December 2020: The beginning of a new decade in the digital economy

While the world prepares for Christmas, December 2020 marks the beginning of a new decade in the digital economy. In only 20 days, the United States released several antitrust lawsuits against Google[1] and Facebook[2] for alleged abuse of a dominant position in their core markets. Australia[3] and Germany[4] probed Facebook for misleading consumers information about privacy (based on consumer protection law) and for the requirement of a Facebook account to use Oculus (owned by Facebook) virtual reality products (based on competition law) respectively. The Competition and Markets Authority (CMA) recommended a pro-competition regime.[5] The Commission published its Digital Services Act (DSA) and its Digital Markets Act (DMA).[6] Meanwhile, the Commission[7] authorized the Google/Fitbit merger subject to long-term behavioral commitments concerning data and interoperability issues, while the ACCC[8] rejected them. Finally, Facebook alleged Apple's privacy transparency policy about data collection and usage practices as anti-competitive.[9] All these antitrust allegations and regulatory proposals are the answers to growing concerns of market failures in the digital economy, including, but not limited to privacy and competition. The outcomes are only expected in several years as the undertakings concerned will probably challenge the cases before the Supreme Court.

(© Stewarts Law LLP 2020)

The purpose of this short opinion is not to analyze each case but to draw some preliminary observations.

First, competition and regulation are complements, not substitutes.[10] Competition laws apply to the behavior of one or more firms against alleged anti-competitive conducts (abuse of a dominant position and collusion). Competition laws mainly apply ex-post on a case-by-case basis and ex-ante in the context of merger control (and might be reviewed ex-post in some jurisdictions like in the US). Regulations only apply ex-ante in case of market failures to all firms (symmetric regulations) or to some firms against objective criteria (asymmetric regulations) without the need to establish a specific case to intervene. Therefore, regulations are deemed broader, as they are not limited to dominant firms. There are also considered faster, as the market definition phase is not required, and the alleged harmful conducts are clearly defined. In sum, as noted in the DMA, regulations might be more effective than competition rules to correct behaviors in a timely manner.[11] In fast-moving digital markets, quick interventions are required to prevent irreparable damages. However, contrary to the DMA, to ensure legal certainty, regulatory rules should be first and foremost established by courts decisions from the Supreme Court, and not based solely on current or pending investigations, and undertakings should be able to justify their conducts objectively.

Second, privacy and competition interact in the digital economy. Privacy is a non-price parameter of competition as recognized in Facebook/WhatsApp and Microsoft/LinkedIn.[12] Firms compete over privacy. Privacy might be reduced due to anti-competitive practices, as noted by the US Attorney Generals in the lawsuits against Facebook and Google. Conversely, competition might be reduced due to privacy policies, as alleged by Facebook, and publishers before the French Competition Authority against Apple.[13] Meanwhile, in Europe, the Commission still seems reluctant to assess privacy issues in merger control as stated in Facebook/WhatsApp[14] and Google/Fitbit.[15] Finally, privacy issues can be analyzed on the ground of data protection, consumer protection, or competition laws,[16] as illustrated by the US (FTC) and Australian Facebook case based on competition and consumer protection law respectively.[17] However, privacy issues are only the tip of the iceberg, where access to personal data is paramount to compete by providing personalized products/services and ads. In this context, even though data protection rules are respected, firms might have the ability and incentive to circumvent them by using nudges and dark patterns to steer people to "accept" the privacy policies without even reading them.[18] In this regard, competition, consumer protection, and data protection authorities must closely collaborate to avoid such behavior and to ensure effective consent.

Finally, the pressures against big tech companies are growing all over the world. The threats are now real. However, international cooperation is more than welcome to avoid diverging enforcement, as shown by the Google/Fitbit merger, and regulatory responses, as illustrated by the UK and EU regulatory proposals.

To quote Churchill, "[n]ow this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."

I wish you a wonderful Christmas.

[1] Texas State Office of the Attorney General, press release, AG Paxton Leads Multistate Coalition in Lawsuit Against Google for Anticompetitive Practices and Deceptive Misrepresentations, December 16, 2020 (accessed December 22, 2020). Colorado State Office of the Attorney General, press release, Colorado Attorney General Phil Weiser leads multistate lawsuit seeking to end Google’s illegal monopoly in search market, December 17, 2020 (accessed December 22, 2020). [2] Federal Trade Commission (FTC), press release, FTC Sues Facebook for Illegal Monopolization, December 9, 2020 (accessed December 22, 2020). New York State Office of the Attorney General, press release, Attorney General James Leads Multistate Lawsuit Seeking to End Facebook’s Illegal Monopoly, December 9, 2020 (accessed December 22, 2020). [3] Australian Competition and Consumer Commission (ACCC), press release, ACCC alleges Facebook misled consumers when promoting app to 'protect' users' data, December 16, 2020 (accessed December 22, 2020). [4] Bundeskartellamt (BkartA), press release, Bundeskartellamt examines linkage between Oculus and the Facebook network, December 10, 2020 (accessed December 22, 2020). [5] Competition and Markets Authority (CMA), press release, CMA advises government on new regulatory regime for tech giants, December 8, 2020 (accessed December 22, 2020). [6] European Commission (EC), press release, Europe fit for the Digital Age: Commission proposes new rules for digital platforms, December 15, 2020 (accessed December 22, 2020). [7] EC, press release, Mergers: Commission clears acquisition of Fitbit by Google, subject to conditions, December 17, 2020 (accessed December 22, 2020). [8] ACCC, press release, ACCC rejects Google behavioral undertakings for Fitbit acquisition, December 22, 2020 (accessed December 22, 2020). [9] Facebook, announcements, Speaking Up for Small Businesses, December 16, 2020 (accessed December 22, 2020). [10] Crémer, J. et al report, pp. 4-5. [11] European Commission, Proposal for a regulation of the European parliament and of the council on contestable and fair markets in the digital sector (Digital Markets Act), {SEC(2020) 437 final} - {SWD(2020) 363 final} - {SWD(2020) 364 final}, December 15, 2020, p. 8. [12] COMP/M.7217-Facebook/WhatsApp, 3 October 2014, para. 87; M.8124-Microsoft/LinkedIn, 6 December 2016, para. 350 and footnote 330. [13] Hagey, K., and Haggin, P., Apple Faces Antitrust Complaint in France Over Privacy Changes in iPhones, The Wall Street Journal, October 28, 2020 (accessed December 22, 2020). [14] COMP/M.7217-Facebook/WhatsApp, 3 October 2014, para. 164. Any privacy-related concerns flowing from the increased concentration of data within the control of Facebook as a result of the Transaction do not fall within the scope of the EU competition law rules but within the scope of the EU data protection rules. [15] As noted in the press release, “[o]ther market participants raised a privacy concern indicating that it would be increasingly difficult for users to track what their health data would be used for. The Commission's investigation found that Google will have to ensure compliance with the provisions and principles of the GDPR, which provides that the processing of personal data concerning health shall be prohibited, unless the person has given explicit consent Such concerns are not within the remit of merger control and there are regulatory tools better placed to address them.”’ [16] The law and economics literature on this topic is well-developed. See for instance, Monti, G., Attention Intermediaries: Regulatory Options and their Institutional Implications, TILEC Discussion Paper DP 2020-018, July 7, 2020. [17] Competition Policy International (CPI), Australia Sues Facebook Over Data Misuse, December 16, 2020 (accessed December 22, 2020). “There is a link to what the FTC is saying, but they’re looking at a competition issue,” ACCC Chairman Rod Sims said at a televised news conference. “We’re looking at the consumer.” [18] Forbrukerrådet, Deceived by design-How tech companies use dark patterns to discourage us from exercising our rights to privacy, June 27, 2018.


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