Europe’s new antitrust rules will annoy, not topple, Big Tech

EU competition czar Margrethe Vestager continues to badger Big Tech firms.
EU competition czar Margrethe Vestager continues to badger Big Tech firms.
Image: Reuters/Johanna Geron
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As US prosecutors ramp up antitrust cases against Big Tech firms, the European Union is readying its own next wave of antitrust lawsuits. On Dec. 15, the bloc will formally begin considering the Digital Markets Act, which would give regulators new firepower to go after digital platforms for alleged anticompetitive practices.

The new regulations take aim at “gatekeeper companies,” barring firms from using unfair tactics like giving their own products special treatment on platforms they control (👀  Google and Apple) or using non-public data harvested from third-party sellers to inform their own competing product lines (👀  Amazon). While the laws would likely keep corporate counsel at FAANG firms busy, they probably won’t result in any fundamental changes to the operation of the world’s most powerful online platforms: For that, all eyes are on US courts.

Gatekeeper companies that break the proposed European rules would face an escalating schedule of fines and the threat that regulators will restructure their business in Europe. (According to Bloomberg, the law will formally define gatekeepers in terms of revenue, number of users, and their dominance in the European single market, and would call for regulators to regularly revisit and update the list.) That sounds serious, but the breakup threat isn’t new. European regulators already have the power to restructure companies in response to antitrust concerns, and they’ve been loath to use it.

“The notion of breakups is completely alien to Europeans, because of course you have this concern about these being big American companies for which you cannot really achieve a breakup that is global,” said economist Cristina Caffarra, who heads the European competition wing of the consulting firm Charles River Associates. Reorganizing companies, in other words, is up to the Americans.

Billion-dollar fines have similarly failed to change Big Tech companies’ business models so far. European courts have already fined Google nearly $10 billion in three separate antitrust cases. The lawsuits challenged Google’s digital ad dominance, its practice of elevating its own shopping tool on search results, and the deals it cut with smartphone makers to get its Android operating system installed on virtually all non-Apple devices. The company has yet to meaningfully change any of these practices.

“Huge fines are not going to change, and haven’t changed, the companies structurally,” said Michelle Meagher, a senior policy fellow at University College London who has worked with national regulators and private firms on antitrust law. “And that’s ultimately what needs to change if you’re going to have a change in the balance of power.”

Caffarra and Meagher both agree the antitrust cases that can really impact the way Big Tech companies do business will have to happen in the US, where the biggest firms are based. American prosecutors have recently launched two cases against Google and Facebook, and are expected to file more in the coming weeks, according to the Wall Street Journal.

“It was always going to be geopolitically difficult for Europe to lead because there are all these complaints from the US that this is sour grapes for not having European tech giants of our own,” said Meagher. “It’s helpful now that the US is waking up to this because it will allow for whatever we see out of the commission to be stronger than it probably could have been if there had been no action in the US.”

Correction: Cristina Caffarra is an economist with Charles River Associates, not an antitrust attorney.