Tuesday, May 9, 2023
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Brussels re-energised for Big Tech battles

After some bitter defeats, Margrethe Vestager, the EU’s competition chief, scored a big win recently after judges in Luxembourg largely upheld a record fine on Google for abusing its dominance of the search giant’s Android mobile phone operating system.

Earlier this month, the European General Court ruled mostly in favour of Vestager’s decision to hand Google the largest ever antitrust fine over the company’s “unlawful restrictions on manufacturers of Android mobile devices and mobile network operators” in order to boost its dominant position.

Vestager celebrated the win by saying it puts Brussels in a position to “blaze a trail” on the new digital rules, which are designed to open markets and foster competition.

Even though Google is likely to appeal against the ruling at the European Court of Justice, the EU’s victory was a milestone in a decade of antitrust enforcement against tech giants. It was also a boost to the new rules aimed at curbing the power of Silicon Valley in the bloc.

 “It’s a win on the principle that EU regulators can go after big tech companies, most of which are US based, and impose major fines,” says Annamaria Mangiaracina, a Brussels-based partner at Linklaters.

After major court losses against Intel and Qualcomm, senior regulators were worried that if the Google ruling had gone the other way, their current investigations into alleged anti competitive behaviour would dramatically slow down or come to a halt at a time when they are already under immense pressure to take swift action.

“This is a cause of celebration,” said one relieved official, pointing to existing probes against Apple, Amazon, Facebook’s owner Meta and Google.

It comes ahead of the Digital Markets Act which aims, among other things, to clarify in law what counts as anti-competitive behaviour by Big Tech, making it easier for Brussels to take action. It targets so-called gatekeepers — a company with at least 45mn monthly active users or at least 10,000 yearly business users. Google, Amazon, Facebook, Apple and Microsoft all meet this standard, as do other groups such as accommodation site Booking.com and ecommerce group Alibaba.

Inevitably there will be legal challenges to the implementation of the DMA. Big tech platforms are likely to deploy their large armies of very aggressive lawyers to fight being captured by the new rules or limit the legal burdens.
Nick Clegg, the former deputy UK prime minister and now president of global affairs for Meta, said during the drafting of the DMA that it “risks fossilising how products work and preventing the constant iteration and experimentation that drives technological progress”.

One crucial part of the legislation includes an outright ban on companies ranking their services ahead of rivals and limits the use of the data they gathered from competitors. This is bad news for business models that have relied on the ability to leverage their dominant position to take a stronghold of digital markets so the fight will be fierce.

“It’s not going to be a walk in the park,” said a corporate lawyer who works on behalf of big tech. “We’ll offer a tough fight.”

On top of lengthy battles against big tech, regulators in Brussels are also concerned they may not have enough officials to enforce the new landmark legislation.

MEPs want at least 150 new people dedicated to enforcing the DMA while the commission anticipated only 80 in its original proposal. Legal experts will be handy but the commission also needs technical ones to make sure big tech complies with the rules.

And member states also want a piece of the action. EU countries are seeking a more prominent role in going after big tech by opening investigations and handing them heavy fines. Tension is growing over how much power Brussels and national competition authorities should have to curb the power of the likes of Amazon and Apple.

Under the new rules, set to come into effect next year, the European Commission has centralised powers as the “sole authority” with the ability to enforce the regulation and to choose when to open competition probes and against which firms. Still, how prominent the role of Berlin and Paris should be in tackling big tech has been the source of recent discussions among regulators.

Alec Burnside, a partner at Dechert in Brussels, offers some caution. “We shouldn’t underestimate the challenge of getting the rules up and running effectively,” he says, adding that it is not only about the implementation of the rules but it will take some time before the new law starts “to bite”.




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