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Silicon Valley's De Facto Regulator Eyes New Rules for Platforms

Technology companies that control their own ecosystem can become their own private watchdogs, raising questions about whether they play fair, said Margrethe Vestager, the EU's incoming digital affairs czar.

(Bloomberg) -- Big tech might face new rules in Europe if antitrust probes keep going over the same ground, the EU’s incoming digital affairs czar said, as she prepares to take on a new role that will give her greater oversight of Silicon Valley.

Internet platforms, from Alphabet Inc.’s Google, Apple Inc. to Inc., have attracted numerous complaints over an alleged failure to play fair when they host smaller companies and compete directly with them.

Now, as Margrethe Vestager prepares to become the bloc’s tech chief in addition to her role as competition watchdog, she’s looking at how regulation might solve problems where antitrust law couldn’t, especially in relation to dominant platforms.

Companies that control their own ecosystem can become their own private watchdogs, raising questions about whether they play fair, Vestager said in an interview with Bloomberg on Friday.

Owning the Market

“If you’re a private regulator because you de facto own this market, then we would want to make sure that you set rules for fair competition,” she said. If companies abuse their position, there’s a risk the EU antitrust regulator’s casework would become repetitive, Vestager added. "And if work has a risk of becoming repetitive, we would put that into regulation.”

Google was fined by the EU in 2017 for discriminating against shopping search rivals. Amazon’s ability to scoop up data on smaller stores that its own retail arm rivals is now the focus of an EU investigation. Apple is also a potential antitrust target over a Spotify Technology SA complaint that it hampered the app after starting its own music-streaming service.

Vestager on Friday also said her team is taking a closer look at potential competition issues around Apple Pay and how Apple nudges users to use its payment system on its iPhones, potentially favoring its own service over that of competitors.

“We would not accept someone to be both player and referee at the same time, and for some of the platforms, this is exactly the role they have,” Vestager said. “How we will handle that, we have not started formulating yet. But that is on our working schedule.”

The bloc’s incoming technology chief has in recent weeks faced questions about her future dual role as rulemaker and enforcer of antitrust law. On Wednesday, Vestager said investigations into specific companies could inform what her team does in terms of regulation.

Google declined to immediately comment while Apple and Amazon didn’t immediately respond to requests for comment.

Vestager, along with the rest of the commission nominees, were due begin their next mandate on Nov. 1 but that’s postponed following difficulties obtaining confirmation from the European Parliament for three other commissioner candidates.

Before deciding on any new platform legislation, Vestager said the commission would first assess the impact of rules that are set to enter into force next year, which will oblige platforms to treat business customers fairly and provide more transparency around search rankings.

The new platform-to-business rules, agreed by the EU earlier this year, will require platforms to provide clear terms of service and disclose in detail any advantage they give their own products over others.

‘First Steps’

Vestager said that legislation provided “first steps” to give fundamental rights to businesses that rely on platforms.

Separately, Vestager said she’s continuing to monitor how Google is obeying orders to give more visibility to rivals for shopping search and Android apps. Search firms have complained that Google’s changes haven’t helped them win much traffic. Google risks fines if it hasn’t tried to restore competition in those markets.

"As we speak, we don’t have a non-compliant case but we will remain vigilant to see if that changes," Vestager said. "I have an open door for people who have insights that they want to share."

TAGS: Data Privacy
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