Can Anti-Trust Save Competition Online?

The European Union is probably the only level of government that has institutions powerful enough to have a real capacity to enforce rule of law online. The US is likely more interested in protecting the business interests of Silicon Valley and the UN does not have the necessary tools (such as a court). For those who believe that the democratic process is the best way to make rules for the online society, the hope is with the EU.

Can the European Union deliver on such an expectation? The jury is still out. On the one hand, the Digital Single Market is in many ways a gift to the internet giants. Rather than help European challengers, it will make today’s dominant players stronger. On the other hand, the European Commission has brought a string of anti-trust cases against some of the biggest internet players. Yesterday’s announcement of a €2,42 Billion fine against Google (for abuse of dominant position in its Google Shopping service) is one in a series of anti-trust cases brought by Commissioner Margrethe Vestager.

Can anti-trust save competition online? The network effects mean the internet gravitates toward niche monopolies. The logic of business makes these niche monopolies branch out to neighbouring fields. The legal system with its immunity of liability for internet intermediaries (“safe harbour”) reinforces the dominance. The would-be challengers in the startup world are set on exiting to the big guys, rather than replacing them. The ideology that says the internet must be left untouched by regulation is strong and wide-spread. Can anti-trust beat all of that? Obviously not, it helps but it’s not the single answer.

So is there no hope for fair competition and rule of law online? Sure there is! While competition may be out, the opinions of share-holders, staff and users can take down a superstar, as Travis Kalanick’s recent departure as CEO of Uber shows. Silicon Valley can do it to itself. There is also room for forward thinking EU-policy. Besides the competition cases, the Commission should look into safe harbour and its consequences for privacy, fake news, competition and more. European investment policy can support challenging today’s business logics. And its research policy around hot new technologies like 5G, internet of things, additive manufacturing and blockchain can consider rule of law and competition from the outset. That and re-thinking the Digital Single Market. There is plenty to do for bold and visionary European policy-makers to follow the path set by Vestager.

This is Netopia’s newsletter June 28 2017

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