Big tech companies have brought the 21st century some of its greatest innovations. Amazon.com Inc, Google search, Apple Inc’s iPhone and other digital products have made people’s lives immensely more convenient and productive — a consumer benefit worth, by one estimate, more than US$2.5 trillion a year. They deservedly dominate their respective markets.
It is true that such dominance can at some point threaten competition. Increasingly, EU officials are taking it upon themselves to decide where that line should be drawn. They should take care not to merely punish success, and remember that red tape often does more harm than good.
To an extent, the tech giants would be remiss not to exploit their scale. Amazon runs the world’s largest online marketplace, so why not sell its products, too? App developers want to reach the iPhone’s 1.5 billion users, so why not connect them through a proprietary app store and payment system? Google handles 90 percent of Web searches; offering services such as comparison shopping surely makes sense. For consumers, the result is often a simpler and more seamless experience.
Yet it is easy to cross a line. With its control of data and search results, Amazon might treat the small retailers that depend on it unfairly. Apple and Google can relegate competitors to the back of the app store or to the end of the search results. All have ample resources to co-opt innovative challengers. If anticompetitive conduct is not addressed, the result for consumers could be limited choice, worse products or unduly high prices. For the economy, ossification.
The goal, then, should be discouraging anticompetitive conduct — not trying to micromanage businesses or dictate how a given industry should develop.
The traditional approach, antitrust enforcement, is a slow-motion bludgeon. For example, the US Department of Justice landmark lawsuit against Google concerns practices that began decades ago and have long since cemented the company’s dominance in search. All too often, remedies fail or even do damage.
The EU believes it has a better way. Its Digital Markets Act sets broad rules of fair play, seeking to head off anticompetitive behavior in something closer to real time. Much would depend on how regulators apply the vast powers it grants them — including fines that can amount to one-fifth of a company’s global revenue. The burden is on them to prove that the law is not merely a stealth tariff on big US tech firms (which it targets as “gatekeepers”), and that they genuinely have the interests of consumers and innovators in mind. Unduly meddlesome regulation could prove disastrous for Europe’s competitiveness.
The evidence so far is not great. Thanks to the Digital Markets Act, which took effect in March, EU consumers have easier access to some apps and Web browsers on their smartphones — although to what extent they really want or would use that choice is an open question. At the same time, they would miss out on new AI features from Apple and Meta Platforms Inc, which have blamed delays on regulatory uncertainty. One must hope EU officials learned something from their 2016 General Data Protection Regulation, which has subjected people to endless online cookie-consent menus while harming investment, innovation and firm performance.
It is an experiment worth watching. Jurisdictions from the US to Japan are considering legislation similar to the EU’s. If Europe’s regulators would rather produce a model than a cautionary tale, they would do well to follow a simple maxim: If it would not make people better off, do not do it.
The Editorial Board publishes the views of the editors across a range of national and global affairs.
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