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The Global Effort to Level the Playing Field with Tech Giants

Competition | Feb 12, 2024

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The global community has begun to question whether big tech corporations are being held suitably accountable for their actions.

Today technology companies have grown to unprecedented sizes, their influence permeates every facet of our daily lives. From how we communicate and consume media to the way we shop and interact with the world around us, tech giants like Google, Meta (formerly Facebook), Amazon, and others have become central to our digital existence.

The Rise of Regulatory Interventions

Recently, there's been a shift in how governments approach the regulation of tech giants:

  • The European Union's Digital Markets Act (DMA) is a prime example, identifying 22 "gatekeeper" services that will face stringent new rules aimed at ensuring fair competition and innovation.
  • Meta complied with the UK Competition and Markets Authority (CMA) to sell the animated images platform Giphy, signaling a growing willingness among tech companies to adapt to regulatory demands. These actions represent significant steps toward curbing the unchecked power of Big Tech, setting a precedent for other nations to follow.

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  • Also, the Canadian government took decisive action against Facebook (now Meta Platforms Inc.) over privacy violations. Stemming from the global Cambridge Analytica scandal, the Privacy Commissioner of Canada found in 2019 that Facebook had contravened Canadian privacy laws by inadequately protecting Canadians' personal information. This failure allowed third-party applications to access users' data without obtaining explicit consent, spotlighting serious flaws in Facebook's approach to privacy and its compliance with national regulations. Despite the investigation's findings, Facebook contested the Privacy Commissioner's authority and recommendations, leading to a legal standoff that highlighted the challenges faced by national regulators in enforcing compliance among global tech behemoths.
  • The approach to tech regulation varies significantly across jurisdictions. Japan, for instance, has recently begun to implement new legislation focused on data protection and social media platforms.
  • Australia's News Media Bargaining Code forced major tech companies to negotiate payment with Australian media companies for their content. These examples illustrate the diverse strategies employed worldwide to manage the impact of Big Tech, reflecting different national priorities and regulatory philosophies.

The Role of Competition Law and Litigation

Competition law has emerged as a key tool in establishing checks and balances against the monopolistic tendencies of Big Tech. The landmark judgment in Meta Platforms and Others v Bundeskartellamt by the Court of Justice of the European Union (CJEU) underscored this point, linking breaches of the EU General Data Protection Regulation (GDPR) to abuses of dominant market positions. This case, among others, highlights a growing recognition of the need to adapt legal frameworks to address the unique challenges posed by the digital economy.

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In 2021, the Canadian Competition Bureau launched an investigation into Google's alleged anti-competitive practices, focusing on the tech giant's dominance in the online advertising market. This investigation is a critical example of how competition law is applied to ensure that the digital economy remains competitive and innovative.

Beyond governmental action, private litigation has proven to be a potent tool in holding tech companies to account. High-profile cases, such as Google's settlement over privacy allegations in its "incognito" mode, have brought significant public attention to the practices of these corporations. These legal battles, while challenging, play a crucial role in ensuring that tech giants cannot operate above the law.

Ben Lasserson, Partner, Mishcon de Reya:

Each of the Big Tech giants is essentially a monopolist in their own ecosystem

Unsplash Matthew Henry privacy - The Global Effort to Level the Playing Field with Tech Giants

Image: Unsplash/Matthew Henry

Best Practices for Regulating Tech Giants

The goal is to create a digital ecosystem where tech companies can thrive and innovate while ensuring they do not abuse their market power to the detriment of consumers and smaller competitors. Here are some key best practices:

1. Clear and Adaptable Regulatory Frameworks

  • Regulations should be clearly defined to avoid ambiguity that tech giants could exploit. Laws need to precisely target anti-competitive behaviors without stifling innovation. Given the rapid pace of technological change, regulatory frameworks must be adaptable. This could involve sunset clauses for regulations to be reviewed and updated regularly based on the evolving digital landscape.

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2. Promoting Fair Competition

  • Implementing strict anti-monopoly measures to prevent market dominance that stifles competition. This includes scrutinizing mergers and acquisitions that could lead to unfair market consolidation.
  • Ensuring that smaller players have fair access to markets dominated by tech giants. This could involve mandating interoperability standards or opening up platforms to third-party developers under fair, reasonable, and non-discriminatory (FRAND) terms.

3. Consumer Protection

  • Strengthening privacy and data protection laws to ensure that consumers' personal information is not exploited for profit without explicit consent. This includes enforcing transparent data practices and giving consumers control over their data.  (See:  67 of top 1000 US websites violate EUs GDPR law)
  • Requiring tech companies to be transparent about algorithms, data collection practices, and the use of personal data. This transparency can empower consumers to make informed decisions about their digital interactions.

4. Encouraging Innovation

  • Creating a supportive environment for startups and smaller tech companies through grants, tax incentives, and access to resources. This can help foster innovation and provide viable alternatives to services offered by tech giants.
  • Promoting the use of open standards to encourage interoperability and compatibility across different platforms and services, facilitating innovation and competition.

5. International Cooperation

  • Working towards global regulatory standards for digital markets can help prevent tech giants from exploiting regulatory gaps between countries. International cooperation can lead to a more consistent approach to antitrust enforcement, data protection, and cyber security.

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  • Establishing agreements on cross-border data flows that protect consumer privacy while not impeding global digital commerce.

6. Effective Enforcement

  • Ensuring that regulatory bodies have robust enforcement mechanisms, the authority and resources to enforce regulations effectively. This includes the ability to impose significant penalties for non-compliance that are substantial enough to deter anti-competitive behavior.
  • Establishing mechanisms for consumers to report grievances and seek redress for harms caused by the actions of tech giants. This can include simplified legal processes or dedicated consumer protection agencies.

7. Stakeholder Engagement

  • Engaging a broad range of stakeholders, including tech companies, consumer groups, academics, and policymakers, in the regulatory process. This inclusive approach can help ensure that regulations are balanced, effective, and reflective of diverse perspectives.

8. Monitoring and Research

  • Continuous regularly monitoring the tech sector for emerging trends and potential anti-competitive behaviors. This can help regulators stay ahead of the curve and address issues proactively.  Investing in research to understand the impacts of digital technologies on society, competition, and the economy. This knowledge can inform evidence-based policymaking.

Conclusion

the path to regulating tech giants will undoubtedly require a concerted effort from all stakeholders. The outlined best practices offer a roadmap for creating a digital environment that prioritizes consumer welfare, fosters healthy competition, and encourages innovation.

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By embracing these principles, regulators can ensure that the benefits of the digital age are widely shared, preventing monopolization by a few dominant players. The journey is complex, but through vigilance, adaptability, and collaboration, we can shape a digital ecosystem that benefits all, characterized by innovation, fairness, and respect for individual rights.


NCFA Jan 2018 resize - The Global Effort to Level the Playing Field with Tech GiantsThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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