Antitrust actions, EU Digital Markets Act signal end of big tech monopoly

In the past, policymakers struggled to understand the implications of the collection and processing of sensitive, personal data on previously unimaginable scales

A string of cases in various jurisdictions against tech giants, along with the Digital Markets Act coming into force in the European Union (EU), indicates a paradigm shift in the policy attitude to big tech. Apple and Google are fighting antitrust cases in the United States (US), and both companies have lost lawsuits in the EU. Meta is defending a class-action lawsuit under the United Kingdom’s (UK’s) Competition Act. The Competition Commission of India (CCI) has imposed a fine equivalent to $113 million on Google for anti-competitive behaviour in India, and Apple too is being investigated by the CCI. While the detailed allegations are different, as are the relevant laws, the allegations are similar that the tech giant in question abused its dominant position. The EU is also forcing Apple to pay €13 billion ($14.4 billion) in back taxes in Ireland, and Google has been fined €2.4 billion for rigging search to favour services it offers. Google has also been “convicted” of monopolist behaviour in the US, although the court has not specified penalties, or remedies, although it could even advocate the breakup of Google under the law. Google, however, won against the €1.49 billion fine imposed by the EU for supposedly blocking rival advertisers.

Most of these cases were filed under older anti-competition laws. But the Digital Markets Act, which came into force in March in the EU, gives regulators more teeth. It is specifically designed for digital markets, and penalties under the Act for some offences could amount to 10 per cent of global turnover. The Act also insists users be allowed to uninstall default apps like Apple Maps and Gmail, and to switch search engines to promote competition. Cases under the law are likely to be settled quicker, with less room for defendants to delay, or drag out appeals. Regulators around the world will be examining the Act carefully and similar regulations may be adopted in other jurisdictions. These cases indicate shifts in thought processes for policymakers. For decades, they found it hard to understand how digital markets worked and, therefore, were willing to give monopolistic incumbents more leeway. Policymakers also struggled to understand the implications of the collection and processing of sensitive, personal data on previously unimaginable scales.

An argument has even been made that tech markets are “natural” monopolies. For example, the average user doesn’t need to use more than one search engine, or use more than one social network. Analogies with power companies and city gas-distribution networks being local monopolies were cited to support the arguments in favour of search engines, app stores, and social networks. But it seems policymakers and regulators have evolved a better understanding of how digital markets work and realised that holding dominant market share is no excuse for monopolistic behaviour. It behoves regulators to ensure users get choices, and competition is not elbowed out by misuse of dominant market share. Unchecked monopolies always lead to sub-optimal outcomes in terms of market dynamics. The incumbent has less incentive to innovate and it may use unfair means to prevent competition. Eventually, users pay more in monopolistic markets than in a competitive ecosystem, whether it is in the form of cash or valuable data. The Act in the EU and the string of global antitrust cases elsewhere indicate that regulators are starting to chip away at the dominance of monopolies, which perhaps lasted for too long.