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Big Tech to Spur Global Antitrust Rewrite in 2020

Jan. 2, 2020, 10:45 AM

If 2019 was the year of the techlash, 2020 is poised to be the year of the global antitrust rewrite, as countries worldwide retool their laws to confront Big Tech.

Facebook Inc., Alphabet Inc.'s Google and other tech giants are facing increased criticism from antitrust regulators over their expanding power, particularly their control over troves of data.

Heading into 2020, some countries have signaled that their displeasure with the tech industry isn’t just talk. Regulators from the U.S. to the U.K. to Australia have warned that they plan to take action to rein in the power of Silicon Valley’s biggest names, by tweaking the policies that govern competition.

“The techlash is the rhetorical thing, it’s the easy bit,” said Greg Francis, a London-based managing director at Access Partnership, a global public policy consultancy for the tech sector. “The dangerous and challenging part is the regulation that is getting drafted in response.”

The Eastern Hemisphere is already dotted with a handful of tech policy proposals, many of which could become a reality in 2020.

Germany’s federal cartel office, which has already sought to overhaul Facebook’s user tracking practices, proposed rules that would address the use of data in digital markets. Australia is slated to set up a new committee in the new year that will monitor Big Tech’s potentially anticompetitive online advertising practices.

The year ahead is the “next chapter” of the techlash debate, said Marianela Lopez-Galdos, global competition counsel at the Computer & Communications Industry Association, whose members include Facebook and Google.

“For 2020, what we will see is how these ideas get implemented,” she said.

Policy Proposals

The EU, which has already levied multi-million dollar fines on Qualcomm Inc., Apple Inc., and other tech companies, is set to review in 2020 the parameters for how it defines markets in the digital age.

Markets may work differently with the rise of globalization and digitization, and the EU needs to ensure its antitrust review process takes those changes into account at the start of the new decade, EU competition czar Margrethe Vestager said in a Dec. 9 speech.

In October, German competition authorities proposed legislation that would amend the country’s antitrust rules to better police dominant tech companies’ ability to control the market through large amounts of data. Actions by tech companies that inhibit rivals’ access to data could be prohibited under the proposed German legislation.

If approved by Parliament, enforcement of the proposed legislation could begin as early as mid-2020, analysts say.

Similar policy tweaks to confront Big Tech have also been proposed by Italy, Australia, the U.K., and others.

Antitrust authorities are generally weighing four main issues stemming from dominant tech platforms: the ability to control big data; the power to impose unfair terms on other competitors; the chances that a merger could thwart future entrants; and the potential use of algorithms for anticompetitive purposes.

“If you think about it, all of the broad issues different regulatory regimes want to address are essentially the same,” said John Terzaken, global co-chair of Simpson Thacher & Bartlett LLP’s antitrust and trade regulation practice.

“What is different is that each authority is looking to study and solve those same issues by applying its own set of regulatory tools,” he added.

U.S. Enters Fray

U.S. antitrust enforcers at the Federal Trade Commission and Justice Department have also signaled that they’re considering potential policy changes. However, unlike their European counterparts, the U.S. hasn’t rolled out formal policy proposals.

The FTC is considering the need to replace its framework for determining whether a merger or allegedly anticompetitive conduct, such as price fixing, amounts to an antitrust violation. The agency has typically found violations under the framework, called the consumer welfare standard, if the alleged conduct results in direct harm to consumers, such as higher prices or decreased quality of products.

The FTC’s Office of Policy Planning in 2020 is slated to release an analytical guide to how it will identify, evaluate, and correct potentially anticompetitive conduct by dominant tech companies. Those guidelines are set to be enforced by the FTC’s new technology enforcement division, which the agency created in February.

Regulators at the DOJ are conducting a broad review of tech companies’ practices, but the department doesn’t think major tweaks are needed to antitrust law in response to the rise of Big Tech.

Instead, the DOJ has said it’s reviewing non-antitrust statutes, such as Section 230 of the Communications Decency Act, to see if modifications are needed.

Section 230 shields internet platforms, such as Google’s YouTube, from liability stemming from user-generated content.

The DOJ is also considering areas such as privacy, consumer protection, and public safety as ways to review potentially illegal tech industry conduct.

Global Asymmetries

In the new year, there may be instances where tech companies choose not to offer services or serve certain markets in countries that have created tighter regulatory regimes, Terzaken said.

“I would think most companies will look to avoid that result, and try to work with the respective authorities to meet any new scrutiny, but some may decide otherwise if authorities aren’t willing to be reasonable in their approach,” he said.

Such a scenario has already played out for Google.

New Android phones sold in Turkey won’t include Google’s services, the company announced Dec. 16 in response to a Turkish antitrust ruling that said its contracts with phone manufacturers didn’t create a competitive market for search and other products.

Come 2020, “the balkanization of regulation is a very clear and present danger for all tech companies,” Francis said.

To contact the reporter on this story: Victoria Graham in Washington at vgraham@bloomberglaw.com

To contact the editors responsible for this story: Alexis Kramer at akramer@bloomberglaw.com; Seth Stern at sstern@bloomberglaw.com

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