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Friday, May 14, 2021

Margrethe Vestager: ‘Need to become better at analysing non-monetary payment and role of data’

It is my firm belief based on my experience and the history of competition law enforcement that if you have competition, then you also have a more prosperous and a dynamic economy.

Written by Pranav Mukul , Anil Sasi | New Delhi |
April 19, 2021 2:10:40 am
Margrethe Vestager

With big-tech companies providing free services to their users, the yardstick for competition objectives has changed over the last five years and antitrust regulators across geographies must now become better at analysing non-monetary payment and the role of data as a barrier for entry and a source of innovation, MARGRETHE VESTAGER, Executive Vice-President of the European Commission for a Europe fit for the Digital Age and Commissioner for Competition told PRANAV MUKUL & ANIL SASI in an interview. She also spoke about the role of governments as arbitrators for regulating technology tools. Edited excerpts:

Does your dual role have an element of subjectivity between your task as a regulator and the newer job of fostering European companies coming on to the digital mainstream?

Of course, a dual role is also dual work. Obviously, from the outset, I have been really specific that the two legs cannot come against one another. As a competition law enforcer, our decisions will have to stand up in court. In the second role, I am responsible to Parliament and the Council. When we look at digitisation and innovation, that is very much helped by fair competition and an open and contestable market place. A marketplace that is characterised by monopolies or duopolies or cartels, where small businesses do not stand a chance and the big ones are comfortable leaning back not really innovating, obviously that would be a problem for the better use of digital technologies.

It is my firm belief based on my experience and the history of competition law enforcement that if you have competition, then you also have a more prosperous and a dynamic economy. So, the two things only support one another because of the different authorities I have to answer to — the court when it comes to competition and Parliament and the Council when it comes to policy-like issues.

India has taken an approach of fostering homegrown players to put up a challenge to Big-Tech firms, in addition to coming out with guidelines to regulate social media companies. How do you see this combination working and is Europe looking into a similar direction?

In the Digital Services Act (DSA) and the Digital Markets Act (DMA) that we have now tabled, we do not propose ‘Europe First’ — that is not our line of thinking. The idea in the DSA is that for the first time we will regulate the services that are provided. The DSA will put a framework on how digital services are provided no matter where you come from, if you do business in Europe.

The DMA will take the consequence of something very fundamental in Europe into context — you are more than welcome to be successful here, no matter where you come from. But with success and growth comes power, and with power comes responsibility. We would like to set that responsibility in our regulations — the dos and the don’ts — if you are so successful that you de facto become the gatekeeper, because gatekeeping makes it difficult for other businesses to do their business and to scale. So no matter where you come from as a smaller business doing business in Europe, with the DMA, you will get a better market access. The market will be more contestable and open — and that is an essential point for us.

Is the government the best arbitrator, given that governments have leveraged these tools to their benefit sometimes? Is there a midway path to looking at both consumer benefit as well as regulating the technology tools?

If you compare the Australian events with the European approach, you see a number of similarities in the mindset. A couple of years ago we passed a European directive on copyright. How to make sure that those who create content are remunerated. The member states are in the process of making this European directive a national legislation in order to fulfil our agreement that there is a right on content creators to have a remuneration from those who make money by advertising next to their content. France has been a frontrunner in this, they have already made this directive a national law. Here, the role of the state would be to say that these are your rights, these are our efforts to balance the negotiating relationship by giving you a right that you can take to court and by enforcing it with authorities on ground. And, then, leave it to private parties to find an agreement. For a year in pandemic, the state as an actor has played an unprecedented role in our individual lives and lives of businesses.

There’s an argument that it was rather convenient for Europe to regulate Big Tech and talk about consumer good because Europe doesn’t have big technology companies of its own. How do you respond to this?

It is a really important discussion to have in an open and transparent manner because it cannot be that we just legislate easily because businesses headquartered in Europe might not be directly affected. Some might, depending on their size, some might not. The reason why it is important is that because you sometimes see US giants doing really well in Europe as if they were Europeans. European customers do not necessarily distinguish if you come from one jurisdiction or another. That is one of the points that makes it legitimate that it is for everyone who wants to do business in Europe that there should be a single rulebook.

Second point should be that we are entering a second chapter of digitisation, where digitisation becomes industrial. So much more becomes a datapoint so you have industrial drivers in the next phase. And Europe has a very industrial culture, very entrepreneurial tradition. When you look at business-to-business digitisation, these different rules will be more relevant also for businesses headquartered in Europe. The digitisation of our society is not static and we have not agreed on an endpoint. On the contrary, we are still in the beginning of how we will use digital technologies.

The yardstick for competition over the last 20 years in the digital world has been consumer good and by providing services for free now. How do you walk the fine line here on what are competition objectives across geographies?

To quote another well-known character, “there is no such thing as a free lunch”. It may be that you don’t have to find a way to put in your credit card (details) but obviously you pay. The myth that these (online services) are for free has been broken over the last five years. Nothing comes for free. We have to become better at analysing non-monetary payment and the role of data as a barrier for entry and a source of innovation, as an asset in the valuation of a company. I think competition-wise and how the markets work, every jurisdiction on the planet is getting there.

Second thing is that privacy is a fundamental right. Everyone who is a member of the UN should make the effort to make sure that the right to privacy that we have in the offline world is translated into the same in the online world. It is difficult because sometimes as a citizen you get a false sense of privacy because it is you and the machine because you don’t know all the tracking mechanisms out there.

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