Heated debates on the future of the digital economy is in vogue in both antitrust circles and broader public discourse.
High-profile politicians, including some U.S. presidential candidates, have suggested that it is time to break up technology leaders such as Amazon, Facebook and Google.
At a basic level, the digital economy has unquestionably provided benefits to consumers by providing numerous innovative products and services. Digital platform services (such as Amazon, Facebook and Google) are highly valued by consumers, as demonstrated by their widespread adoption and use worldwide. However, the rapid growth of firms that do not use traditional business models for monetisation (e.g., direct payment of money for services) has raised questions whether our regulatory regimes have been left behind and are out-of-sync with today’s digital economy and not effectively serving the will of the people. In part due to the fact that digital platforms are so widely used, the discussion about their regulation has shifted from legal circles to the general public.
This type of discussion is fueled by the fact that a) digital platforms generally collect consumer data in order to sell personalized advertising opportunities to advertisers, raising ongoing concerns about privacy; and b) there is informational asymmetry (i.e., consumers do not know the value of their data, the extent to which data is collected or how it is used or shared). Accordingly, there has been increasing public sentiment that these issues must be addressed, whether it be through competition regulators or otherwise.
However, because it is often unclear what the precise policy objective that is trying to be resolved (i.e., addressing income and wealth inequality, protecting privacy, valuing an individual’s data, etc.), competition laws may not be best suited to deal with these issues.
Despite this, it appears that governments and the public have looked to antitrust and competition regulators as the “regulators of last resort” in order to address these issues.
World regulators weigh in
Indeed, there have been a number of reports commissioned and published by antitrust and competition regulators around the world regarding competition regulation of the digital economy. European Commissioner for Competition and candidate for the Presidency of the European Commission Margrethe Vestager enlisted professors Jacques Crémer, Yves-Alexandre de Montjoye and Heike Schewitzer to prepare a report called "Competition policy for the digital era." This report, published on April 4, explores how competition policy should evolve to promote pro-consumer innovation in the digital age and suggests vigorous competition policy enforcement is required in connection with digital economy. Similarly, the U.K. government commissioned a report on this topic led by former U.S. president Barack Obama’s chief economic advisor, professor Jason Furman. This report advocates for the U.K. to take a forward-looking approach to regulation by implementing a code of competitive conduct applicable to major digital market firms. This report also suggests that certain large digital firms should have to provide advance notice of any intended acquisitions (a similar recommendation was recently made by the Australian Competition and Consumer Commission).
By comparison, the Canadian Competition Bureau has consistently advocated for a more measured approach to the application of competition law to the digital economy. In its 2018 report titled "Big data and innovation: key themes for competition policy in Canada" (Big Data Report), the Bureau stated that “the emergence of new firms that control and exploit data can raise new challenges for competition law enforcement but does not, in and of itself, necessitate an immediate cause for concern.” Further, it is clear from the Big Data Report that the Bureau is not seeking to be the “regulator of last resort” to deal with emerging issues in connection with the digital economy: “big data can have implications for other policy areas beyond competition law but the Bureau will restrict its attention to its mandate as set out in the [Competition] Act.”
The Bureau did not rule out considering privacy as a factor that may affect consumer perception and the quality of services that use “big data.” On this basis, it recognizes such considerations may factor into the analysis under the Competition Act as a dimension of competition. However, it is clear that the Bureau does not currently believe that there is anything about digital economy and the concerns outlined by other regulators that cannot be solved under the traditional competition law framework.
The next chapters of this untold story will surely be fascinating. If, for example, Europe proceeds to reform its competition law regime to apply to the digital economy in new ways, its impact would extend far beyond Europe. Witness what has happened with the implementation of Europe’s privacy rules pursuant to General Data Protection Regulation (GDPR), which in some ways have become the global benchmark for all jurisdictions. Not only would global businesses have to ensure they comply with European rules, which would likely extend to their other operations, it could pressure other regulators and legislatures to make changes to their competition regimes, particularly with recent movement towards international cooperation between foreign competition regulators.