EU takes action against Amazon 'dominance' as regulators get tougher
Updated 23:31, 10-Nov-2020
Giulia Carbonaro

The European Union has filed charges against Amazon for allegedly using data to gain an unfair advantage over businesses using its platform to sell.

It's the latest sign of a more aggressive stance the bloc's regulators are adopting towards US tech giants.

"The Commission takes issue with Amazon systematically relying on non-public business data of independent sellers who sell on its marketplace, to the benefit of Amazon's own retail business, which directly competes with those third party sellers," the European Commission said in a statement.

Amazon disagreed with the Commission's accusations, however regulators have also opened a second inquiry into the possibility that the company gives preferential treatment to marketplace sellers that use its own logistics and delivery services.

For years Europe has been standing aside while big U.S. digital platforms grew their dominance over the internet. The legal framework regulating digital services within the bloc is 20 years old – an incredibly long time for the ever-changing, fast-paced digital world.

Now the EU is trying to catch up with the U.S. "Big Tech" companies and claim a spot in the digital market – even if that means threatening to break up the Silicon Valley giants.

The EU's new Digital Services Act, due to be unveiled in December, should curb the power of Big Tech and help smaller European competitors by banning large digital platforms from favoring their own services in search rankings or pre-installing their own apps on devices.

The rules will also force companies to share data with rivals and be more transparent on their collection of users' information.




France and the Netherlands are the first two EU member states to formally support the European Commission's plan to issue stricter regulations against Silicon Valley's big tech companies, the so-called gatekeepers of digital markets.


Margrethe Vestager is leading the the EU's Europe fit for the Digital Age drive./Yves Herman/Pool Photo via AP, file

Margrethe Vestager is leading the the EU's Europe fit for the Digital Age drive./Yves Herman/Pool Photo via AP, file


In a joint position paper, French secretary of State for digital transition and electronic communications Cédric O and Mona Keijzer, the Dutch secretary of state for economic affairs, justified the need for intervention by EU regulators and called for the possibility of breaking up Big Tech in case of infringement of said regulation.

"Breaking up [companies] is on the table," reportedly said O. "But this is the ultimate remedy."

According to the two countries, intervention is required when "the asymmetric bargaining power of structuring platforms leads to negative consequences," such as users lacking alternatives to Big Tech and smaller companies being unable to access the market because of the unfair competition of the U.S. tech giants.


What's the problem with Big Tech?

The size and power of U.S. Big Tech – which includes Google, Amazon, Facebook and Apple – has grown significantly in the past few years, even during the pandemic, to the point of reaching what has been defined as a monopoly on the global market.

"Over time, what we've seen is these giant tech companies got bigger and bigger because they were able to use their positioning in one market to introduce their products in another one, even if just by reputation," explains Amanda Brock, who has been working as a lawyer in the tech sector for more than 20 years.

In Brock's opinion, the growth of those companies is strictly linked to the way society has become dependent on the services Big Tech firms provide. "We're actually at a point in time where the structure for everything, business and personal life, is tech and cloud driven," she says.


Facebook CEO Mark Zuckerberg testifies before the Senate Commerce Committee investigating Big Tech companies' content-moderation practices and selective censorship of information on October 6, 2020./zz/DJ/AAD/STAR MAX/IPx

Facebook CEO Mark Zuckerberg testifies before the Senate Commerce Committee investigating Big Tech companies' content-moderation practices and selective censorship of information on October 6, 2020./zz/DJ/AAD/STAR MAX/IPx


But with the success of these companies, grew their power to control the entire global market, cutting out competitors.

"What they're doing is actually nothing evil," explains Christian Ahlborn, competition lawyer and global head of Linklaters' competition practice. "Their business model is very, very efficient. And they are in large part very powerful because they provide what customers actually want. It is just that the nature of the market tends towards a few dominant companies."

According to Ahlborn, the respective business models of Google and Facebook are based on a sort of "economy of scale," which inherently strengthens their position on the market and weakens competition: search users are not incentivized to use a browser which produces results necessarily less precise than Google (as it has a smaller user base feeding the accuracy of its results). And if all your friends are on Facebook, you're unlikely to choose a less popular social platform.


Google offices in Midtown, New York City. /zz/STRF/STAR MAX/IPx

Google offices in Midtown, New York City. /zz/STRF/STAR MAX/IPx


But the lack of competition ultimately damages customers, who aren't allowed other options, and hurts the sector, hindering innovation.

Even the start-ups that managed somehow to offer a product capable of competing with the tech giants, were eventually integrated in the same ecosystem. "An issue that Europe and the UK raise regularly is that over the last decade plus, the really interesting tech companies coming out of the UK and Europe have been bought by the big companies," says Brock. 

What the EU and other countries are now trying to do is to fill the existing gap in regulation that allows Big Tech to fence off competition without technically breaking any law.


Why is the pressure against Big Tech building up now?

Google, Amazon and Facebook have really cemented their position in the global digital market in a way that's become clear to a large number of people only in recent years. Until 2016, because of both a lack of transparency and a lack of understanding from the general public about what these companies really did with the data they collected, the people questioning the power of Big Tech were a minority. Now things have changed.

"A lot of what the giants were doing was really beneficial," says Ahlborn. "Why would you intervene if someone invents a really fantastic search engine, which helps you do what you what you want to do? And I think what people realized only slowly is that the tools you have from competition law don't really work in those circumstances. And I think the other thing why pressure is building up is that it's not just about competition."

What government and users started to realize only recently is the incredible value of Big Tech users' data.

"Data is the new oil," says Brock. "Not just for business, but also for government and the public sector. And what they've realized is the value of their citizens' data and the vulnerability of that when it's exposed to other governments."

"We are facing a new business model that basically revolves around data and machine learning used to exploit those data," says Jean-Pierre Vergne, associate professor at University College London, UK. "And this is relatively new. We don't really know how to deal with that quite yet."


Beyond the EU

Also trying to restrain the overwhelming market influence of Big Tech is the UK, with the country's competition regulator, the Competition and Markets Authority (CMA), threatening action against Google and Facebook if the government fails to regulate the two tech firms and curb their market power.

The CMA is calling for the UK government to set up a digital regulator within a year or it will proceed with launching antitrust and market investigations and taking action against the two tech giants.

"Our work found that large multinational online platforms such as Google and Facebook now have a central role in the digital advertising ecosystem and have developed such unassailable market positions that rivals can no longer compete on equal terms," said the CMA's CEO Andrea Coscelli in a recent speech. "In particular, their large user base is a source of market power, leading to weak competition in search and social media."

Ahlborn says: "If you look at the UK, they are doing very much what the Commission is doing as well. They are thinking about a mixture of regulation where you have similar dos and don'ts. They package it as 'code of conduct.' So each of these gatekeeper platforms would have to sign up to a code of conduct which would similarly regulate certain types of behavior." 

He adds: "And in addition, the UK would also want active intervention to promote competition. So forcing interoperability, for example, or ensuring that data will be made available to a wider range of players."


Apple is one of the companies a House Judiciary Committee report in the U.S. called for Congress to break up. /zz/STRF/STAR MAX/IPx

Apple is one of the companies a House Judiciary Committee report in the U.S. called for Congress to break up. /zz/STRF/STAR MAX/IPx


Democratic lawmakers in the U.S. are also calling for Congress to reduce the power of the likes of Facebook, Apple, Google.

U.S. tech giants have now formally been accused of holding a "monopoly power" on the digital market. After a 16-month-long congressional investigation backed up by Democratic lawmakers, the U.S. House Judiciary Committee produced a report that found Google, Amazon, Facebook and Apple have too much power, "and that power must be reined in."

The report accuses Facebook of holding a monopoly on social networking, Google on advertising, Amazon in online shopping and Apple on its Apple store, where the company would favor its own products against competitors'.

The report advised lawmakers to restructure the companies and reform antitrust laws.


How likely are antitrust actions against Big Tech?

According to Ahlborn, the EU at the moment is in the strongest position, among other governments including the U.S., to actually act to curb the power of Big Tech.

"I think for the first time, you now have a clear consensus, at least in Europe," he says. But he's skeptical about whether politically the EU will want to take such an extreme action as breaking up the Silicon Valley giants.

"One question is whether you can give yourself power to do that. The other one is whether politically you can actually implement it," Ahlborn says. "If you look at it, OPEC has operated a cartel of oil prices for quite a while, which clearly is against some of the cartel legislation. No one has had the sort of the political power to intervene."



Brock agrees, but remains positive that the EU Commission will implement its plans to obtain data sovereignty and create a cloud for Europe: "They may not actually go as far as to break up these big companies, but what they're looking at is activities to exclude them and they're also going to step further and say that they would prefer European companies delivering those services."

Vergne, who's based in Ontario, Canada, also puts his faith in Europe, while he sees the U.S.'s ongoing antitrust case against Google as a symbolic action rather than an effective one. "In my opinion it's unlikely to make a big difference, because the previous instance of a similar antitrust case was the one against Microsoft in the 1990s, and it took 13 years to get a result."

He adds: "And at the time, the evidence that they had gathered of anti-competitive practices seemed stronger than the one they have now against Google."

Vergne mistrusts the efficacy of breaking up Big Tech companies and instead supports the idea that these corporations should allow users to put their data across other services and other platforms. "If these platforms [Big Tech] want to enjoy the benefits that they currently have in terms of regulatory exemptions, such as intermediary immunity or immunity from copyright infringement in the U.S., they should become a neutral platform," he says. 

"And a neutral platform basically would look like a utility. It would look like an electricity company or water company or a telecommunications company. It would become a common carrier, which means that it would not be allowed to discriminate against particular users."

And it's not only about ensuring fair competition in the market. If politicians and regulators are successful in regulating Big Tech, it will be because an enormous number of people are now aware of the issues that come with many of the services provided by the tech giants: misinformation, hate speech, conspiracy theories, breach of privacy. And a growing number of people want the power of Big Tech to be contained and for companies to be accountable for their actions.

Cover image: An Avaaz demonstrator waves the European flag during a protest against fake Facebook accounts spreading disinformation on the platform near the EU Commission in Brussels in May 2018./AP Photo/Geert Vanden Wijngaert