Competition law scrutiny on tech giants spills over to the other side of the Atlantic (and the rest of the globe?)
It’s official now: tech giants such as ‘GAFA’ (Google, Amazon, Facebook and Apple) have now caught the eye of the competition (antitrust) authorities in their native United States as well.
On 23 July 2019, the US Department of Justice (DoJ) confirmed in various media that it is launching an investigation into the possible market power of internet giants and its effects on consumer welfare. In an article in the New York Times, Makan Delharim, head of the DoJ’s Antitrust Division, is quoted as follows: “Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands, (…). The department’s antitrust review will explore these important issues.”
Although it is unclear what exactly this investigation will bring, it would appear that the US authorities are following suit of their European counterparts and are exchanging a cautious ‘wait and see’ approach for a more interventionist policy. Until approximately 2017-2018, European competition authorities were reluctant to intervene in fear of stifling innovation. Right now, they are more and more ‘hitting hard’.
Where Amazon was able to agree to a commitment decision with the European Commission in May 2017 by abandoning a policy according to which Amazon required e-book sellers not to offer more favourable terms on other sales platforms, the Commission’s investigation into another tech giant, Google, ended about two months later with a fining decision in which the Commission imposed a fine of as much as EUR 2.42 billion on Google for abuse of a dominant position. At the time, this was the highest fine ever imposed on a single company. The Commission concluded that Google had used algorithms in order to make the price comparison services of its competitors appear relatively low in lists of search results. The price comparisons of its own Google Shopping service were not downgraded by these algorithms and therefore appeared higher in the search results, causing Google Shopping to be favoured over the other price comparison services. On 18 July 2018, Google broke the record of receiving the highest fine ever imposed on a single undertaking for the second time (EUR 4.34 billion). The Commission found, among other infringements, that Google abused the dominant position of its Android operating system for smart phones to protect the equally dominant position of its search engine. Things did not end there for Google. On 20 March 2019, the Commission imposed a third fine of EUR 1.49 billion on Google for abuse of a dominant position, this time on the market for online search advertising intermediation services. Users of AdSense, a Google application that allows third parties to add a search function to their website, were found to have been forced by Google to sign contracts stating they would not accept advertising from rival search engines. A forth investigation into Google is pending, as are investigations into Amazon and, possibly, Apple. In addition, competition commissioner Vestager did not rule out that one day, the European Commission could start a case comparable to the one in Germany against Facebook.
National authorities throughout Europe as well have dramatically increased their level of competition law enforcement towards tech giants. In France, Google was twice (in 2010 and again in 2019) forced to strike conditions for its advertising service that the competition authority found to be discriminatory. In the UK, Amazon changed its commercial terms for third party sellers in 2013 after the competition authority had started an investigation. In Germany too, Amazon was forced to amend its commercial terms twice (in 2013 and 2019). A joint investigation with the European Commission into the market for audio books persuaded Apple to do the same in 2017. Earlier this year, the German competition authority prohibited Facebook to combine user data of Facebook with those of other services, most importantly WhatsApp and Instagram. This conduct was found to infringe the privacy rules of General Data Protection Regulation, and for that reason was also considered to be an abuse of a dominant position. In Italy, Apple and Samsung received fines of EUR 10 million and 5 million respectively, because they were found to have deliberately slowed down older mobile phones (2018). Last but not least, the Dutch competition authority announced last spring that it is investigating possible anticompetitive practices related to Apple’s App Store.
This trend of tighter enforcement seems to spread not only across the Atlantic, but also across the Pacific. On 26 July 2019, the Australian competition authority published the results of its Digital Platforms Enquiry. The Report proposes various legislative changes, as well as the setting up of a special task force. Most European competition authorities already have such a special task force in place.
To stay on top of all these rapid developments, Loyens & Loeff too has set up its own Digital Competition Team. As members of the Digital Competition Team, we are proud to announce our book Digital Competition Law in Europe: A Concise Guide (Kluwer), which will appear in September 2019 and provides an overview of where European digital competition law currently stands and where it is likely to head in the future.
Should you have any questions with regard to the above, please contact Marc Wiggers, Robin Struijlaart, Joost Dibbits or your regular Loyens & Loeff adviser.