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Vestager: “We Will Demand More Responsibility From Big Technology”

ByMike Paul

Oct 16, 2020
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The covid-19 pandemic has completely disrupted the agenda of the European Commissioner for Competition, Margrethe Vestager, who, like a large part of her team, focused on the authorization of emergency state aid to alleviate the economic debacle. But the vice president of the European Commission does not lose sight of one of the main objectives of her current mandate, focused on strengthening control of large technology platforms. Vestager believes that the accountability demanded of these companies is far less than the near-omnimous power they have achieved in the digital marketplace. And it is proposed to end that impunity with a Digital Services standard that will allow the Commission to impose obligations and limitations on companies like Google,

Question. Their proposals seem to point to competition rules for some companies and more demanding ones for the digital giants. Can’t this change lead to a double yardstick, perhaps discriminatory?

Answer. We are working on various initiatives in this area. The first, within the so-called Digital Services Law, is an update of the electronic commerce directive to more or less equate the rights of digital commerce with those of analytics. It is about ensuring that trading through a digital platform is secure and transparent. The second route, with the Market Access Law included, is twofold and aims not only at current digital markets but also at those that may arise because they are increasing. The first instrument will consist of setting objective criteria to define the companies that have become gatekeepers, in other words, the inevitable gateway to the network. These companies will be set a series of things to do and others that will be prohibited. Obligations include, for example, sharing the data they collect. And among the prohibitions, will include the one to grant yourself preferential access to adjacent markets, something that we have already seen that has happened in some of the cases we have investigated.

P . It has also indicated its intention to prevent the platforms from becoming so inordinate that they are already uncontrollable.

R . That’s where the second instrument comes in. We want to equip ourselves with a system for investigating the structure of markets. Today, we have tools to investigate companies. But we have seen that in digital markets there are symptoms that reveal when a company can become a gateway, such as network effects, zeroing marginal costs or revenue at the cost of data and not money. With the new instrument, we will be able to intervene preventively when we detect that there is a risk that a company will take control of a market. It will not be about imposing fines, but rules of conduct to preserve the market and prevent a gatekeeper from appearing .

P . Is there no risk of slowing down growth and innovation? A preventive intervention might have aborted the development of a company like Google.

R. It is not a matter of preventing a company from growing, but of not becoming a de facto monopoly . Because when a de facto monopoly arises then there is an enormous risk of having very little competition and that the market pressure towards innovation will disappear. Of course, a balance will have to be found. But, in any case, our instrument will be subject to procedural rules that will allow companies to question our views and defend themselves if they consider that the measures imposed are not proportionate or reasonable.

P . Some reports suggest that the new rules would hit 20 large companies that, coincidentally, are almost all American. Is competition or protectionism what is sought?

R. We try to define the scope of the legislation, which will apply to all companies based on their characteristics and not on the location of their headquarters. It may be an old European custom but here when you grow in size and power your responsibilities also increase. That’s what it’s about. To demand more responsibilities from digital service providers. Someone told me, although I can hardly believe it, that 25 million objects are put up for sale every day on eBay. EBay cannot be held responsible for each and every one of these operations. But you can demand the implementation of a control system that prevents the placing on the market of counterfeit, dangerous products, etc. And the same in the case of digital opinion platforms, where there must be a control system.

P . The merger of CaixaBank and Bankia in Spain is interpreted as the beginning of a new wave of consolidation in the European financial sector, but within each national market. Are you in favor of these operations that create bigger banks but reduce the number of competitors in each country?

R . It is too early to pronounce. We have not even received notice of the transaction or pre-notification yet, so I cannot say what the investigation will show if we have to do it.

P . Financial institutions complain that the current regulatory framework penalizes their growth, especially when it is cross-border. Would you be in favor of modifying the rules to facilitate mergers at the European level?

R . I don’t know if that is really so. We have a lot of European legislation on how banks operate and that should help if you want to do a cross-border merger. I think it would be a good thing if more pan-European consolidation took place while maintaining competition in each market. But it is something that is not up to us because obviously the decision to buy a company or to merge is entirely up to the business community.

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