Big Tech unlikely to find any cheer as its EU scourge Vestager prepares to step down

Big Tech unlikely to find any cheer as its EU scourge Vestager prepares to step down

Away from the dangerous Brexit soap opera, the EU has been reshuffling its pack of cards.

Arguably, one of the most significant outcomes from this exercise is the anticipated departure of Margrethe Vestager from her current job as Competition Commissioner.

The 51-year-old Dane has been assured of reappointment to the commission high table, but the expectation is that she will be assigned an even broader range of responsibilities under the new President, Ursula von der Leyen.

Ms Vestager could be a hard act to follow.

She has led the way in tackling the threats posed by a group of increasingly dominant technology giants and she fired a parting shot with the launch of a formal investigation into the activities of Amazon, which as the Financial Times in the past noted, “the European Commission rarely opens a formal investigation into big companies without being confident that it can build a solid case”.

Ms Vestager has questioned how the tech giants use data and exploit their market dominance.

The EU investigators will be looking into how Amazon makes use of the data available to it from other merchants selling goods on its websites.

She rattled the cages in Dublin when on the basis of a conclusion that Apple had received tax benefits worth €13 billion to which it was not entitled from the Government, the commission ruled the sweetheart billions be repaid tothe Irish State.

Qualcomm — which also has a large Cork facility — has been fined more than €1bn. Google has been fined more than €8bn by Brussels in separate competition cases.

Away from the tech sector, Mastercard was hit with a fine of €570 million for the way it deals with retailers using the credit card service.

Ms Vestager annoyed the government in Berlin when it halted the planned merger between rail infrastructure firms Siemens and Alstom — this decision may have counted against her when it came to the recent nominations for the EU Presidency.

It has been suggested that the German chancellor Angela Merkel was irritated by the intervention. Opponents of the deal were concerned that the takeover by Siemens would result in price hikes.

Not for nothing has the Dane built a reputation as a tough enforcer. The big question is whether much of the commissioner’s enforcement zeal departs with her as she moves on to graze on new pastures — assuming that this turns out to be the case.

Ms Vestager has, in recent times, gathered some interesting allies and one of the most influential is US academic Lina Khan. Just 30 years old, Ms Khan currently works as a legal fellow at the US Fair Trade Commission and as a researcher at Columbia University.

Her modest place in the academic pecking order belies her growing influence on US competition policy.

Two years ago, she published an article in The Yale Law Journal — ‘Amazon’s Antitrust Paradox’ — in which she questioned competition law in the US over the past 40 years.

In effect, she accused US regulators of using competition enforcement that helped companies to engineer price cuts for consumers, but only over the short term.

Customers benefit from a sugar hit of lower prices but at a long-term cost as a business — Amazon being the classic example — assumes a dominant position in one market after another.

A broader outcome — one identified by Ms Khan and her allies — is that over time as the tech giants and other dominant players consolidate, it becomes harder and harder for innovators — the successors of the Steve Jobs, Bill Gates, or Michael Dell of a generation ago — to emerge.

A key figure in the 1970s shift of approach was the rightwing legal scholar and former US solicitor general, Robert Bork.

It is hardly coincidental that itwas also in the 1960s and 1970s thatthe large food companies persuadedUS administrations to relax regulations and allow the large scale introduction of fructose and trans fats into theproduction process, with the sort of long-term effects on human healthwe are now experiencing.

Since then, Ms Khan has hooked up with politicians such as the Democratic Party’s Elizabeth Warren and has joined the US House of Representatives Committee on antitrust, and administrative law.

The election of a Democrat majority in the House last November has given people like Ms Khan much greater leverage in the political process.

This could be important as in recent years, it has been left largely to the EU to take the fight to the tech titans and other dominant players.

This has allowed the companies and their army of paid lobbyists and lawyers to paint the Europeans as being somehow anti-American.

Big Tech — like Wall Street — retains enormous leverage.

A Warren [Elizabeth] presidency would represent the greatest threat to their position, but such an outcome remains an outside possibility. Elsewhere, it can be hard to work out the position of some of the key actors.

President Donald Trump dislikes Silicon Valley — seen by him as too liberal — yet he has also threatened retaliation against the EU over its treatment of the tech firms.

Some right-wing Republicans back the Ms Khan position while some left-leaning Democrats lean in favour of the tech companies.

Louisiana senator John Kennedy has been scathing about Facebook’s plan for a new digital currency. “Facebook now wants to control the money supply. What could possibly go wrong?” he suggested sarcastically.

Ms Khan, meanwhile, has been working away, recently producing a paper exploring the case for hiving off ownership of technology platforms from the commercial activities run on those platforms.

So-called “trust-busting” has an honourable history in the US and Ms Khan is, in effect, proposing a revival of the idea of breaking up the big battalions.

The position is complicated by the emergence of China as a leading player in technology, particularly artificial intelligence, with some again arguing the case for strong national champions.

Ireland’s competition body, the Competition and Consumer Protection Commission, largely focusses on domestic matters not large enough to impact on EU inter-state trade.

It is no doubt taking note of the changes that have been taking place in this arena. It has recently been involved in a number of investigations into areas including motor insurance and household waste collection.

There have been calls for national governments to become more involved in the EU merger control assessment process.

According to a recent commentary by solicitors, A&L Goodbody, the impact of Brexit on the market could prompt the government here to engage more closely with the national competition body.

The government finds itself in an awkward position when it comes to large technology players. On the one hand, Ireland benefits from the corporate tax largesse and the jobs.

On the other hand, government must be mindful of the long-term effects of the excessive concentration of commercial and financial power in the hands of a few.

Not for the first time, Ireland is having to tip-toe through the tulips, so to speak.

Irish farmers have arguably been victims of a lopsided commercial balance of power in dealing with meat factories and large retailers.

As a result, the EU has spent heavily on financial supports for primary producers while at the same time, the rural environment has suffered as farmers engage in a drive for production at all costs.

The environmental challenges are growing. One consequence of Brexit is that EU coffers are likely to be less bountiful. The government will have a greater incentive to press the case to redress the balance between food supplier and customer.

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