MEPs call to ramp up Big Tech enforcement in competition review

The European Parliament’s Economic Affairs Committee adopted the annual competition policy report with a broad majority on Monday (4 December), suggesting expanding the reach of the EU’s Big Tech law to the cloud and Artificial Intelligence sectors.

The Digital Markets Act is an EU law for dominant ‘gatekeeper’ companies, and the 2023 competition policy report focuses on it, highlighting areas for investigation and the importance of involving national competition authorities.

“The European Parliament is shedding light on the current challenges for competition policy, namely the implementation of new tools such as the DMA [Digital Markets Act], but also the interplay of competition policy with other regulations such as data protection as well as the future of state aid policy,” Stéphanie Yon-Courtin, the centrist MEP spearheading the file, told Euractiv.

Competition in digital markets

EU lawmakers welcomed the designation of six gatekeepers under the DMA, stressing that the Commission should consult with third parties and vet to assess the appropriateness of their compliance solutions.

The report makes the case for designating Apple’s iMessage as a core platform service under the DMA.

Regarding the cloud market, the report ‘regrets’ that no cloud service provider has been designated as a gatekeeper despite this market being highly concentrated and subject to anti-competitive practices. It urges the Commission to open a market investigation in this sector.

MEPs also want to see a market investigation on whether emerging technologies that do not currently fall under existing categories, such as generative AI, should be included under the DMA. They said this technology could reinforce market dominance in existing digital services, for instance, by being integrated into online search engines.

“The rise of AI and rising competition issues will be the next battle. Given the massive amount of data required for AI, current gatekeepers might use their dominant position to become a leader in AI,” Yon-Courtin added.

The Commission is invited to be ‘vigilant’ regarding the partnership between Big Tech companies and leading AI start-ups “to ensure such cooperation agreements are not potentially hidden mergers nor killer acquisitions.”

The text includes a reference to the digital advertising market, wanted by Dutch lawmaker Paul Tang, pointing to the need to analyse options for future legislative interventions to address anti-competitive practices.

MEPs referenced the seminal Meta vs Bundeskartellamt case, which shows the important relationship between personal data and abuses of market dominance. The Bundeskartellamt investigation against Google is also referenced.

While not explicitly referring to Amazon’s acquisition of iRobot, the report mentions robot vacuum cleaners as major data sources, stressing more generally that data should be regarded as a traditional asset when deciding on digital mergers.

References to the senders-pay principle have been removed as the initiative is not expected until the next mandate. Instead, the lawmakers pointed to consolidation in the telecom market as potentially “the only way to avoid selling infrastructure piece by piece to foreign non-EU companies and compete effectively in a global scenario.”

The report also calls for companies engaged in tax avoidance practices in third countries to be excluded from public procurement procedures and barred from receiving state aid.

An explicit reference to Booking.com not reaching the gatekeeper’s threshold because of COVID-19 lockdowns was taken out.

Merger control

The MEPs invite the Commission to pay close attention to the phenomenon of ‘killer acquisitions’ in the digital sector, a concept Yon-Courtin also pushed throughout the DMA negotiations.

The report points to the importance of structural remedies in merger decisions. It considers the potential harm to competition concerning mergers into adjacent markets that might strengthen market dominance in the company’s core market.

At the same time, the lawmakers stress the need for a ‘more dynamic approach’, especially for digital markets, as they consider that European companies were sometimes deprived of the opportunity to effectively compete internationally due to a too narrow perspective.

Antitrust

The report invites the Commission to make better use of interim measures to stop any practice harming competition, notably in the fast-paced digital markets, and speed up antitrust probes by setting appropriate procedural time limits.

Here, MEPs mentioned the example of Spotify’s complaint filed in 2019, leading to no concrete actions to address Apple’s restrictions for app developers to communicate directly with users despite the Commission’s stated objection.

In an implicit reference to the Google advertising case, where the EU antitrust department floated the idea of breaking up a company’s business practices for the first time, the MEPs expressed support for this approach, especially for cases where anti-competitive practices have been repeated over the years.

A reference to an ongoing case against Microsoft, accused by Slack of bundling Teams with its productivity software package, was removed in favour of vaguer wording asking the Commission to assess the proposed concessions carefully.

Moreover, MEPs note that past cases against gatekeepers have not led to effective behavioural changes, especially regarding self-preferencing in the digital markets. Thus, the Commission should make a ‘better use’ of structural remedies as a last resort.

The report also urges the Commission to remove unjustified geo-blocking and other restrictions on cross-border online sales, a long-standing grievance in the audio-visual sector.

[Edited by Alice Taylor]

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