Google and Meta antitrust cases show why we need a policy pincer to foster competition in digital markets
The dominance of Big Tech is the context for India’s digital competition law on its way. We should combine prohibitions on anticompetitive practices with positive obligations on digital players to strengthen rivalry in favour of end users.
The US Department of Justice recently filed a petition in the Google Search case suggesting remedial action to promote competition in digital markets. Key steps include opening up the search ecosystem by prohibiting Google from offering any monetary incentives for the distribution of its search services, combining its search with other products and signing exclusive agreements with content publishers. It also suggests that Google be asked to offload its web browser Google Chrome, through which about 30% of the total search queries are obtained.
The petition comes in the backdrop of multiple contravention orders by competition authorities globally. For instance, in this case, the District Court of Columbia held that Google is monopolizing the general search and general search text advertisement market. Verdicts in Europe have found digital companies such as Google, Amazon and Meta engaged in practices like exclusive deals, lock-in provisions and self preferencing that foreclose avenues of competition to the incumbent.
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Negative obligations: The digital industry is characterized by network effects and economies of scale. These sometimes also exhibit the first-mover advantage and winner-takes-all effect. The concentrated nature of platform markets has been such that governments globally have taken steps to inhibit the tipping effect. For instance, Europe has enacted the Digital Markets Act (DMA), which bans bundling and tying, self-preferencing and cross-utilization of data. Digital gatekeepers have a positive obligation to ensure the interoperability of their technologies.
Bundling and tying: There are many adjacent services in digital markets and a core issue with the business model of digital companies has been the group-level tying and bundling of services in ways that can result in power concentration. Big Tech entities ensure that the behavioural bias of users is fully exploited so that dominance in one relevant market stream could be exploited to foreclose competition in a second market. For instance, while using Gmail along with its search engine may appear ‘optional,’ the size and placement of its pop-up on the search engine screen would suggest otherwise.
Also Read: Google’s ad-tech dominance is easier to fix than its search monopoly
Self-preferencing: This is another ubiquitous practice found to be anti-competitive. The strategy remains the same: i.e., to exploit a behavioural bias so that the user doesn’t exit the ecosystem. For instance, an Android phone comes with Google Chrome as its default web browser. While users can install competing browsers, user inertia would support the status quo, which cements the position of the incumbent.
Cross-utilization of data: Tech firms have been consolidating their dominant position through unauthorized access to personal data. For instance, in the Facebook data sharing case, Germany’s federal cartel office found the company to be profiling users for advertisements without consent. The European Commission has held Meta in violation of the DMA, stating that its pay-or-consent model didn’t give users any realistic choice to sign up for a less intrusive data sharing model.
Positive obligations: It is important to give obligations such as interoperability and data portability their due focus, given concerns of whether negative obligations will actually help promote competition in digital markets.
Also Read: Big Tech in the dock: The EU could force Meta and Apple to change their coercive ways
The European Commission recently developed guidelines to ensure the interoperability of Apple devices . Even the Court of Justice for the EU recently held that there is a positive obligation on a dominant company to keep its technology interoperable.
India’s startup ecosystem may benefit from expanded space for competition in various fields, be it app stores, web browsers or cloud computing platforms. India’s draft digital competition law provides for data portability, indicating a change in direction.
Conclusion: Digital markets have posed unique challenges for competition law enforcement. The Google case has highlighted the detrimental effect on competition of practices such as bundling, tying, self-preferencing and cross-utilization of data.
So, positive obligations such as interoperability and data portability must be accorded high priority. A combination of negative and positive obligations is more likely to work as a deterrent to anti-competitive activity and ensure that digital markets become duly competitive. Such a framework would guard against abuses of digital market dominance and ensure that both our short-term and long-term goals of consumer welfare are served.
The authors are directors, Centre for Competition Law and Economics.
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