Updated: July 13, 2021 8:52:22 am
“Capitalism without competition isn’t capitalism. It’s exploitation,” President Joe Biden said Friday as he signed an executive order aimed at cracking the dominance of big tech firms and fostering competition across a number of sectors. This new order is being seen as a decisive policy step in the Biden administration’s stated mission of targeting Big Tech, coming close on the heels of the appointment of two vocal Big Tech baiters in Washington DC — Lina Khan at the helm of the FTC and Tim Wu as his Special Assistant for Technology and Competition Policy.
The new order and it’s remit
Friday’s executive order includes 72 actions and suggestions involving multiple federal agencies.
The problems that it specifically flags include that of big tech firms collecting massive volumes of personal information, acquiring fledgling competitors and holding a competitive advantage against small businesses and corporate consolidation. The line of actions proposed include a set of new rules to be issued by the FTC on data collection, increased scrutiny of fresh mergers in the technology sector, scrutiny of the anti-competitive moves in the internet marketplaces. Other sectors under the scanner include travel, healthcare and agriculture.
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Amazon, others in the cross-hairs
A fact sheet released by the government lists out transgressions, without naming companies and entities. But it does not make any pretense about the intended targets. For instance, the document talks about how companies that run “dominant online retail marketplaces” can see how sellers are doing on the platform and then use the data to launch their own competing products. This is aimed at Amazon and has a discernible Khan imprint on it, resonating with what she had flagged in a 2017 paper titled ‘Amazon’s Antitrust Paradox’ — where she had critically examined the online selling platform’s dual role. This dual role, Khan had then said, also “enables a platform to exploit information collected on companies using its services to undermine them as competitors”. She had then proposed two potential regimes to address the sort of power that Amazon wielded: “restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties”.
The executive order by the US federal govt comes weeks after the House Judiciary Committee also voted to approve a series of antitrust bills, which could force big tech firms to transform or even break up their businesses
Scrutiny of tech mergers, sectoral surges in prices
While on the one hand the order calls for changes to how tech mergers and other anti-competitive behaviour by big-tech is scrutinised, the order also aims to bring down prices of goods and services that have risen over time with companies in various sectors such as airlines, pharmaceuticals, mobile phones, internet connections, etc gaining control of their respective segments. However, in calling for sweeping actions that look at lowering prices across sectors, the order does not address the conflict between the dogma that lower prices are considered in favour of consumer good and that technology companies often provide services for free but make consumers pay for with their data.
Potential impact beyond the US, India included
The move could have resonance outside of the US, coming at a time when there is increasing consensus across geographies on the issue. In India, there have been a number of antitrust cases against big-tech companies like Amazon and Google being investigated by the Competition Commission of India, but none so far with a significant impact on the behaviour of the companies’ operations. In 2018, the CCI fined Google Rs 136 crore for “search bias”. However, this fine was set aside by the National Company Law Appellate Tribunal (NCLAT) just months later.
Specific antitrust cases notwithstanding, New Delhi has also ratcheted up the heat on big-tech companies on the policy front with the IT Intermediary Rules that impact social media companies like Facebook and Twitter, and the imminent amendments to Consumer Protection (E-commerce) Rules that increase compliance burden for Amazon and Walmart-owned Flipkart. So, while the development in the US sends signals across the board about a greater consensus on preventing accumulation of “too much power” with a handful of companies, it does so from an antitrust point of view that aims at having a level-playing field.
Consumers’ dependence on a few large platforms
The Indian antitrust regulator is learnt to be studying the dependence of consumers and enterprises on a few large digital platforms. A previous government-instituted review of the Competition Law conducted in 2018, while finding the existent provisions “largely adequate and fit-for-purpose”, has recommended overarching amendments for additional enforcement mechanisms “in the interest of speedier resolution of cases, which is particularly critical in the context of fast changing digital markets”.
More importantly, how the US manages to rein in big-tech firms through the executive order and whether these companies are forced to make changes to how they operate could set precedence for other antitrust regulators to ask the same of these firms in their jurisdictions. This could also be an step toward alignment of policy outlook on both sides of the Atlantic. This could mean an affirmation in Washington of the anti-trust actions taken by the European Union, which has so far waged a lone battle against Big Tech.
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