Observers will be looking to see whether ex-ante regulation can really address the perceived competition concerns
Laying the groundwork for ex-ante rules: The Bundeskartellamt was given new powers in January this year, when Germany adopted the Digital Competition Act. It can now identify companies which have “paramount significance” across markets, and prohibit them from engaging in anti-competitive practices such as self-preferencing, tying or bundling strategies, or raising barriers to market entry by processing data that is relevant for competition. On 25 May, the Bundeskartellamt opened an investigation into Google to determine whether the company is of paramount significance across markets. This is the third investigation of this kind by the authority, following the one opened into Amazon a week earlier, and the one launched against Facebook in January.
The authority intends to act fast: In all the three cases opened as a result of the new rules, the Bundeskartellamt noted that ecosystems which extend across various markets are a likely sign of such paramount significance. So much so, that in the case of Google the authority is launching a parallel investigation into the company’s data processing practices, in a move that looks intended to save time – i.e. assuming that Google meets the ‘paramount significance’ threshold, and that the authority can mandate remedies. The Bundeskartellamt will determine whether consumers have meaningful choice as to how Google uses their data. It will also examine the extent of cross-services data processing, including data from third-party websites and apps.
The world will be watching Germany: Germany is the first country to adopt a comprehensive framework to impose ex-ante remedies on digital platforms based on their market dominance, but an international trend has emerged. In our Platforms and Big Tech Tracker, we’ve identified eight initiatives so far to impose ex-ante regulation on Big Tech. Three of these (EU, Germany, UK) introduce a mechanism to identify dominant firms in a given market and prevent anti-competitive conduct. The German initiative does preempt the EU’s Digital Markets Act, which is still in its early stages of negotiation and could take years before it is approved. However, policymakers in the EU and elsewhere will be able to learn from Germany’s early moves, and observe the impact of the new framework on the country’s digital economy to determine whether ex-ante regulation really addresses the competition issues caused by the rise of Big Tech.
