By Bernold Nieuwesteeg
New European legislation is a first step to restrain the power of Big Tech. The largest dominant American tech companies (also known as Big Tech) have become even more powerful due to the corona crisis. Therefore, their sinful anti-competitive behavior must be restrained further.
In December 2020, the European Commission introduced two comprehensive legislative packages: The Digital Services Act (DSA) and Digital Markets Act (DMA). The DMA and DSA are innovative laws. They force Big Tech to give innovative young companies access to their data, which is of great value. Still, I fear that it will all be of little use if we do not take extra steps right now.
The power and strength of Big Tech has risen to extraordinary heights, because of the corona crisis. An example: the joint R&D budget of Google, Apple, Facebook, Amazon and Microsoft exceeded 100 billion euros in 2020. This is more than five times as much as the Netherlands as a whole spends on R&D. There are also numerous examples that show that Big Tech is effectively turning well functioning competitive markets into oligopolies or monopolies. Gone are the days when a new innovative company could challenge the established order. How long has it been since Hyves and MySpace were outcompeted by Facebook? Restricting Big Tech is therefore not a matter of left-wing or right-wing politics, but rather common sense.
The European Commission wants to impose new rules on Big Tech and has every reason to do so. Big Tech is too powerful and disrupts the free market. Legislation, however, is a slow process, especially the European kind. The DMA and DSA replace a directive dating back to the year 2000. Almost a quarter of a century will have passed when the new legal frameworks will enter into force. That is why more steps need to be taken now. Digital services are now even more indispensable due to the corona crisis. The relatively new permanent parliamentary committee on digital affairs can take the initiative. Dear committee: put your focus on the seven sins of Big Tech.
“Restricting Big Tech is not a matter of left-wing or right-wing politics, but rather common sense.”
Be aware of their pride. American people generally love their products, and big tech companies certainly do too. Pride is part of their success. Look at cloud, for example: many European alternatives may not play it as big as Amazon, Microsoft and Google, but offer excellent solutions for large parts of the business community. More awareness and more pride for ‘digital made in Europe’ is needed.
Bind greed. The takeover of Whatsapp and Youtube resulted in billions of dollars of revenue for Facebook and Google respectively. Competition law should be stricter on buying companies that are rapidly making Big Tech even more powerful.
Put a limitation to lust. Big Tech often arouses the user’s lust to stay in the ecosystem for as long as possible. The European Commission can use insights from behavioral economics to limit this form of nudging and to encourage consumers to have a look at other platforms.
Restrain envy. Some big tech companies have been merciless when it comes to copying competitors. For example, Facebook copied parts of Snapchat through ‘Instagram Stories’. Can we use intellectual property law to make copying businesses more difficult?
Tax gluttony. Big Tech’s hunger for data is never satisfied. Big Tech is big all over the world and, due to the new EU rules, has to share a limited part of data within the borders of the EU. But the problem of data sharing does not stop at the border. That is why the EU should start taxing Big Tech when it does not share its data outside the EU. In this way we encourage Big Tech to share data in other parts of the world and we can create a level playing field.
“We must realize that Europe is the only continent that can really curb Big Tech.”
Be prepared for wrath. Limiting power of almost any person or business does not go without a fight. The multi-billion dollar profit of Big Tech is already being used to set up a strong lobby in the direction of European and Dutch policymakers. Therefore, one should always keep an ‘ultimum remedium’ on the table: splitting up Big Tech.
Beware of one’s sloth. The seventh sin applies to those who want to limit the power of Big Tech. We must realize that Europe is the only continent that can really curb Big Tech. In the United States, vested interests and lobbying power are too big. And in China they have their own Chinese Big Tech ecosystem and take sole actions to restrain it. Not everything has to be put into legal texts which takes years to develop. The competitiveness of European companies can already be strengthened. Create the right infrastructure and increase the financing options for start-ups and scale-ups in Europe. Finance these companies upon the condition that these companies may not be bought by Big Tech companies.
In short, Digital Affairs Committee: take action! Focus on the seven sins of Big Tech. Give citizens and businesses more opportunities to create the conditions for fair competition in the digital domain.
About the author
Bernold is director of the Centre for the Law and Economics of Cyber Security at Erasmus University and entrepreneur. He recently founded www.cybersecuritybooster.nl, a webinar series that boosts cybersecurity knowledge.