‘Big Tech’ and Competition

The investigation into Amazon will serve to compare ideas about antitrust rules.

The European Commission has announced the opening of an investigation into Amazon for alleged abuse of its dominant market position. This joins the ranks of past inquiries the commission has made into the commercial behavior of American technological and digital giants. Apart from the technical issues they raise, these proceedings have been accompanied by debates that, categorized as ideological time and again, have confronted authorities and academic circles in the European Union and the United States.

Benefiting from market dominance is not illegal in itself; only abuse of this dominance is punishable in accordance with the treaty.* However, what constitutes abuse is not defined in either this European standard or the American equivalent. This means that, notwithstanding judicial review, the authorities in Brussels and Washington benefit from a degree of discretion when it comes to defining their respective antitrust policies and, consequently, sanctioning the behaviors they deem abusive.

The problem is that what should be regarded as abusive behavior is often debatable. It involves assessing in advance what type of competition must be given priority in the market and the objectives to be met. In the U.S. for example, the understanding that competition rules should be geared exclusively toward improving consumer welfare has prevailed without necessarily taking into account the fate of competitors. In contrast, the EU has traditionally been more responsive to the need to ensure there are as many competitors in the market as possible in order to avoid economic concentration. The risks involve either letting conduct that favors monopolization go unpunished, or penalizing the benefits of a dominant position achieved on one’s own merits.

American big tech, such as Google, Facebook and Amazon, has taken the previous debate to the extreme. They each are based on an innovative idea and a costly subsequent investment, which no one would suggest discouraging. In addition, they are liked and are used by millions of people. However, based on their algorithms and platforms, their business practices may encourage the exclusion of competitors or prevent the entry of new ones. In turn, economic concentration can lead to undesirable conditions for consumers, in terms of a lack of variety, development and even privacy. In this context, assessment of these practices is determined by a delicate prioritization between efficiency and decentralization.

One of the strongest critics of the commission’s decisions was President Barack Obama, who publicly criticized the EU for imposing sanctions on mere commercial interests. Other voices have pointed out that the EU should instead ask itself why there are no comparable European companies. Even from Europe, it has been stressed that efforts should be geared toward providing a public impetus for its technology companies.

Interestingly enough, maintaining fair antitrust laws reopens the debate on the different visions of market organization in our society and the government’s role when engaging with it. Indeed, the promotion of more competitors in the markets contributes to greater wealth distribution and to limiting private economic power and its interference in the political sphere. It also tends to protect small and medium-sized merchants and to promote goals such as job creation or retention. On the contrary, the sole commitment to the welfare of consumers is that economic concentration can be efficient and valuable in geostrategic terms.

The commission has stood firm in its approach, including with regard to European companies, as evidenced by the opposition to the Alstom and Siemens merger. Moreover, we see a certain degree of convergence from the United States regarding big tech. In fact, Democratic [presidential] candidate Elizabeth Warren advocated for breaking up these companies in response to the threat that, according to her, they pose to consumers, to their privacy, and their democratic freedom. In turn, the Department of Justice last month went public with its decision to sue Google for conduct similar to that criticized by the commission in 2019. The American citizen now seems to be seen as a victim of excessively lax antitrust policies, justified on the grounds of confronting Asian competitors in the technological field.

It remains to be seen what the position of the Biden administration and the EU will be following the commission’s proposal to strengthen the enforcement of the rules of competition in the digital sector. So far, the president-elect’s transition team includes former top Facebook and Apple executives. It is not easy to anticipate whether there will be a total convergence of the European and American standards. Under any scenario, the new investigation into Amazon will provide material for comparing conceptions about antitrust on both sides of the Atlantic.

*Editor’s note: The author may be referring to either the Treaty on European Union or the Treaty on the Functioning of the European Union, the two principal treaties that are the basis for the EU.