tuesday, 4 february of 2020


Tech companies face clampdown in Germany over competition fears

Germany’s government has proposed a clampdown on anti-competitive behaviour by digital platforms, putting Berlin in the vanguard of European efforts to regulate companies including Google and Amazon.

The draft "digital law" will strengthen the intervention powers of Germany’s competition watchdog, the Federal Cartel Office. Peter Altmaier, the economy minister, said the measures would "toughen control of abusive practices for big market-dominating digital companies".

"There is no other jurisdiction that has proposed such a far-reaching tool for taming the digital giants," said Rupprecht Podszun, head of the Institute for Competition Law at the Heinrich Heine University in Düsseldorf.

Germany’s bill is part of a broader "techlash" as governments consider ways to limit the economic and social power of the tech giants and public disquiet grows about the potential threats they pose to competition, privacy and civil liberties.

The bill would make it easier for the cartel office to establish whether companies dominate a particular market. The agency would then be able to prohibit such platforms from "self-preferencing" — that is, giving preferential treatment to their own products or services to the detriment of those provided by rivals.

Platforms would also be banned from impeding "data portability", the ability of users to transfer personal information collected by digital companies to other online services.

The bill, which could still be changed before it is passed into law, also stipulates that a platform can be found to have engaged in “abusive” behaviour if it denies other companies access to the data it has collected on them.

Mr Podszun said this part of the bill "is completely new, and you might say, revolutionary". He said its practical impact might not be great, "but the signalling effect is huge". He added: "You could see France and Italy following suit, and the net gradually tightening."

Daniela Seeliger, a partner at Linklaters who specialises in competition law, said: "Germany is taking a first step and putting into concrete proposals what other countries are thinking about in more abstract terms." She said the EU could go down the same route.

The German bill comes as Brussels also considers moves to toughen regulation. EU competition commissioner Margrethe Vestager recently called for the burden of proof in antitrust cases to be placed on the big tech companies themselves.

Meanwhile the UK government is making plans for a regulator to police the technology sector. The idea reflects the findings of a review led by Jason Furman, chief economic adviser to former US president Barack Obama, which looked into the "emergence of powerful new companies" in the tech sector and recommended a dedicated regulator.

Andreas Mundt, head of the German cartel office, told the FT late last year that the proposed digital bill was part of a broader trend that also included the Furman report and recent moves to clamp down on big tech companies in Australia.

"What is happening in Germany is very much embedded in my understanding of the international context, based on many studies around the world that go in the same direction," he said.

His agency has already earned a reputation for its robust stance towards Google, Amazon, Facebook and Apple. A year ago it blocked Facebook from pooling data collected from Instagram, its other subsidiaries and third-party websites without user consent. The decision was later overturned by a court in Düsseldorf, although the cartel office has since appealed.

The draft digital law has drawn a sceptical response from German business. Iris Plöger of the BDI, the main German business lobby, said it "would make it difficult to create internationally competitive digital companies". She said it would also widen the gap between German and European law.

Rebekka Weiss, of the digital lobby group Bitkom, said the bill was "so unclear in some of its formulations that it could have negative consequences for new emerging business models that the law is expressly designed to support".

(Published by Financial Times, February 4, 2020)

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