The pandemic has accelerated the use of technology and data, and increased dependency on major tech companies. These tech companies have out-performed the market during the crisis and they are again in the regulatory spotlight. As a result, we expect to see further moves to regulate the digital economy in coming months.
Increasing regulatory scrutiny
While Covid-19 has temporarily halted the UK Information Commissioner's investigation into privacy and AdTech, it seems to have done little to slow down the antitrust authorities, who are continuing to pro-actively pursue new and existing cases.
The European Commission has launched two new investigations into Apple in relation to: the terms and conditions of its app store; and its rules on how Apple Pay should be used in merchants' apps and websites. Its investigation into Amazon – Marketplace is expected to escalate in the coming months and a number of preliminary probes into Facebook and Google remain open.
In the U.S., there is also increasing scrutiny: the federal and state antitrust enforcers have opened probes into the major U.S. tech companies in the last year, while a Congressional antitrust sub-committee has been holding high-profile public hearings on conduct in the sector.
Regulating the digital economy
However, the most significant developments over the next year may stem from increased legislative efforts to regulate the digital economy. The GDPR marked a watershed in efforts to regulate data not just in the EU but globally: the so-called "Brussels Effect" resulting in (perhaps begrudging) widespread adoption of a higher standard of general privacy compliance, with jurisdictions as far afield as Thailand and India among those taking or expected to take the European rules as a model for their own markets in 2020.
Its impact has not been lost on policymakers, with the next year expected to see the initiation of even more sweeping regulatory reform that will directly impact tech companies:
At the EU level, at the start of June the EU Commission launched a public consultation on the Digital Services Act and a 'new competition tool' that would allow it to initiate market investigations into perceived structural competition problems, with the ability to impose market-wide remedies on companies. Also, the long-awaited ePrivacy Regulation remains on the horizon. The former is already tagged as a legislative "bulldozer", covering topics such as online platforms' responsibility for content as well as new antitrust powers for the European Commission.
In the UK, the CMA's final report from its market study into online platforms and digital advertising was published in July, recommending that the UK government establish a new regulatory regime for online platforms. The report includes a wide range of politically controversial proposals, including the potential breakup of Google and Facebook, to address a slew of competition concerns in relation to the AdTech industry. The autumn should also bring news of the UK government's plan for its new online harms regime, with legislation said to follow soon afterwards.
Finally, U.S. regulatory developments are likely to turn heavily on the outcome of the elections in November, but may ultimately be the most momentous given Big Tech's centre of gravity on the U.S. West Coast.
Opening new regulatory fronts
These legislative efforts are seeking in part to embed the lessons of the last few years, as well as opening new regulatory fronts. For example, the EU's recent Platform – to – Business Regulation addresses how online platforms treat businesses operating on their platforms – a concern which has run through the European Commission's antitrust investigations over the last decade.
The EU is also consulting on proposals to impose wide-ranging new rules on online platforms deemed to hold significant market power. Germany will enact similar rules in the Autumn and the UK is actively doing likewise. This would mark a significant escalation of the intensity of regulation and draws parallels with the European Commission's "access" regime imposed on telecommunications markets in the early 2000s. Indeed, Europe is not alone with the Japanese Diet having passed the Digital Platform Transparency Act at the end of May. Although aiming to compel platform operators to deal with business users and consumers with greater fairness and transparency, this new legislation has drawn criticism from industry leaders (including the CEO of e-commerce giant Rakuten) who complain that it will have an adverse effect on technology innovation in Japan.
Harmonising competing policy objectives
To regulate Big Tech effectively, legislation will need to harmonise competing policy objectives, notably privacy and anti-trust law, encouraging competition while also offering individuals sufficient protection in their interactions with digital markets. The next decade may well be spent examining, shaping, and implementing the legislative efforts of the next year.
There continues to be an increasingly interventionist approach to regulating the digital economy. - Christian Ahlborn Tech Sector Leader, Competition Partner, London
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