No promise of a cheerful new 12 months for Massive Tech as EU and US lawmakers bear down
Big Tech is entering a year when the only certainty is that there will be a lot of unwanted uncertainty. And with so many of the major technology platforms calling Ireland their European home, this could have an impact on Ireland Inc.
If 2019 and 2020 were the years of uncomfortable political hearings, with founders and senior executives being asked to question before the US Congress, the European Parliament and at some point before the Dáil, then 2021 promises to be far more sobering and alarming overall Year of the antitrust investigation.
The political grills of the past 18 months, especially in the US, have paved the way for the next steps. When we got that strange hearing last July with the virtual appearances of the executives of Apple, Facebook, Amazon and Google / Alphabet before the US House of Representatives antitrust subcommittee, the questions from the politicians made it clear that the executives could and would say something against them and their companies are used.
After a 16-month investigation that included a number of those US hearings, the bold (449 page) Congressional report that finally appeared in October proved that it was indeed the case. It referred to statements and documents such as B. Emails from internal directors to support the conclusion that much stricter regulatory and antitrust measures were required.
At the end of 2020, no fewer than five antitrust investigations against large technology and social media platforms at the federal and state levels were officially initiated in the USA: three against Google and two against Facebook. There could be more on the horizon for 2021.
Of these, the headliner is the U.S. Department of Justice’s lawsuit against Google. It is the first significant application of antitrust law by the US since the Microsoft acquisition at the turn of the millennium.
The action focuses on the dominance of Google search engines and the company’s ability to leverage its strong position to knock out potentially smaller competitors. The action will not be heard until 2023. However, if the Microsoft case serves as an example of what to expect, we will hear many ongoing details in 2021 as the case is prepared, particularly as one of the other cases against Google announced in December and by Texas and nine other states have been filed that may be included in the federal case.
The US Federal Trade Commission (FTC) and a grand coalition of US states bring separate antitrust proceedings against Facebook and demand that the most important acquisitions WhatsApp and Instagram must be sold.
Government investigations are no less powerful or worrying to the platforms than government measures. Think of the situation in the EU where both Member States and the EU itself can bring cases against companies. Individual EU states such as France and Germany have brought criminal lawsuits against the platforms in the past.
If anything, a multitude of separate US state measures could be worse than a single federal measure, resulting in a multitude of different regulations and a huge headache for any company.
But there is more. The US Department of Justice is also investigating Apple (apparently at the heart of its App Store) and is believed to be investigating Amazon and other aspects of Facebook’s activities as well. It found in 2019 that it was “search, social media and some retail services online”.
The FTC also researches Amazon’s relationship with small retailers on its platform – companies with which it sometimes competes directly.
Given the strong bipartisan dislike of the big platforms, be it social, retail, or search, the new Biden administration and a Biden-appointed Justice Department are likely to maintain the same cool relationship with the platforms as the previous administration.
This is likely to be the case even if some tech industry figures have emerged as actual or potential agents within the administration. So far, executives from companies like Amazon, Airbnb, Lyft, Uber and Salesforce are in.
And since mid-November, former Google boss and chairman Eric Schmidt has been rumored to be a possible choice for a task force for the Biden-Tech industry, but this has met with much public resistance.
On the other hand, the new US President has named Pete Buttigieg, against whom he ran for the Democratic presidential candidacy, as his transport secretary. During campaigns in California, Buttigieg supported taxi drivers against Uber and Lyft, as well as greater rights for gig workers, and criticized Google and Uber in its economic policy proposals during the 2019 campaign.
His West Wing prospect probably carries far more weight than anyone else in a minor administrative role or technology policy advisor.
The recent fines and penalties from the EU have shown that they are still not a big fan of the platforms. However, these recent moves from the US – especially in the area of antitrust law – represent a significant contrast between the US and the EU.
For years, the European Union was (rightly) seen as the far stronger regulatory environment and also the torchbearer for antitrust activity as the US kept silent on what had once been a legal trademark of the US and provided some of the most important, US -American charities, divestments, and reorganizations throughout the 20th century.
For years, many believed that the EU would be the most likely source of significant antitrust action against the platforms and, in particular, the most likely to impose one of the most dramatic penalties in antitrust law: the splitting of the major platforms by demanding a divestment of previous major acquisitions .
Not that the EU has set a good example in this area. It has repeatedly mirrored the US and approved highly controversial acquisitions such as Google’s acquisition of advertising giant DoubleClick and Facebook’s moves to Instagram and WhatsApp.
Still, many felt that the EU would consider such measures. In one major change, EU Competition Commissioner Margrethe Vestager said that, according to a special report she commissioned, she did not see the division of platforms as the best solution to persistent problems. The turnaround came as a shock to the activists against the platforms.
However, the EU, reappointing Vestager to the same Commission role, has continued to apply other aspects of EU antitrust law against the platforms and has imposed significant fines on companies like Google and Facebook.
In late 2020, Vestager announced significant antitrust charges against Amazon, claiming it misused data it received from sellers on its platform. A decision is expected in 2021. Further technological research in the EU has not yet been completed.
In addition, two key EU pieces of legislation were published in December – the Digital Markets Act and the Digital Services Act (DMA and DSA). Together, they would fundamentally change the way the major platforms work and identify the largest as gatekeeper companies with significant additional responsibilities and operational restrictions.
The DMA has a firm focus on antitrust law and could enable companies to be wound up. As with the General Data Protection Regulation (GDPR) during its long development, the two pieces of legislation in 2021 have a lot of lobbying and argument ahead of us.
But while the EU messed up its collection of antitrust swords with the publication of these laws, it also approved Google’s controversial acquisition of FitBit, which gave the search giant a huge slice of health data generated by FitBit’s wearable fitness equipment.
Mixed signals indeed.
Regardless of the growing antagonistic anti-trust and regulatory focus in both the EU and the US, there is certainly no promise of a Happy New Year 2021 for Big Tech.
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