The chief executive of the Competition and Markets Authority has admitted regulators such as his in the UK and others around the world “struggled to stay ahead of the curve” and keep up with the tech giants.
But Andrea Coscelli said there is now “less uncertainty” in the digital market than there was five years ago, with enough evidence to make a “compelling case that a new regulatory framework for the most powerful platforms is required to promote competition in a number of digital markets”.
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In April the UK Government will launch a new competition regime, the Digital Markets Unit, within the CMA to rein in the dominance and power of platforms such as Google and Facebook, rebalancing the relationship between the tech giants and news publishers.
Meanwhile Australia’s ACCC is pursuing new rules that would force the Duopoly to pay publishers for the use of their content. In response Google has threatened to pull its search engine from the country and Facebook has warned it could stop allowing people to share and publish news on its feeds.
Meanwhile the FT has reported that draft EU legislation could be amended as it passes through EU Parliament to include aspects of Australia’s proposals, forcing platforms to pay for news and tell publishers in advance of any algorithm changes.
Coscelli said the CMA, ACCC and others have “concluded that the traditional competition policy toolkit – antitrust enforcement and merger control – is insufficient to address the competition issues arising from the growth of the most powerful digital firms”.
“Procompetitive regulatory intervention (such as interoperability or non-discrimination in rankings) is justified, and indeed necessary, if we are to sustain innovation and growth, and avoid consumer harm, in this increasingly important sector,” he added.
Giving the Bannerman Competition Lecture virtually for the Australian Competition and Consumer Commission on Tuesday, Coscelli responded to arguments that regulators have been overcautious and too narrow in their assessments of companies like Google and Facebook in recent years, leaving them under-regulated.
He noted that “…as the digital revolution has transformed markets, competition authorities have struggled to stay ahead of the curve.
“The largest digital platforms, it is argued, have attained unassailable positions of dominance right under our noses.
“The ‘web of restrictions’ is reasserting itself, this time in new guises, such as algorithmic collusion, anticompetitive self-preferencing, and acquisitions of nascent rivals. And we are struggling to address these concerns in a timely and effective way.”
Coscelli warned that digital markets can easily and quickly “tip” towards monopoly and said this is why the CMA has recommended to Government there should be a lower standard of proof on the risks of mergers and acquisitions than currently applies before the regulator will intervene.
He said: “Many of us are now familiar with the statistic that – between 2008 and 2018 of the 400 acquisitions made globally by the 5 largest digital firms – none has been blocked by competition authorities.
“But it remains a powerful one. It is very hard to look at those numbers, to look at the state of the relevant markets today, and conclude with hindsight that the balance has been struck correctly.”
Coscelli added that although he still believes competition is generally preferably to regulation, “we need to get away from the simplistic idea that regulation is usually harmful to competition”.
“Designed well, regulation can help competition work better, and improve outcomes for consumers and society at large,” he said.