CHENNAI: Big technology corporations are at an inflection point in their growth trajectory as regulators and government authorities around the world are tightening competition laws to rein in the unbridled monopoly and clout of tech giants. Regulatory actions against the big tech firms have gained momentum in the past two months, keeping the legal teams these firms busy.
The anti-competitive practices of Apple, Meta Platforms, Google and its parent Alphabet, TikTok, and Amazon are under scrutiny in the US, Europe, the UK, Japan, and North Korea. India, too, is working on a pre-emptive approach to deal with a large market. The recent report of the Committee for Digital Competition Law, constituted by India’s Ministry of Corporate Affairs, has recommended ex-ante anti-competition rules.
Anti-trust experts say it will be difficult for a small governmental agency to go after big tech for violations as these firms have a large pool of legal and consulting teams. So, a proactive approach is the way to go. The European Union’s Digital Market Act and Digital Services Act forces companies to respect user data privacy, allow interoperability, fair trade practices in digital markets such as PlayStore or App Store, among other things. India is looking at emerging global practices including that of EU and Japan. India’s Digital Competition Law panel has proposed that the Competition Act should apply to a pre-identified list of ‘core digital services’ that are prone to concentration. This is similar to that of the EU identifying ‘gate keepers’ and ‘core platforms’, which have major control over internet users.
The success of the US Department of Justice lawsuit against Apple for abusing dominance position is yet to be seen because in that case, the onus is on the government to prove Apple is a monopoly and it is thwarting competition with that power. It could be argued that it created the whole ecosystem, built the user base and it is fair to charge a fee to the developer and have the right to block developers based on privacy and security reasons. Some of its supporters are already saying that.
But, the case of the European Commission’s investigation against tech giants is different. In its newly implemented digital market and service laws, the onus is on the companies to comply or face hefty fines - up to 10% of their global turnover and even 20% for repeat offenders. They may even order the big technology firms to ‘break up’ in case of ‘systematic infringements’.
Such break-up orders may prove fatal to highly integrated tech firms, such as Apple. “The Commission may also adopt additional remedies such as obliging a gatekeeper to sell a business or parts of it, or banning the gatekeeper from acquisitions of additional services related to the systemic non-compliance,” the European Commission said on Monday while launching investigation into big tech.
Microsoft is now competing with Apple to become the world’s most valuable company. For long it had lost its way and many thought it would decline and diminish. But the innovation by OpenAI and their ChatGPT helped Microsoft tremendously. While poor leadership and lack of innovation are cited as the reasons for Microsoft’s flat growth, some argue the regulatory crackdown was a major reason for its slowdown.
The same could be said for all major giants. They may win the legal battle but it means expending their resources on antitrust cases and changing behaviour to escape the regulator’s wrath. Such paradigm shifts could slow down their growth.