People might like to say that data is the new oil, but no business is regulated on digital platforms like the old-school oil companies.
Legislators and law enforcement agencies on both sides of the aisle and around the world agree that it is time to rewrite the rules governing competition for the new Internet age.
“The unique features of digital technology have ushered in new market dynamics and business strategies for which we need to update our outlook,” said Lina Khan, chair of the Federal Trade Commission, speaking at a no-confidence motion in a room of her European counterparts on Thursday. Charles River Associates, a global consulting firm based in Brussels.
The European Union passed the Sweeping Antitrust Act last week in the form of the Digital Markets Act, which has the Big Tech platform directly on the crosshairs.
The new law prohibits large platforms from consolidating data sources without explicit opt-in, restricts self-preference across all services, requires interoperability between messaging apps and generally aims to control “gatekeepers” by forcing them to engage in fair business practices.
The United States follows the EU in terms of federal antitrust laws, but there are now multiple antitrust bills around Congress that are supported by bipartisan politicians, including Sen. Amy Kloboucher (D-MN) and Republican Ken Buck (R-CO).
One such bill, the American Innovation and Choice Online Act, aimed at preventing companies such as Amazon or Google from bundling or liking their own products, was publicly supported by the judiciary on Monday.
Frame work
Jonathan Canter, assistant attorney general in charge of the DOJ, said the legal framework that enforcers have relied on for the past three decades to build trust cases was based on precedents and economic theories while the U.S. economy still revolves around factory smokestacks and linear supply chains. Was. Department of Disbelief.
While some of those precedents may still apply in certain cases, Canter said the underlying rules of the business have changed, and if enforcers don’t roll with those changes, “we’re missing the boat.”
“We should focus on competition rather than a theoretical model of what anyone thinks competition looks like,” Canter said.
There is a movement towards the application of modernized distrust. The DOJ and FTC announced in January that agencies would rewrite their consolidation guidelines to reflect today’s market realities. An important consideration to consider is that price control – often the only metric that a regulator can legally use to define monopoly power – makes no sense when we talk about free consumer products such as social media platforms and search engines.
Facebook bought Instagram for 1 1 billion almost 10 years ago when the photo-sharing app had only 13 employees, and the FTC cleared the deal without any objection at the time because Instagram was free and pre-revenue, as it still had no ads. The commission is now suing Facebook for trying to acquire and release both Instagram and WhatsApp. The FTC did not stand in the way of buying Facebook’s WhatsApp in 2014.
Current M&A guidelines have not been updated for over 12 years.
Power tools
But distrust enforcers don’t just need new tools; They need a new mentality.
To be effective, Khan said, would require “more than just bringing a huge structure.” Applicants need to study the market and understand the business incentives that motivate companies to act like them.
Sometimes, though, a company’s operations, especially those taken by big tech platforms, are quite transparent – and not in a good way.
Their lobbying efforts could be perfectly ridiculous, says Rep. Buck practically attended the Brussels event from his office in Washington, DC
“It’s pretty ridiculous when these giant companies talk about how [antitrust] The bills we are debating in Congress are “anti-American” – we always hear them, “he said. “We are actually helping China and we will lose our leadership position in the world economy – that is utter nonsense and a lot of people here have ridiculed it.”
“These companies also make nonsense of the idea of American companies – they’re multinationals and they’re looking for profit, which is good, but they don’t share American values,” Buck said. “For these organizations, any actor in the world to talk about doing something anti-American … they have no position to do it.”