — perhaps hinting at ongoing ‘structural separation’ between DG Comp and DG Justice where digital policymaking streams are concerned.

The current competition chief, Margrethe Vestager — who also heads up digital strategy for the bloc, as an EVP — has repeatedly expressed reluctance to impose radical ‘break up’ remedies on tech giants. She also recently preferred to waive through another Google digital merger (its acquisition of fitness wearable Fitbit) — agreeing to accept a number of ‘concessions’ and ignoring major mobilization by civil society (and indeed EU data protection agencies) urging her to block it.

Yet in an earlier CEPR discussion session, another panellist — Yale University’s Dina Srinivasan — pointed to the challenges of trying to regulate the behavior of companies when there are clear conflicts of interest, unless and until you impose structural separation as she said has been necessary in other markets (like financial services).

“In advertising we have an electronically traded market with exchanges and we have brokers on both sides. In a competitive market — when competition was working — you saw that those brokers were acting in the best interest of buyers and sellers. And as part of carrying out that function they were sort of protecting the data that belonged to buyers and sellers in that market, and not playing with the data in other ways — not trading on it, not doing conduct similar to insider trading or even front running,” she said, giving an example of how that changed as Google gained market power.

“So Google acquired DoubleClick, made promises to continue operating in that manner, the promises were not binding and on the record — the enforcement agencies or the agencies that cleared the merger didn’t make Google promise that they would abide by that moving forward and so as Google gained market power in that market there’s no regulatory requirement to continue to act in the best interests of your clients, so now it becomes a market power issue, and after they gain enough market power they can flip data ownership and say ‘okay, you know what before you owned this data and we weren’t allowed to do anything with it but now we’re going to use that data to for example sell our own advertising on exchanges’.

“But what we know from other markets — and from financial markets — is when you flip data ownership and you engage in conduct like that that allows the firm to now build market power in yet another market.”

The CMA’s Coscelli picked up on Srinivasan’s point — saying it was a “powerful” one, and that the challenges of policing “very complicated” situations involving conflicts of interests is something that regulators with merger control powers should be bearing in mind as they consider whether or not to green light tech acquisitions.

(Just one example of a merger in the digital space that the CMA is still scrutizing is Facebook’s acquisition of animated GIF platform Giphy. And it’s interesting to speculate whether, had brexit happened a little faster, the CMA might have stepped in to block Google’s Fitibit merger where the EU wouldn’t.)

Coscelli also flagged the issue of regulatory under-enforcement in digital markets as a key one, saying: “One of the reasons we are today where we are is partially historic under-enforcement by competition authorities on merger control — and that’s a theme that is extremely interesting and relevant to us because after the exit from the EU we now have a bigger role in merger control on global mergers. So it’s very important to us that we take the right decisions going forward.”

“Quite often we intervene in areas where there is under-enforcement by regulators in specific areas… If you think about it when you design systems where you have vertical regulators in specific sectors and horizontal regulators like us or the ICO we are more successful if the vertical regulators do their job and I’m sure they are more success if we do our job properly.

“I think we systematically underestimate… the ability of companies to work through whatever behavior or commitments or arrangement are offered to us, so I think these are very important points,” he added, signalling that a higher degree of attention is likely to be applied to tech mergers in Europe as a result of the CMA stepping out from the EU’s competition regulation umbrella.

Also speaking during the same panel, the EDPS warned that across Europe more broadly — i.e. beyond the small but engaged gathering of regulators brought together by CEPR — data protection and competition regulators are far from where they need to be on joint working, implying that the challenge of effectively regulating big tech across the EU is still a pretty Sisyphean one.

It’s true that the Commission is not sitting on hands in the face of tech giant market power.

At the end of last year it proposed a regime of ex ante regulations for so-called ‘gatekeeper’ platforms, under the Digital Markets Act. But the problem of how to effectively enforce pan-EU laws — when the various agencies involved in oversight are typically decentralized across Member States — is one key complication for the bloc. (The Commission’s answer with the DMA was to suggest putting itself in charge of overseeing gatekeepers but it remains to be seen what enforcement structure EU institutions will agree on.)

Clearly, the need for careful and coordinated joint working across multiple agencies with different legal competencies — if, indeed, that’s really what’s needed to properly address captured digital markets vs structural separation of Google’s search and adtech, for example, and Facebook’s various social products — steps up the EU’s regulatory challenge in digital markets.

“We can say that no effective competition nor protection of the rights in the digital economy can be ensured when the different regulators do not talk to each other and understand each other,” Wiewiórowski warned. “While we are still thinking about the cooperation it looks a little bit like everybody is afraid they will have to trade a little bit of its own possibility to assess.”

“If you think about the classical regulators isn’t it true that at some point we are reaching this border where we know how to work, we know how to behave, we need a little bit of help and a little bit of understanding of the other regulator’s work… What is interesting for me is there is — at the same time — the discussion about splitting of the task of the American regulators joining the ones on the European side. But even the statements of some of the commissioners in the European Union saying about the bigger role the Commission will play in the data protection and solving the enforcement problems of the GDPR show there is no clear understanding what are the differences between these fields.”

One thing is clear: Big tech’s dominance of digital markets won’t be unpicked overnight. But, on both sides of the Atlantic, there are now a bunch of theories on how to do it — and growing appetite to wade in.

#advertising-tech, #amazon, #andreas-mundt, #competition-and-markets-authority, #competition-law, #congress, #data-processing, #data-protection, #data-protection-law, #data-security, #digital-markets-act, #digital-rights, #doubleclick, #elizabeth-denham, #europe, #european-commission, #european-court-of-justice, #european-union, #facebook, #federal-trade-commission, #financial-services, #fitbit, #france, #general-data-protection-regulation, #germany, #human-rights, #margrethe-vestager, #policy, #privacy, #uk-government, #united-kingdom, #united-states, #yale-university

Tech antitrust crusader Lina Khan is confirmed as FTC commissioner

The Senate confirmed big tech critic and prominent antitrust scholar Lina Khan as FTC Commissioner Tuesday, signaling a new era of scrutiny for the tech industry. Khan was confirmed in a 69-28 vote, with Republicans joining Democrats in a rare show of bipartisan support for Khan’s ideas on reining in tech’s most powerful companies.

An associate law professor at Columbia, Khan’s star rose with the publication of a landmark paper examining how the government’s outdated ways of identifying monopolies have failed to keep up with modern business realities, particularly in tech. In Khan’s view, that regulatory failure has allowed the biggest tech companies to consolidate unprecedented wealth and power, in turn making it even more difficult to regulate them.

President Biden nominated Khan back in March, sending an early message that Biden would not extend the warm relationship big tech companies enjoyed with the White House under former President Obama.

Khan’s confirmation is a sign that the agency will be prioritizing tech antitrust concerns, a priority that will run parallel to Congressional efforts to bolster the FTC’s enforcement powers. The FTC famously imposed a $5 billion fine on Facebook for privacy violations in 2019, but the record-setting fine was only a glancing blow for a company already worth more than $500 billion.

Last week, Congress revealed a long-anticipated package of bipartisan bills that, if passed, would overhaul tech’s biggest businesses and redraw the industry’s rules for years to come.

A previous bill proposed by Sen. Amy Klobuchar would set aside a pool of money that the FTC could use to create a new division for market and merger research, one step toward modernizing antitrust enforcement to keep up with relentless growth from tech’s most powerful giants.

#amy-klobuchar, #biden, #big-tech, #competition-law, #congress, #federal-trade-commission, #ftc, #lina-khan, #policy, #senate, #tc, #the-battle-over-big-tech, #white-house

UK’s CMA opens market study into Apple, Google’s mobile “duopoly”

The UK’s competition watchdog will take a deep dive look into Apple and Google’s dominance of the mobile ecosystem, it said today — announcing a market study which will examine the pair’s respective smartphone platforms (iOS and Android); their app stores (App Store and Play Store); and web browsers (Safari and Chrome). 

The Competition and Markets Authority (CMA) is concerned that the mobile platform giants’ “effective duopoly” in those areas  might be harming consumers, it added.

The study will be wide ranging, with the watchdog concerns about the nested gateways that are created as a result of the pair’s dominance of mobile ecosystem — intermediating how consumers can access a variety of products, content and services (such as music, TV and video streaming; fitness tracking, shopping and banking, to cite some of the examples provided by the CMA).

“These products also include other technology and devices such as smart speakers, smart watches, home security and lighting (which mobiles can connect to and control),” it went on, adding that it’s looking into whether their dominance of these pipes is “stifling competition across a range of digital markets”, saying too that it’s “concerned this could lead to reduced innovation across the sector and consumers paying higher prices for devices and apps, or for other goods and services due to higher advertising prices”.

The CMA further confirmed the deep dive will examine “any effects” of the pair’s market power over other businesses — giving the example of app developers who rely on Apple or Google to market their products to customers via their smart devices.

The watchdog already has an open investigation into Apple’s App Store, following a number of antitrust complaints by developers.

It is investigating Google’s planned depreciation of third party tracking cookies too, after complaints by adtech companies and publishers that the move could harm competition. (And just last week the CMA said it was minded to accept a series of concessions offered by Google that would enable the regulator to stop it turning off support for cookies entirely if it believes the move will harm competition.)

The CMA said both those existing investigations are examining issues that fall within the scope of the new mobile ecosystem market study but that its work on the latter will be “much broader”.

It added that it will adopt a joined-up approach across all related cases — “to ensure the best outcomes for consumers and other businesses”.

It’s giving itself a full year to examine Gapple’s mobile ecosystems.

It is also soliciting feedback on any of the issues raised in its statement of scope — calling for responses by 26 July. The CMA added that it’s also keen to hear from app developers, via its questionnaire, by the same date.

Taking on tech giants

The watchdog has previously scrutinized the digital advertising market — and found plenty to be concerned about vis-a-vis Google’s dominance there.

That earlier market study has been feeding the UK government’s plan to reform competition rules to take account of the market-deforming power of digital giants. And the CMA suggested the new market study, examining ‘Gapple’s’ mobile muscle, could similarly help shape UK-wide competition law reforms.

Last year the UK announced its plan to set up a “pro-competition” regime for regulating Internet platforms — including by establishing a dedicated Digital Markets Unit within the CMA (which got going earlier this year).

The legislation for the reform has not yet been put before parliament but the government has said it wants the competition regulator to be able to “proactively shape platforms’ behavior” to avoid harmful behavior before it happens” — saying too that it supports enabling ex ante interventions once a platform has been identified to have so-called “strategic market status”.

Germany already adopted similar reforms to its competition law (early this year), which enable proactive interventions to tackle large digital platforms with what is described as “paramount significance for competition across markets”. And its Federal Cartel Office has, in recent months, wasted no time in opening a number of proceedings to determine whether Amazon, Google and Facebook have such a status.

The CMA also sounds keen to get going to tackle Internet gatekeepers.

Commenting in a statement, CEO Andrea Coscelli said:

“Apple and Google control the major gateways through which people download apps or browse the web on their mobiles – whether they want to shop, play games, stream music or watch TV. We’re looking into whether this could be creating problems for consumers and the businesses that want to reach people through their phones.

“Our ongoing work into big tech has already uncovered some worrying trends and we know consumers and businesses could be harmed if they go unchecked. That’s why we’re pressing on with launching this study now, while we are setting up the new Digital Markets Unit, so we can hit the ground running by using the results of this work to shape future plans.”

The European Union also unveiled its own proposals for clipping the wings of big tech last year — presenting its Digital Markets Act plan in December which will apply a single set of operational rules to so-called “gatekeeper” platforms operating across the EU.

The clear trend in Europe on digital competition is toward increasing oversight and regulation of the largest platforms — in the hopes that antitrust authorities can impose measures that will help smaller players thrive.

Critics might say that’s just playing into the tech giants’ hands, though — because it’s fiddling around the edges when more radical intervention (break ups) are what’s really needed to reboot captured markets.

Apple and Google were contacted for comment on the CMA’s market study.

A Google spokesperson said: “Android provides people with more choice than any other mobile platform in deciding which apps they use, and enables thousands of developers and manufacturers to build successful businesses. We welcome the CMA’s efforts to understand the details and differences between platforms before designing new rules.”

According to Google, the Android App Economy generated £2.8BN in revenue for UK developers last year, which it claims supported 240,000 jobs across the country — citing a Public First report that it commissioned.

The tech giant also pointed to operational changes it has already made in Europe, following antitrust interventions by the European Commission — such as adding a choice screen to Android where users can pick from a list of alternative search engines.

Earlier this month it agreed to shift the format underlying that choice screen from an unpopular auction model to free participation.

#amazon, #android, #app-store, #apple, #apple-inc, #big-tech, #cma, #competition-and-markets-authority, #competition-law, #digital-markets-act, #digital-markets-unit, #duopoly, #europe, #european-commission, #european-union, #germany, #google, #ios, #mobile, #policy, #smartphone, #smartphones, #uk-government, #united-kingdom, #web-browsers

Google ditches pay-to-play Android search choice auction for free version after EU pressure

Google is ditching a massively unpopular auction format that underpins an choice screen it offers in the European Union, it said today. Eligible search providers will be able to freely participate.

The auction model was Google’s ‘remedy’ of choice — following the 2018 EU $5BN antitrust enforcement against Android — but rivals have always maintained it’s anything but fair, as we’ve reported previously (here, here, here, for eg).

The Android choice screen presents users in the region with a selection of search engines to choose as a default at the point of device set up (or factory reset). The offered choices depend on sealed bids made by search engine companies bidding to pay Google to win one of three available slots.

Google’s own search engine is a staple ‘choice’ on the screen regardless of EU market.

The pay-to-play model Google devised is not only loudly hated by smaller search engine players (including those with alternative business models, such as the Ecosia tree-planting search engine), but it been entirely ineffectual at restoring competitive balance in search marketshare so it’s not surprising Google has been forced to ditch it.

The Commission had signalled a change might be coming, with Bloomberg reporting in May remarks by the EU’s competition chief, Margrethe Vesager, that it was “actively working on making” Google’s Android choice screen for search and browser rivals work. So it evidently heard the repeated cries of ‘foul’ and ‘it’s not working, yo!’. And — finally — it acted.

However, framing its own narrative, Google writes that it’s been in “constructive discussions” with EU lawmakers for years about “how to promote even more choice on Android devices, while ensuring that we can continue to invest in, and provide, the Android platform for free for the long term”, as it puts it.

It also seems to be trying to throw some shade/blame back at the EU — writing that it only introduced what it calls a “promotional opportunity” (lol) “in consultation with the Commission”. (Ergo, ‘don’t blame us gov, blame them!’)

In another detail-light paragraph of its blog, Google says it’s now making “some final changes” — including making participation free for “eligible search providers” — after what it describes as “further feedback from the Commission”

“We will also be increasing the number of search providers shown on the screen. These changes will come into effect from September this year on Android devices,” it adds.

The planned changes raise new questions — such as what criteria it will be using to determine eligibility; and will Google’s criteria be transparent or, like the problematic auction, sealed from view? And how many search engines will be presented to users? More than the current four, that’s clear.

Where Google’s own search engine will appear in the list will also be very interesting to see, as well as the criteria for ranking all the options (marketshare? random allocation?).

Google’s blog is mealy mouthed on any/all such detail — but the Commission gave us a pretty good glimpse when we asked (see their comment below).

It still remains to seen whether any other devilish dark pattern design details will appear when we see the full implementation.

But it’s worth noting that it’s not in Google’s gift to claim these changes are “final”. EU regulators are responsible for monitoring antitrust compliance — so if fresh complaints flow they will be duty bound to listen and react.

In one response to Google’s auction U-turn, pro-privacy search player DuckDuckGo was already critical — but more on the scope than the detail.

Founder Gabriel Weinberg pointed out that not only is the switch three years too late but Google should also be applying it across all platforms (desktop and Chrome too), as well as making it seamlessly easy for Android users to switch default, rather than gating the choice screen to set-up and/or factory reset (as we’ve reported before).

Another long-time critic of the auction model, tiny not-for-profit Ecosia, was jubilant that its fight against the search behemonth has finally paid off.

Commenting in a statement, CEO Christian Kroll said: “This is a real life David versus Goliath story — and David has won. This is a momentous day, and a real moment of celebration for Ecosia. We’ve campaigned for fairness in the search engine market for several years, and with this, we have something that resembles a level playing field in the market. Search providers now have a chance to compete more fairly in the Android market, based on the appeal of their product, rather than being shut out by monopolistic behaviour.”

The Commission, meanwhile, confirmed to TechCrunch that it acted after a number of competitors raised concerns over the auction model — with a spokeswoman saying it had “discussed with Google means to improve that choice screen to address those concerns”.

“We welcome the changes introduced by Google to the choice screen. Being included on the choice screen will now be free for rival search providers,” she went on. “In addition, more search providers will be included in the choice screen. Therefore, users will have even more opportunities to choose an alternative.”

The Commission also offered a little more detail of how the choice screen will look come fall, saying that “on almost all devices, five search providers will be immediately visible”.

“They will be selected based on their market share in the user’s country and displayed in a randomised order which ensures that Google will not always be the first. Users will be able to scroll down to see up to seven more search providers, bringing the total search providers displayed in the choice screen to 12.”

“These are positive developments for the implementation of the remedy following our Android decision,” the spokeswoman added.

So it will certainly be very interesting indeed to see whether this Commission-reconfigured much bigger and more open choice screen helps move the regional need on Google’s search engine market share.

Interesting times indeed!

#android, #antitrust, #chrome-os, #competition-law, #duckduckgo, #ecosia, #eu, #europe, #european-union, #gabriel-weinberg, #google, #google-search, #margrethe-vestager, #policy, #search-engine, #search-engines

Google’s data terms are now in Germany’s competition crosshairs

Germany’s national competition regulator, the Bundeskartellamt, has continued its investigative charge against big tech — announcing that it’s opened two proceedings into Google.

The move follows earlier proceedings targeting Amazon and Facebook — both of which are also looking to determine whether their businesses are of “paramount significance for competition across markets”, as German competition law puts it. (The regulator is also probing Facebook’s tying of Oculus to Facebook accounts.)

In Google’s case, one of the Bundeskartellamt’s new proceedings will confirm whether amended competition rules, which came into force in January, apply in its case — which would enable the FCO to target it with proactive interventions in the interests of fostering digital competition.

The second, parallel procedure will see the Federal Cartel Office (FCO) undertake an in-depth analysis of Google’s data processing terms in a move that looks intended to avoid wasting time — i.e. that its working assumption is that Google/Alphabet’s business meets the legal bar in the GWB Digitalisation Act.

By running the two Google procedures in parallel the German competition regulator will be in a position to act faster — assuming the first proceeding confirms it can indeed intervene.

The second probe running alongside would then identify potential problems to shape any intervention — with the FCO saying for example that it will look at whether Google/Alphabet “makes the use of services conditional on the users agreeing to the processing of their data without giving them sufficient choice as to whether, how and for what purpose such data are processed”.

It also says it will “examine the extent to which the terms provide Google with an opportunity to process data on an extensive cross-service basis” and will seek to clarify “how the company’s data processing policy applies to the processing of user data obtained from third-party websites and apps” (such as through Google’s advertising services).

Another key element of the proceeding will aim to establish what choice users actually have with regard to Google’s processing of their data, with the FCO noting that protecting consumer choice is a primary aim of competition law.

Given those point of focus it’s possible to imagine a future order from the FCO to Google could require it to simplify how it asks users for consent, to ensure genuine choice — and also shrink its ability to link first party user data with information obtained on people elsewhere online.

Commenting in a statement, Andreas Mundt, president of the Bundeskartellamt said: “An ecosystem which extends across various markets may be an indication that a company holds such a market position [i.e. whether it is of paramount significance across markets]. It is often very difficult for other companies to challenge this position of power. Due to the large number of digital services offered by Google, such as the Google search engine, YouTube, Google Maps, the Android operating system or the Chrome browser, the company could be considered to be of paramount significance for competition across markets.”

“Google’s business model relies to a very large extent on processing data relating to its users. Due to its established access to data relevant for competition, Google enjoys a strategic advantage. We will therefore take a close look at the company’s data processing terms. A key question in this context is whether consumers wishing to use Google’s services have sufficient choice as to how Google will use their data,” he added.

Reached for comment on the FCO proceedings, Google said it will fully cooperate with the FCO’s process but rejected the charge that people are forced to use its services — further claiming in a statement attributed to spokesperson, Ralf Bremer, that it offers “simple controls” so people can “limit” its use of their information:

“People choose Google because it’s helpful, not because they’re forced to, or because they can’t find alternatives. German consumers have enormous choice online and we give people simple controls to manage their information and limit the use of personal data. We will cooperate fully with the German Competition Authority and look forward to answering their questions.”

The Bundeskartellamt‘s in-depth prove of Google’s data processing terms picks up on long running criticism that the tech giant relies on forced and/or manipulative consent from users to obtain their data. Whereas the pan-EU legal standard if consent is used as a legal basis to process people’s information is that it should be clear, informed and freely given.

Back in 2019 Google was fined $57M by France’s data protection watchdog under the EU’s General Data Protection Regulation (GDPR) over a failure to provide “sufficiently clear” information to Android users when it sought their consent to use their data for targeted ads.

However, subsequent to the CNIL’s action, the tech giant limited its exposure to the privacy regulation by changing the legal jurisdiction of where it processes European users’ data to Ireland.

The Irish Data Protection Commission (DPC) then became Google’s lead data supervisor under the GDPR’s one-stop-shop mechanism. And the DPC has not decided a single GDPR complaint against Google — though it has a number of open investigations. It continues to face high level criticism over its enforcement record on key cross-border cases against big tech.

The awakening of European competition regulators to the issue of how abuse of user privacy is an anti-competitive tactic that can lock in the dominance of digital giants by unfairly enabling them to grab and link people’s data is thus a very important development in the regulation of big tech — and one where the Bundeskartellamt has already been a pioneer.

In an earlier FCO ‘super profiling’ case against Facebook — which predates the amendments to national digital competition law — it ordered the social media behemoth not to combine user data from across its different products.

Facebook has sought to block the order in the German courts. And, back in March, the case was referred to Europe’s top court — meaning the FCO’s order to it remains on hold pending the CJEU’s ruling (which could take years to be handed down).

The FCO confirmed today that the Facebook case is still pending before the court, reiterating the decision of the Düsseldorf Higher Regional Court to refer certain issues relating to the application of the GDPR to the European Court of Justice — which means that a decision on the merits of the case “can only be rendered after these issues have been clarified”.

The Bundeskartellamt’s investigation of Facebook’s data practices started all the way back in in March 2016. So it’s a safe bet that the regulator’s experience of digging into the detail of how tech giants process people’s data — and how hard it is to make cases stick against them — has helped inform the amendments to Germany’s competition law that introduce ex ante powers to tackle digital giants deemed to be of “paramount significance for competition across markets”.

Although there is still another waiting period baked in to this approach — as the regulator must first assess whether tech giants meet that legal bar.

The EU has proposed a similar ex ante approach for what it dubs as digital “gatekeepers”, under the Digital Markets Act, which it introduced at the end of last year.

Although with the bloc’s co-legislative process ongoing that regulation is likely some years away from adoption and pan-EU application — meaning Germany’s national law and the energetic FCO could be a significant actor in the meanwhile.

The EU’s competition commission are also digging into Google’s adtech practices — though they’re having to do so under existing powers, for now, which have been shown to be a painstakingly slow and not very effective route to tackle digital market power.

Elsewhere in Europe, the UK, which now sits outside the bloc, is also shaping its own an ex ante regime to curb the market power of digital giants. So regardless of political cross-currents in the region — and the problem of patchy privacy enforcement — there is growing consensus that European competition authorities must be empowered to step in proactively to tackle digital market abuses.

 

#advertising-tech, #alphabet, #andreas-mundt, #android, #bundeskartellamt, #competition-law, #digital-regulation, #europe, #european-court-of-justice, #european-union, #facebook, #france, #general-data-protection-regulation, #germany, #google, #ireland, #oculus, #policy, #privacy, #search-engine, #united-kingdom

Amazon’s market power to be tested in Germany in push for “early action” over antitrust risks

Germany’s Federal Cartel Office (FCO) is seeking to make swift use of a new competition tool to target big tech — announcing today that it’s opened a proceeding against ecommerce giant Amazon.

If the FCO confirms that Amazon is of “paramount significance for competition across markets” — as defined by an amendment to the German Competition Act which came into force in January (aka, the GWB Digitalisation Act) — the authority will have greater powers to proactively impose conditions on how it can operate in order to control the risk of market abuse.

Section 19a of the GWB enables the FCO to intervene earlier, and the idea is more effectively, against the practices of large digital companies.

The provision gives the authority the power to prohibit digital giants from engaging in anti-competitive practices like self-preferencing; or using tying or bundling strategies intended to penetrate new markets “by way of non-performance based anti-competitive means”; or creating or raising barriers to market entry by processing data relevant for competition.

The FCO already has two other proceedings ongoing against Amazon — one looking at the extent to which Amazon is influencing the pricing of sellers on Amazon Marketplace by means of price control mechanisms and algorithms; and a second examining to agreements between Amazon and brand manufacturers to check whether exclusions placed on third-party sellers on Amazon Marketplace constitute a violation of competition rules — but a finding of “paramount significance” would enable the authority to “take early action against and prohibit possible anti-competitive practices by Amazon”, as it puts it.

Amazon has been contacted for comment on the FCO’s latest proceeding. Update: An Amazon spokesperson said:

“We cannot comment on ongoing proceedings and will fully cooperate with the FCO. Amazon employs 23,000 people in Germany, has invested €28 billion in the country since 2010 and is working closely with local research. We continue to focus on innovating for both our customers and the businesses in Germany that sell in our store.”

It’s the second such application by the Bundeskartellamt to determine whether it can apply the new law to a tech giant.

In January the authority sought to extend the scope of an existing abuse proceeding, opened against Facebook in December — related to Facebook tying Oculus use to Facebook accounts — saying it would look at whether the social media giant is subject to the GWB’s “paramount significance” rules, and whether, therefore, its linking of Oculus use to a Facebook account should be assessed on that basis.

Commenting on its latest move against Amazon in a statement, FCO president Andreas Mundt said: “In the past few years we have had to deal with Amazon on several occasions and also obtained far-reaching improvements for sellers on Amazon Marketplace. Two other proceedings are still ongoing. Parallel to these proceedings we are now also applying our extended competences in abuse control.”

“In this particular case we are first of all examining whether Amazon is of paramount significance for competition across markets. An ecosystem which extends across various markets and thus constitutes an almost unchallengeable position of economic power is particularly characteristic in this respect,” he added. “This could apply to Amazon with its online marketplaces and many other, above all digital offers. If we find that the company does have such a market position, we could take early action against and prohibit possible anti-competitive practices by Amazon.”

In January Mundt made stronger comments vis-a-vis Facebook — describing its social networking ecosystem as “particularly characteristic” of the bar set by the new digital law for proactive interventions, and adding that: “In view of Facebook’s strong market presence with the eponymous social network, WhatsApp and Instagram such a position may be deemed to exist.”

The FCO proceeding to confirm whether or not Facebook falls under the law remains ongoing. (It also has a pioneering case against Facebook’s ‘superprofiling’ of users that’s headed for Europe’s top court — which could result in an order to Facebook to stop combining EU users’ data without consent, if judges agreed with its approach linking privacy and competition.)

Zooming out, the Bundeskartellamt’s moves to acquire more proactive powers at the national level to tackle big tech foreshadow planned updates to pan-European Union competition law. And specifically the ex ante regime which is set to apply to so-called “digital gatekeepers” in future — under the Digital Markets Act (DMA).

The DMA will mean that Internet intermediaries with major market power must comply with behavioural ‘dos and don’ts’ set by Brussels, risking major penalties if they don’t play by the rules.

In recent years lawmakers across Europe have been looking at how to update competition powers so regulators can respond effectively to digital markets — which are prone to anti-competitive phenomena such as networking effects and tipping — while continuing to pursue antitrust investigations against big tech. (The Commission laid out a first set of charges against Amazon in November, for example, relating to its use of third party merchant data.)

The problem is the painstaking pace of competition investigations into digital business vs the blistering speed of these players (and the massive market power they’ve amassed) — hence the push to tool up with more proactive antitrust powers.

Earlier, EU lawmakers also toyed with the idea of a new competition tool for digital markets but quietly dropped the idea — going on propose their ex ante regime for gatekeeper platforms, under the DMA, at the end of last year. However the proposal is in the process of being debated by the other EU institutions under the bloc’s co-legislative approach — which means it’s still likely years away from being adopted and applied as pan-EU law.

That in turn means German’s FCO could have an outsized role in clipping big tech’s wings in the meanwhile.

In the UK, now outside the bloc — where it too may have an influential role in reforming regional competition rules to rebalance digital market power — the government is also working on a pro-competition regime aimed at big tech.

This year it set up a dedicated unit, the DMU, within the national Competition and Markets Authority which will be tasked with overseeing a regime that will apply to platforms which are identified as having “strategic market status” (akin to the German approach of “paramount significance for competition across markets”). And while the UK is taking a similar tack to the EU’s DMA, it has said the domestic regime will not sum to a single set of rules for all gatekeeper-style platforms — but rather there will be bespoke provisions per platform deemed to fall under the ex ante regulations.

 

#amazon, #andreas-mundt, #big-tech, #brussels, #competition, #competition-and-markets-authority, #competition-law, #digital-markets-act, #e-commerce, #ecommerce, #europe, #european-union, #facebook, #online-marketplaces, #policy, #united-kingdom

The UK’s plan to tackle big tech won’t be one-size fits all

The director of a new unit set up this month inside the UK’s competition watchdog — with a dedicated focus on tech giants’ impacts on digital markets — has been giving a hint of how it could operate, once it’s on a statutory footing and imbued with powers to sanction problem platforms and potentially even order some forms of structural separation.

The government announced its intention to regulate big tech in November last year — saying it would establish a “pro-competition” regime to tackle concerns associated with digital markets, such as ‘winner takes all’ network-effect dynamics.

It’s not clear when exactly that will happen — the government has only said it will do so as soon as parliamentary time allows.

The UK is devising its own approach to digital regulation now that the country is outside the European Union — where lawmakers recently proposed a major new set of pan-EU rules to apply to digital services (the Digital Services Act) and ex ante requirements for the largest tech giants (the Digital Markets Act).

EU lawmakers have also proposed draft rules for high risk applications of AI, while the UK has an Online Safety bill in the pipeline (a legislative proposal is due this year) — so there are a lot of new digital rules being written right now, and the potential for confusing and counterproductive regulatory overlap if lawmakers don’t end up on the same page.

Continued divergence of approach between the UK and the EU is, nonetheless, to be expected, even as UK lawmakers say they want to engage with the international community as they work on drafting rules to ensure a British digital rulebook aligns in spirit (if not letter) with requirements being shaped for Internet platforms elsewhere.

The UK’s Digital Markets Unit (DMU) launched earlier this month, to help support the government as it drafts legislation to put it on a statutory footing and ahead of the unit being able to function as big tech’s British overseer.

Speaking at a conference on Friday the head of the DMU, Catherine Batchelor, detailed the approach she wants the unit to take, and some of the powers it has advised the government it needs to deliver on ministers’ goal of fostering competition in tipping-prone digital markets.

Giving an overview of the issues, she said a new approach is needed to regulating digital markets owing to changed dynamics — noting that companies “who were once garage startups or started from campuses in universities [and] are now the most powerful firms across the world” — and saying tech giants have been able to accrue so much market power as a result of digital market characteristics like access to data; network effects and economies of scale associated with platform business; and the ecosystems firms have been able to build around their core businesses — leveraging those interlocking benefits of data, scale and network effects to also acquire rivals to (further) grow and consolidate a powerful position.

“You might say well what’s the danger of that? But I think we see the danger of that on a day to day basis. Firms can use this position to exploit the consumers and businesses that rely on them,” she explained. “From a business perspective that might be the price you’re paying to sell your goods and services on the marketplace or the price you’re paying to list your app in an app store or the price you’re paying to advertise your products and services.

For consumers she pointed out they may be ‘paying’ for free digital goods and services with their attention or data, highlighting concerns over whether the amount of data being provided by users is a “fair exchange” for what they’re getting in return.

On the business side, Batchelor pointed to ‘self preferencing’ as one of the problematic “exclusionary” tactics tech giants indulge in that the unit will be seeking to tackle. “The overarching impact of that is a less vibrant digital economy,” she said. “You don’t have these new tech firms coming through, able to grow in the way the ones of old were.”

The problem with trying to tackle unfair (digital) market behaviors with existing competition law is that it can’t be “proactive and preventative”, she said — hence DMU has recommended setting rules that prevent firms from engaging in such conduct in the first place.

But she also said the unit is keen to avoid the risk of over-regulating. So unlike the EU’s DMA proposal it hasn’t supported having a set list of ‘dos and don’ts’ to apply universally to all platforms which fall under scope of the regulation.

Instead she said it wants more flexibility to target requirements at specific platforms — to take account of unique characteristics and any variations in market or operation.

On the question of who would fall under scope of the incoming pro-competition regime, the unit has recommended an “evidence-based assessment” to define whether or not a firm has ‘strategic market status’ (SMS) — meaning they are “in a position which is unlikely to be transitory”, as she put it.

“Our recommendations were that to come within scope of this regime the DMU should have to assess whether a firm has substantial, entrenched market power and that that market power provides the firm with a strategic position,” she went on. “We’ll be looking at the factors which might lead to that entrenched position — so things like barriers to entry and expansion.”

“The addition of strategic position is probably the more novel or more new element,” she added. “What we are getting at with that is whether the effects of the firm’s market power are particularly widespread or significant.”

Batchelor also gave a few examples of what strategic position might boil down to. Such as the sheer size of the business (which makes its impact particularly significant or widespread); or that the firm acts as an important access point to businesses trying to reach customers (along the lines of the ‘gatekeeper’ designation EU lawmakers have used in the DMA); or its ability to leverage or extend its market power from a core operational market into neighbouring markets.

The recommendation is for the SMS test to be carried out by the regulator, which would consult and take views during the process of arriving at a designation — a period which she suggested could take as long as a year.

It has also recommended that the SMS designation — once arrived at — is fixed for a set period. (Batchelor said they’d recommended five years.)

Firms that meet the SMS test will be subject to the full sweep of the pro-competition regime. The DMU wants this to include a preventative code of conduct — specific to the firm but with general objectives set out in legislation (such as “fair trading, open choices and trust and transparency”). And the government appears to have accepted that approach.

Also speaking at the conference was Harry Lund, who works on digital policy at the Department of Digital, Media, Culture and Sport, as deputy director for digital regulation and markets, as it draws up the new competition approach.

“At the centre of this regime will be an enforceable code of conduct to provide firms with substantial and endearing market power — so ‘SMS’ status — with clear expectations over what’s acceptable and what’s not acceptable behavior,” he said, adding: “The government has also accepted the case in principle for pro-competition interventions — which would address the underlying sources of market power, noting that these are potentially very major market interventions.”

Lund added that the overarching aim for the regime will be for regulators “to proactively shape platforms’ behaviour to avoid harmful behavior before it happens”, while when harmful behavior does happen the goal is to be able to address it more quickly then currently happens under existing competition law.

“The DMU would be able to set the code itself, very much targeted at the evidence of harms and problematic conduct that was identified through the SMS designation,” Batchelor went on.

“One of the key factors that we highlighted in our advice is the ability for these codes to differ between the activities of different SMS firms. So we are not necessarily recommending there is one code that is uniform across different SMS firms and activities but that there should be the discretion to be able to target those codes depending on the particular activity that is of concern, or the particular business model of the firm for example,” she went on, flagging that as a distinguishing feature from the European Commission’s approach — and part of the DMU’s philosophy of trying to avoid “over or under regulation”.

The idea is therefore “the ability to go further when you feel that it warrants it, but equally the ability to row back and take away regulation where you feel it’s not needed for a particular firm”, she also said, adding that the unit feels that’s “very important”.

Batchelor said the DMU has suggested each code be developed alongside an SMS designation — so that a consultation on a firm’s SMS status would happen in parallel to a consultation on a draft code of conduct for the same firm.

On top of the code, the DMU has proposed pro-competition interventions — which she said are intended to address the reason why a firm has a powerful position in the first place. The aim will be for interventions to try and promote “greater contestability, greater competition” in the markets where a given firm operates, she added.

“These are vital interventions if what you want to do is not just deal with the consequences of the firm having this powerful position — but actually try and change it for the future,” she emphasized.

The unit has suggested a range of pro-competitive interventions to be able to do the job — including data-related interventions, such as personal data mobility (so consumers can seamlessly move their data from platform to platform); interoperability; access to data (by competitors or third parties); common standards; and separation remedies — “not necessarily going so far as full ownership separation”, but perhaps separation of different business divisions within a firm, for example.

“We recognize that these are very significant interventions and would not be undertaken lightly. The idea around the pro-competitive interventions is that the DMU would have to go through… and evidence-based process to firstly identify what is the particular problem that is causing a lack of competition in the market but also then to satisfy itself that the remedy it’s proposing… is a rational, proportionate and effective way of dealing with that problem,” she added.

“We would expect significant consultation to go into the development of these remedies, and, for example, to undergo testing to ensure that they were effective and they were going to have the intended outcome. So we recognize the significance of these remedies but we also recognize how powerful they could be and we think they’re a very important part of the regulator’s toolkit.”

The DMU has also proposed a bespoke merger regime for firms with SMS — including an obligation to make the Competition and Markets Authority (CMA) aware of all intended transactions and mandatory notifications for some transactions that meet particular thresholds.

“This is in contrast to the CMA’s existing regime which is a voluntary regime,” Batchelor noted, saying the intent is to make sure the watchdog is in a position to consider the market impacts of proposed transactions.

Significantly, she said the DMU has proposed using “a more caution standard of proof” in relation to mergers — which could mean it will become much, much harder for tech giants to gain regulatory approval for acquisitions in the UK (assuming the government decides to take this particular piece of the DMU’s advice).

“What we’re saying is that with this mergers, quite often there is a small likelihood of a very, very significant impact on competition, with the likelihood for significant harm, and with these tech mergers where you have these firms in such significant positions perhaps having to say that on the balance of probabilities this merger is likely to lead to a significant lessening of competition is too high a bar,” said Batchelor, adding: “We think that [having a more cautious standard of proof is] really important so we can effectively scrutinize the mergers and acquisitions that these firms are undertaking.”

On the enforcement front, she notes that it’s important the DMU is able to take action if firms breach codes of conduct or pro-competition interventions.

Though she said it has suggested a “participatory” approach to tackling compliance issues in the first instance — “working with the firm in a relatively informal way”, i.e. to try and address the problem without regulatory sanction.

If that fails she said it’s recommended the DMU has the power to order firms to change behaviors to comply with requirements. And for those tech giants that act negligently or intentionally breach requirements the DMU wants to have the power to issue “very significant” penalties — of up to 10% of a firm’s global annual turnover.

Lund said the government has a number of priorities as it works on developing and implementing the new regime — which includes instructing the DMU to look at how the code of conduct could work in practice for specific sectors of the economy — such as content creators and news publishers (“where we know from the CMA’s market study and other work that there’s a particular competition issue”).

It is also seeking to shape international debate on digital competition — such as at the G7. “The international dimension of this is really important. The UK is not operating in a vacuum so we’re looking to build consensus, foster dialogue and increase co-operation with international partners as they seek to develop their own approaches.”

He confirmed that a consultation will be launched later this year to set out the government’s vision on digital competition and its specific proposals for the regime — fed by the expert advice from the DMU (which Lund said DCMS is now working through, as well as taking advice from other sources).

The final details of the regime — including key elements such as penalties for breaches — will be set out in a legislative proposal from DCMS once it’s concluded the consultation process.

The latter is slated to take place in the first half of this year, but there’s no timeframe from government on when it will introduce legislation. But the soonest would logically be the second half of this year — so there’s no realistic prospect of legislation being introduced before 2022.

During a Q&A discussion at the conference, Lund gave an example of a potential pro-competition remedy the DMU may be able to apply — albeit at what he couched as “the more radical end of the spectrum” — as ordering changes to default settings which affect how people’s data is collected, such as requiring an active opt in from consumers to gather their data, rather than consumers having to actively opt out.

It won’t be “one-size fits all”, he emphasized, saying “the tailored nature of the pro-competition interventions is that if that’s the issue then that’s where the remedy can be targeted”.

He added that the work reconfiguring competition policy for an era of digital giants is “complex and far-reaching”, adding: “A new competition regime will be a major change to the regulatory landscape so it’s really important we get it right.”

#big-tech, #cma, #competition, #competition-and-markets-authority, #competition-law, #digital-markets-act, #digital-markets-unit, #europe, #european-commission, #european-union, #g7, #online-safety-bill, #platform-regulation, #policy, #united-kingdom

Republican antitrust bill would block all big tech acquisitions

There are about to be a lot of antitrust bills taking aim at big tech, and here’s one more. Senator Josh Hawley (R-MO) rolled out a new bill this week that would take some severe measures to rein in big tech’s power, blocking mergers and acquisitions outright.

The “Trust-Busting for the Twenty-First Century Act” would ban any acquisitions by companies with a market cap of more than $100 billion, including vertical mergers. The bill also proposes changes that would dramatically heighten the financial pain for companies caught engaging in anti-competitive behavior, forcing any company that loses an antirust suit to forfeit profits made through those business practices.

At its core, Hawley’s legislation would snip some of the red tape around antitrust enforcement by amending the Sherman Act, which made monopolies illegal, and the Clayton Act, which expanded the scope of illegal anti-competitive behavior. The idea is to make it easier for the FTC and other regulators to deem a company’s behavior anti-competitive — a key criticism of the outdated antitrust rules that haven’t kept pace with the realities of the tech industry.

The bill isn’t likely to get too far in a Democratic Senate, but it’s not insignificant. Sen. Amy Klobuchar (D-MN), who chairs the Senate’s antitrust subcommittee, proposed legislation earlier this year that would also create barriers for dominant companies with a habit of scooping up their competitors. Klobuchar’s own ideas for curtailing big tech’s power similarly focus on reforming the antitrust laws that have shaped U.S. business for more than a century.

Click to access The%20Trust-Busting%20for%20the%20Twenty-First%20Century%20Act.pdf

The Republican bill may have some overlap with Democratic proposals, but it still hits some familiar notes from the Trump era of hyper-partisan big tech criticism. Hawley slams “woke mega-corporations” in Silicon Valley for exercising too much power over the information and products that Americans consume. While Democrats naturally don’t share that critique, Hawley’s bill makes it clear that antitrust reform targeting big tech is one policy era where both political parties could align on the ends, even if they don’t see eye to eye on the why.

Hawley’s bill is the latest, but it won’t be the last. Rep. David Cicilline (D-RI), who spearheads tech antitrust efforts in the House, previously announce his own plans to introduce a flurry of antitrust reform bills rather than one sweeping piece of legislation. Those bills, which will be more narrowly targeted to make them difficult for tech lobbyists to defeat, are due out in May.

#amy-klobuchar, #antitrust, #big-tech, #competition-law, #federal-trade-commission, #government, #josh-hawley, #senate, #tc, #the-battle-over-big-tech, #trump, #united-states

Competition challenge to Facebook’s ‘superprofiling’ of users sparks referral to Europe’s top court

A German court that’s considering Facebook’s appeal against a pioneering pro-privacy order by the country’s competition authority to stop combining user data without consent has said it will refer questions to Europe’s top court.

In a press release today the Düsseldorf court writes [translated by Google]: “…the Senate has come to the conclusion that a decision on the Facebook complaints can only be made after referring to the Court of Justice of the European Union (ECJ).

“The question of whether Facebook is abusing its dominant position as a provider on the German market for social networks because it collects and uses the data of its users in violation of the GDPR can not be decided without referring to the ECJ. Because the ECJ is responsible for the interpretation of European law.”

The Bundeskartellamt (Federal Cartel Office, FCO)’s ‘exploitative abuse’ case links Facebook’s ability to gather data on users of its products from across the web, via third party sites (where it deploys plug-ins and tracking pixels), and across its own suite of products (Facebook, Instagram, WhatsApp, Oculus), to its market power — asserting this data-gathering is not legal under EU privacy law as users are not offered a choice.

The associated competition contention, therefore, is that inappropriate contractual terms allow Facebook to build a unique database for each individual user and unfairly gain market power over rivals who don’t have such broad and deep reach into user’s personal data.

The FOC’s case against Facebook is seen as highly innovative as it combines the (usually) separate (and even conflicting) tracks of competition and privacy law — offering the tantalizing prospect, were the order to actually get enforced, of a structural separation of Facebook’s business empire without having to order a break up of its various business units up.

However enforcement at this point — some five years after the FCO started investigating Facebook’s data practices in March 2016 — is still a big if.

Soon after the FCO’s February 2019 order to stop combining user data, Facebook succeeded in blocking the order via a court appeal in August 2019.

But then last summer Germany’s federal court unblocked the ‘superprofiling’ case — reviving the FCO’s challenge to the tech giant’s data-harvesting-by-default.

The latest development means another long wait to see whether competition law innovation can achieve what the EU’s privacy regulators have so far failed to do — with multiple GDPR challenges against Facebook still sitting undecided on the desk of the Irish Data Protection Commission.

Albeit, it’s fair to say that neither route looks capable of ‘moving fast and breaking’ platform power at this point.

In its opinion the Düsseldorf court does appear to raise questions over the level of Facebook’s data collection, suggesting the company could avoid antitrust concerns by offering users a choice to base profiling on only the data they upload themselves rather than on a wider range of data sources, and querying its use of Instagram and Oculus data.

But it also found fault with the FCO’s approach — saying Facebook’s US and Irish business entities were not granted a fair hearing before the order against its German sister company was issued, among other procedural quibbles.

Referrals to the EU’s Court of Justice can take years to return a final interpretation.

In this case the ECJ will likely be asked to consider whether the FCO has exceeded its remit, although the exact questions being referred by the court have not been confirmed — with a written reference set to be issued in the next few weeks, per its press release.

In a statement responding to the court’s announcement today, a Facebook spokesperson said:

“Today, the Düsseldorf Court has expressed doubts as to the legality of the Bundeskartellamt’s order and decided to refer questions to the Court of Justice of the European Union. We believe that the Bundeskartellamt’s order also violates European law.”

#competition-law, #europe, #facebook, #gdpr, #lawsuit, #privacy

UK’s competition watchdog still eyeing Facebook’s Giphy buy

The UK’s competition regulator will make a decision on whether or not Facebook’s purchase of Giphy has a ‘realistic prospect’ of substantially lessening competition by March 25, it said today, as it continues to scrutinize the acquisition.

“The Competition and Markets Authority (CMA) hereby gives notice pursuant to paragraph (b) of the definition of ‘initial period’ in section 34ZA(3) of the [Enterprise] Act that it has sufficient information in relation to the completed acquisition by Facebook, Inc of Giphy, Inc, (the Merger) to enable it to begin an investigation for the purposes of deciding whether to make a reference for a Phase 2 investigation,” it writes.

“The initial period defined in section 34ZA(3) of the Act in relation to the Merger will therefore commence on the first working day after the date of this notice, ie on 29 January 2021. The end of the initial period and the deadline for the CMA to announce its decision whether to refer the Merger for a Phase 2 investigation is therefore 25 March 2021.”

The Competition and Markets Authority launched a probe of Facebook’s $400M acquisition of the GIF-sharing platform back in June 2020.

The investigation put a freeze on Facebook’s ability to continue activities related to integrating Giphy into its wider business empire — such as integrating products or teams or working on business deals or contracts together — despite having already been completed the acquisition.

Facebook confirmed its plan to acquire Giphy in May 2020 — when it also announced its plan to integrate the platform into its photo and video sharing app, Instagram.

But those plans remain on ice as a result of competition scrutiny in the UK. (Last June Facebook and Giphy confirmed they were complying with the CMA’s order to pause integration activity.)

It’s another sign of the growing regulatory friction that tech giants are facing when they seek to grow via acquisition. Last year, for example, European regulators also spent months eyeing Google’s Fitbit acquisition — although they did finally clear the deal in December. But only after obtaining a number of commitments from the tech giant related to how Fitbit data could be used and rivals’ access to APIs.

In the Facebook-Giphy case, the UK watchdog will make a decision in March on whether to open a deeper and broader Phase 2 investigation (after which it would need to issue a final decision).

It could also decide at that point that there is no ‘realistic prospect’ of a substantial lessening of competition as a result of Facebook acquiring Giphy and conclude its intervene — lifting the bar on continued integration between the pair.

The regulator also has discretion to choose not to open a Phase 2 investigation for other reasons, such as if it believes the market is not of sufficient importance to justify the deeper dive or that benefits to customers from a merger outweigh any negative competitive effects.

Given the acquired business in this case is a platform for swapping reaction GIFs it certainly seems possible the CMA may decide that a deeper dive isn’t merited. But we’ll know more in a couple of months.

Whatever happens, regulatory concern linked to Facebook’s grip on the social web has already delayed its plans for Giphy by well over half a year — and the probe may yet drag on for longer — impacting its ability to move fast (and break things).

#acquisition, #cma, #competition-law, #facebook, #giphy, #tc

Europe urged to block Google-Fitbit ahead of major digital policy overhaul

The European Commission must block the Google -Fitbit merger as a matter of democratic imperative, prominent academic and author Shoshana Zuboff has warned.

The Harvard professor who wrote the defining book on surveillance capitalism has become the latest voice raised against the $2.1BN data+devices deal — that’s now been delayed at the regulatory clearance stage for over a year.

Others calling for the Google-Fitbit acquisition to be blocked — unless or until robust competition, democratic and human rights safeguards can be baked in — include Amnesty International; scores of consumer, privacy and digital rights groups across civic society; and the EU’s very own data protection advisor, to name a few.

EU regulators are still considering whether or not to greenlight the merger. The deadline for them to make up their minds was recently extended into early 2021 — although a decision could come as soon as next week.

Back in August, the Commission opened an in-depth investigation into the deal — saying it was concerned it would “further entrench Google’s market position in the online advertising markets by increasing the already vast amount of data that Google could use for personalisation of the ads it serves and displays”.

EU lawmakers have also expressed scepticism over initial concessions offered by Google which suggested storing Fitbit data in a silo that it said would be kept separate from other Google data.

It also said it would not use Fitbit data for ad targeting — at least for a time-limited period (though it’s not clear what exactly it’s proposed in Europe). Elsewhere, Australian regulators are also still eyeing the deal — and recently sought industry feedback on a pledge by Google not to use Fitbit data for ads for ten years.

The ACCC published draft undertakings in November which includes stipulations such as: ‘Google must not use any Measured Body Data or Health and Fitness Activity Location Data in or for Google Ads’ and that data must be kept separate. 

But Zuboff’s point is that targeted advertising is just the tip of the vast data-extracting ambitions of surveillance capitalists — while health data is one of the few personal data fields these digital giants have not yet been able to mine in their usual limitless way.

“Any notion of approving the Fitbit acquisition — based on Google’s promises not to do something that is anyway an irrelevant thing, to do or not to do — is a serious mistake,” she said yesterday, giving the keynote speech at the annual lecture of the EU Parliament’s Science and Technology Options Assessment (STOA) panel.

“Such a decision should be reconsidered immediately. And never again repeated,” she added.

A Google spokesman declined to comment on Zuboff’s remarks — pointing only to its blog post from August where it claims the deal is about ‘devices not data’.

Beware the “epistemic coup”

In the STOA lecture, Zuboff articulates a view of tech giants’ uncontrolled extraction and use of data leading to what she described as an “epistemic coup” — where bottomless digitally-enabled data extraction leads to an unprecedented dominance of knowledge by the private sector, generating radical inequalities and full-spectrum harms, as a data-empowered few are able to run roughshod over humanity, democratic values and the rule of law in the name of increasing their profits.

“There is no ‘attention economy’; these are effects of a deeper cause — and that cause is surveillance capitalism’s economic imperatives. These corporations are not publishers, they are not distributors, they are not merely adtech providers; they are indiscriminate, radically indifferent all-you-can-eat extractors of everything forever, all for the sake of prediction that become more lucrative as they approach certainty,” she said.

“Knowledge at this kind of scale produces a new kind of power over people. This is what data scientists call the shift from monitoring to actuation. Where there’s actually sufficient data about a machine system to be able to control it remotely. The thing is now it’s not just the machine systems; it’s the human systems.”

The wide-ranging keynote is well worth watching in full for how clearly Zuboff articulates why allowing corporates to “unilaterally claim[…] private human experience for raw material, bent to the purposes of datafication, computational production and sales” is terrible for humanity and the (genuine) communities which make up our civilization — likening it to how uncontrolled extraction of oil for corporate profit has threatened the survival of life on earth, fuelling climate change, biodiversity decline and mass species extinction.

The nub of the argument is that surveillance capitalism’s target is human nature itself — with Zuboff calling out the ‘data business’ playbook of “hidden extraction mechanisms” which she said are robbing us of the ability to fight back.

“Today our nemesis is not, and could never be, mere data or technology — but rather the extractors, led by a handful of giant corporations: Google, Facebook, Apple, Amazon, Microsoft, to name only the largest, along with their complex, far-reaching ecosystems, these are corporate institutions that have pioneered a new logic of extraction but with a dark and startling twist… These corporations have placed the defence of their narrow economic self-interest above the interests of individual sovereignty, democracy and humanity itself.”

The keynote included a call to action to European lawmakers to step in and reverse what has been allowed to become entrenched at humanity’s expense.

“I am here today because the European Union represents humanity’s best hope to alter this course before lawless, unprecedented computational concentrations of knowledge and power become as irreversible and poisonous to our societies as the toxic concentrations of carbon dioxide in our atmosphere have become to our earth,” said Zuboff, adding: “The idea that we could bequeath both of these cataclysms to our children is intolerable.”

EU lawmakers are on the cusp of unveiled a major package of legislative proposals which will update rules for digital services and bring in new requirements for platforms with significant market power.

The Commission’s Digital Services Act (DSA) and the Digital Markets Act (DMA) proposals are due to be presented next Tuesday — the start of a long road of negotiating to turn the policies into EU law.

It’s turned out to be particularly awkward timing for the Commission, in parallel with the Google-Fitbit decision. Not least because a key EVP involved in shaping the new digital strategy, Margrethe Vestager, is also the competition commissioner — so she’s simultaneously tasked with deciding whether to waive the tech giant’s latest data acquisition through, even as she puts the finishing touches on ex ante rules for gatekeepers that won’t likely come into force for years.

Vestager told the EU parliament’s Committee on Economic and Monetary Affairs this week that the Commission’s incoming proposals for a major overhaul of digital regulations are necessary to tackle the challenges of the platform economy.

The scale and the scope of the platform economy is “unprecedented and it’s increasing”, she said, acknowledging that the digitization process has “given us a concentration of data, intellectual property, capital — and because of that there’s a lot of power in the hands of a few global players”.

That in turn is making it “really urgent” to complement existing EU competition law enforcement with dedicated regulation for digital services and platform giants, said Vestager.

“The DSA will propose a clear set of due diligence obligations and operate the ecommerce framework for all Internet services within the EU and the point is to ensure that digital services face no borders within the EU, define clearer responsibilities and accountability for online platforms such as social media and marketplaces,” she told MEPs — saying the overarching aim is to ensure consumers have the same protections online as they already do offline.

The aim of the DMA — and its incoming list of ‘dos and don’ts’ for platforms that the EU will define as gatekeepers — is to make sure digital markets “stay open and contestable”, and thus to serve consumers in “the best possible way”.

‘Trust but verify’ via audit authority

In her keynote, Zuboff suggested EU regulators should follow two key principles as they consider what to do.

Firstly, “trust but verify” is how to treat with surveillance capitalists — so no more ‘taken at face value’ pledges swallowed naively and later regurgitated under the one-way logic of extraction maximization. (She raised the awkward example of Facebook’s reversal of an earlier pledge to EU regulators not to combine WhatsApp user data with Facebook data).

“Secondly we have to keep in mind so often we reduce the harms back to that originating context of targeted advertising — when in fact this whole economic logic has moved way beyond targeted advertising to many other markets,” she also said, warning against EU regulators taking too narrow a view on any concessions made by Google as it works to push open another data gate.  

We’ve reached out to the Commission for comment on Zuboff’s remarks.

Zuboff also spoke to concerns that EU regulators don’t believe they have legal grounds to deny Google-Fitbit.

“If the decision to approve Google’s acquisition of Fitbit was made because of a determination that EU laws are not strong enough to defend the acquisition denial in the European courts then let us please stop talking this minute; let’s suspend our event while the parliament moves into an emergency session to pass new laws that are strong enough to take this kind of rejection through the courts. Because we need those laws,” she said.

It would certainly be ironic if the Commission green-lit the Google-Fitbit merger because it was worried about losing a legal challenge down the line — given how frequently tech giants resort to legal action to try to thwart the application of existing EU regulations. Not to mention how fiercely these giants lobby against any new regulation or legislative proposal that would dare to put limits on their ability to continue maximizing their data extraction.

Zuboff said the forthcoming DMA “is the legal instrument to accomplish this necessary lawmaking [against the surveillance capitalists]”, addressing her remarks to those in the EU who have the power to pass laws.

“Make no mistake: This is your opportunity to make a bold intervention to defend democracy against the surveillance capitalists. Faint heartedness is not an option,” she said, adding that the DSA is likewise an essential intervention to defend democracy. 

“This is your chance to finally pry open the black box of surveillance capitalism and demand the right of democratic societies to control their own destiny,” she said, suggesting regulators’ watch word here should be “audit authority”.

Democracy must have audit authority to protection the public just as regulators have done in countless other industries, she added.

The Google-Fitbit acquisition was raised in a question to Vestager yesterday during a session of the Committee on Economic and Monetary Affairs — where she was asked what the EU intends to do vis-a-vis health data and competition, given the risk of tech giants gleaning far deeper and more intimate knowledge of users than they’ve been able to via current data-mining practices.

Vestager told the committee she couldn’t comment on the specific merger as the process is ongoing but she said she agreed health data “are much more precious and much more sensitive” than other types of commercially exploited data.

“This is why one has to be very careful when it comes to health data and advertising — because here it can be a much more vulnerable position for the person in question,” she said.

“For health data as such I think it’s very important that the market develops because the more health data that becomes available the more services people expect for the market to provide for them to have a better understanding of how their health develops,” she went on, adding on Google-Fitbit specifically that “it remains to be seen how the remedies were to bear out if they were to be accepted”.

US vs EU approach to antitrust

During the session Vestager also faced a number of questions from MEPs about the difference of approach to antitrust between the EU and the US — where states have just opened a massive antitrust case against Facebook.

She repeatedly stressed that Europe has a “different” approach to competition law vs the US, sounding a tad on the defensive.

“The US Facebook case is a different approach than what we have. In Europe we do not have a ban of monopolies. They have a different legal basis in the US. We would say you’re more than welcome to be successful but with success comes responsibility — which is why we have article 102 [against abusing a dominant position],” she sahe.

“As a last resort in Europe we would also be able to ask our [institutions] to split up companies but then we would also have to prove that this was the only thing to solve a competition problem and I don’t think we have been there yet,” Vestager added.

Responding to other questions from MEPs she described her department as doing its “best” across a number of big tech investigations — pointing it’s recently opened case against Amazon and has others ongoing into Google’s and Facebook’s use of data for advertising.

“We have a couple of ongoing investigations into the Facebook ecosystem — on the use of data from customers and consumers into advertising and how the Facebook marketplace is functioning,” she noted.

“These cases are not as advanced as they are in the US when it comes to Facebook but I find [the US action] very encouraging,” she added, saying it’s a sign that “the global debate about tech dominance has been shifting over the last couple of years”.

Asked about Facebook’s reversal of an earlier promise not to combine Facebook and WhatsApp user data, Vestager said EU regulators had performed an analysis at the time — looking into whether such a move would still allow for competition — and “found there would be room for others services of the same kind”.

There were no follow-up questions in the event format so MEPs were unable to ask whether Vestager believes that analysis was sound or flawed. But it’s not a good look that the EU’s competition authorities were left so wrong-footed on Facebook’s market power.

Off her own bat, Vestager merely said: “It remains to be seen what will be the outcome of the US [Facebook antitrust] case; as I said they have a different legal basis — to see if by acquiring this company you have entrenched monopoly position.”

She was also asked what the Commission intends to do about companies using self-serving tactics to artificially prolong investigations (and thus delay competition enforcement) — such as by procrastinating or handing out requested information only with substantial delay.

Vestager said its approach is to aim to “always try to balance things out” but she argued it’s important to give businesses enough time to response properly even though it extends the length of investigations.

During the session she did also note that the aim for the DMA is to enable competition authorities to be “so much quicker” — because the ex ante rules will bake in “self-executing obligations”.

The gatekeeper status also means regulators will not need to do the work of establishing dominance first — “which means you’ll get to the sanction must faster and should prevent damages in the marketplace”, she noted. 

It’s not clear whether or not the forthcoming legislative package will feature a new competition tool for specifically tackling digital markets — which the Commission consulted on earlier this year.

Reports have suggested this has been dropped after a standard EU pre-regulatory review process. But the commissioner did not confirm either way.

She was also asked about interim measures — an existing tool she dusted off last year after an extended period when it had not been used, applying it in a case against chipmaker Broadcom.

On this she said the tool has been shown to have been useful — noting the Broadcom case was settled in a year (which is a very speedy turnaround for a competition case) — and she suggested the tool could be used more frequently in the future. “I think that we will see we can use it more often,” she told the MEPs. 

#antitrust, #artificial-intelligence, #competition-law, #europe, #fitbit, #gadgets, #google, #margrethe-vestager, #platform-regulation, #policy, #privacy, #shoshana-zuboff, #surveillance-capitalism

No Google-Fitbit merger without human rights remedies, says Amnesty to EU

Human rights NGO, Amnesty International, has written to the EU’s competition regulator calling for Google’s acquisition of wearable maker Fitbit to be blocked — unless meaningful safeguards can be baked in.

The tech giant announced its intent to splash $2.1BN to acquire Fitbit a year ago but has yet to gain regulatory approval for the deal in the European Union.

In a letter addressed to the blocs competition chief, Margrethe Vestager, Amnesty writes: “The Commission must ensure that the merger does not proceed unless the two business enterprises can demonstrate that they have taken adequate account of the human rights risks and implemented strong and meaningful safeguards that prevent and mitigate these risks in the future.”

In a report last year the NGO attacked the business model of Google and Facebook — saying the “surveillance giants” enable human rights harm “at a population scale”.

In its letter to Vestager Amnesty warns that Google is “incentivized to merge and aggregate data across its different platforms”.

“Google’s business model incentivizes the company to continuously seek more data on more people across the online world and into the physical world. The merger with Fitbit is a clear example of this expansionist approach to data extraction, enabling the company to extend its data collection into the health and wearables sector,” it writes. “The sheer scale of the intrusion of Google’s business model into our private lives is an unprecedented interference with our privacy, and in fact has undermined the very essence of privacy.”

Amnesty is urging the Commission to take heed of an earlier call by a coalition of civil society groups also raising concerns about the merger for “minimum remedies” which regulators must guarantee before any approval.

We’ve reached out to the Commission and Google for a response to Amnesty’s letter.

Google’s plan to gobble Fitbit and its health tracking data has been stalled as EU regulators dig into competition concerns. Vestager elected to open an in-depth probe in August, saying she wanted to make sure the deal wouldn’t distort competition by further entrenching Google’s dominance of the online ad market.

The Commission has also voiced concerns about the risk of Google locking other wearable device makers out of its Android mobile ecosystem.

However concerns over Google’s plan to gobble up Fitbit range wider than the risk of it getting more market muscle if the deal gets waved through.

Put simply, letting sensitive health data fall into the hands of an advertising giant is a privacy trashfire.

Amnesty International is just the latest rights watcher to call for the merger to be blocked. Privacy campaign groups and the EU’s own data protection advisor have been warning for months against letting the tech giant gobble up sensitive health data.

The Commission’s decision to scrutinize the acquisition rather than waiving it through with a cursory look has led Google to make a number of concessions in an attempt to get it cleared — including a pledge not to use Fitbit data for ad targeting and to guarantee support for other wearables makers to operate on Android.

In its letter, Amnesty argues that the ‘safeguards’ Google has offered are not enough.

“The company’s past practice around privacy further heighten the need for strict safeguards,” it warns, pointing to examples such as Google combining data from advertising network DoubleClick after it had acquired that business with personal data collected from its other platforms.

“The European Data Protection Board has recognized the risks of the merger, stating that the “combination and accumulation of sensitive personal data” by Google could entail a “high level of risk” to the rights to privacy and data protection,” it adds.

As well as undermining people’s privacy, Google’s use of algorithms fed with personal data to generate profiles of Internet users in order to predict their behavior erodes what Amnesty describes as “the critical principle that all people should enjoy equal access to their human rights”.

“This risk is heightened when profiling is deployed in contexts that touch directly on people’s economic, social and cultural rights, such as the right to health where people may suffer unequal treatment based on predictions about their health, and as such must be taken into account in the context of health and fitness data,” it warns.

“This power of the platforms has not only exacerbated and magnified their rights impacts but has also created a situation in which it is very difficult to hold the companies to account, or for those affected to access an effective remedy,” Amnesty adds, noting that while big tech companies have faced a number of regulatory actions around the world none has so far been able to derail what it calls “the fundamental drivers of the surveillance-based business model”.

So far the Commission has stood firm in taking its time to consider the issue in detail.

A series of extensions mean a decision on whether to allow the Google-Fitbit merger may not come until early 2021. Though we understand the bloc’s national competition authorities are meeting to discuss the merger at the start of December so it’s possible a decision could be issued before the end of the year.

Per EU merger law, the Commission college takes the final decision — with a requirement to take “utmost account” of the opinion of the Member States’ advisory committee (though it’s not legally binding).

So it’s ultimately up to Brussels to determine whether Google-Fitbit gets green lit.

In recent years, competition chief Vestager, who is also EVP for the Commission’s digital strategy, has said she favors tighter regulation as a tool for ensuring businesses comply with the EU’s rules, rather than blocking market access or outright bans on certain practices.

She has also voiced opposition to breaking up tech giants, again preferring to advocate for imposing controls on how they can use data as a way to rebalance digital markets.

To date, the Commission has never blocked a tech merger. Though it has had its fingers burnt by big tech’s misleading filings — so has its own reputation to consider above reaching for the usual rubberstamp.

Simultaneously, EU lawmakers are working on a proposal for an ex ante regulation to address competition concerns in digital markets that would put specific rules and obligations on dominant players like Google — again in areas such as data use and data access.

That plan is due to be presented early next month — so it’s another factor which may be adding to the delay to the Commission’s Google-Fitbit decision.

#amnesty-international, #competition-law, #europe, #fitbit, #google, #health-data, #margrethe-vestager, #privacy, #wearables