EU’s Digital Markets Act
In December 2020 the European Commission proposed the Digital Markets Act (DMA) to regulate the multi-sided platforms or gatekeepers of the digital world by imposing direct restrictions on the behavior of tech giants. The DMA takes a diametrically opposite approach to antitrust enforcement (which is currently the United States’ favored approach). It is an ex-ante set of rules that constrains operators before any bad behavior can materialize, as opposed to antitrust which kicks in after an infringement (ex-post). The goal of DMA is to constrain gatekeepers’ behavior while forcing them to proactively open up to more competition. Some of the rules include:
- No self-preferencing: a prohibition on ranking their own products over others;
- Data portability: an obligation to facilitate the portability of continuous and real-time data;
- No ‘spying’: a prohibition on gatekeepers on using the data of their business users to compete with them;
- Interoperability of ancillary services: an obligation to allow third-party ancillary service providers (eg payment providers) to run on their platforms;
- Open software: an obligation to permit third-party app stores and software to operate on their OS.
Regulating big tech: the Digital Markets Act
By: Julia Anderson, Mario Mariniello – Bruegel
The big tech break-up legislation is coming in the US
Certain platforms have accumulated so much economic and political power that they may not be governable, as a result break-up legislation is gaining steam in Congress. How can the break-up be done? Hal Singer suggests there are two options:
- The Congress specifies the firm boundaries for each platform on the front end. For example, Amazon could be compelled to shutter its private-label division and spin-off its logistics and web hosting divisions. Currently, Amazon provides web-hosting services to Netflix but also competes against Netflix with its own film division; the Amazon logistics division is forcing its merchants to buy fulfillment services from Amazon at inflated prices.
- The Congress empowers a tribunal to impose structural relief on the back end, as a remedy to a particular case or set of cases i.e. the tribunal could require the platform to sell off its content arm or cease operations in the content space. Amazon could be sliced up the same way, but the slicing would have to address the competitive harms presented in a particular case or set of cases.
Congress Is Leaning Towards a Big Tech Breakup
By: Hal Singer – Georgetown University
Is there a better way?
One solution might be to move to a decentralized, data-driven accountability regulatory system, whereby gatekeepers would provide data APIs for public auditing, perhaps to ad-hoc digital agencies. This mechanism would not force platforms to disclose their algorithms, and so would therefore protect the value of their innovation. At the same time, it will allow oversight over the system, which can act also as deterrent of the potential abuse of orchestration power. Such a system might balance the various interests at stake; it can enhance transparency and higher standards of behavior while not discouraging innovation by preserving a firm’s latitude of action.
Can the EU Regulate Platforms Without Stifling Innovation?
By: Carmelo Cennamo, D. Daniel Sokol – Copenhagen Business School, University of Florida
