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After some bitter defeats, EU competition chief Margrethe Vestager recently scored a major victory after a Luxembourg judge handed down a record conviction for abusing search giant Google’s dominance of the Android mobile operating system.
Earlier this month, the European Supreme Court upheld Vestager’s ruling and handed down the company’s largest antitrust fine against Google for “illegal restraints on Android mobile device manufacturers and mobile network operators.”
Vesteger celebrated the win, saying it set Brussels to “blaze a trail” on new digital rules designed to open up markets and encourage competition.
Although Google is likely to appeal the ruling at the European Court of Justice, the EU’s victory was a milestone in a decade of antitrust enforcement against tech giants. It was also the impetus for new rules aimed at curbing Silicon Valley’s power in the bloc.
“The fact that EU regulators can go after big tech companies and impose huge fines,” says Annamaria Mangiarasina of Linklaters in Brussels.
After major court losses against Intel and Qualcomm, top regulators worried that if Google’s ruling had gone the other way, their investigations into existing anti-competitive behavior would have been significantly reduced or stopped. Pressure to act quickly.
“This is cause for celebration,” said one relieved official, pointing to investigations into Apple, Amazon, Facebook owner Meta and Google.
It comes before the Digital Markets Act, among other things, to clarify in law what constitutes anti-competitive behavior by Big Tech, making it easier for Brussels to act. It targets so-called gatekeepers – companies with at least 45mn monthly active users or at least 10,000 annual business users. Google, Amazon, Facebook, Apple and Microsoft all meet this criteria, as do other groups such as accommodation site Booking.com and ecommerce group Alibaba.
Legal challenges to DMA implementation are inevitable. Big tech platforms may deploy their largest armies of aggressive lawyers to fight being caught by the new rules or limit legal burdens.
“There is a risk of fossilizing how products work and preventing the constant iteration and experimentation that drives technological progress,” said Nick Clegg, former UK deputy prime minister and now META’s president of international affairs, when preparing the DMA.
A key part of the law includes requiring companies to rank their services ahead of competitors and restricting the use of information they collect from competitors. This is bad news for business models based on the ability to use their dominance to hold a strong stronghold of digital markets, so the fight will be tough.
“It’s not going to be a walk in the park,” says a corporate attorney who works on behalf of big tech. “We will fight hard.”
In the long battle against big tech, regulators in Brussels fear they may not have enough authorities to enforce the new landmark law.
MEPs wanted at least 150 new people to apply for the DMA, while the Commission’s previous proposal expected only 80. Legal experts will be handy, but the commission also needs tech to make sure big tech complies with the rules.
And member states want a piece of the action. EU countries want a more prominent role in tracking big tech by opening investigations and imposing heavy fines. Tensions are rising over how much power Brussels and national competition authorities should have to curb the likes of Amazon and Apple.
Under the new law, which will come into effect next year, the European Commission will be empowered as the “sole authority” to enforce the rules and have the ability to choose when to open competition investigations and against which firms. Still, it’s the focus of a recent debate among regulators over how prominent the role of Berlin and Paris should be in fighting big tech.
Alec Burnside, Dechert’s partner in Brussels, offers some caution. “We should not underestimate the challenge of implementing the rules effectively,” the director said, adding that it will take some time before the new law starts to “bite”.
javier.espinoza@ft.com
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