Last week, the Linklaters Competition & Antitrust group sponsored and participated in the inaugural BIICL Tech Roundtable. Leading officials from the European Commission, as well as the French and UK authorities, academics, economists, and senior leaders from the tech industry and disrupted corporates, discussed the question: “Is antitrust still fit for purpose in the digital age?”

In this blog post, we have set out the three main themes from the discussions.

1. Antitrust remains fit for purpose

Concerns expressed about antitrust enforcement in digital markets may, at first, look new. But the roundtable discussion agreed that, as regards leveraging-based theories of harm applied in recent and ongoing enforcement against Google and Amazon, they correspond to well-known “traditional” theories of harm. These include abusive tying, self-preferencing/discrimination and refusal to supply. The notable exception to this, which is truly novel (at least in a European context), is the use of antitrust to pursue exploitative non-pricing abuses. An example is the Bundeskartellamt’s Facebook case, which relates to data use.

While there was broad consensus that the core antitrust concepts are flexible enough to deal with digital markets, some participants considered that the intervention threshold needs to be lowered. It was argued that, in light of the scope and magnitude of potential harm to competition in digital markets, enforcers have been too concerned with the risk of “false positives”, and that a “rebalancing” of error costs should occur. Related to this, it was suggested that authorities need to utilise early-intervention tools, such as interim measures, to prevent potentially irreparable harm in fast-moving markets. Some participants also argued that merger notification thresholds may need to be adjusted, to ensure that the right sort of transactions (e.g. so-called “killer acquisitions”) are subject to regulatory scrutiny.

2. Platforms are not homogenous

When we talk about GAFA (or FAAMG, FAANG, MAGA), we are mixing different platforms with business models. While Facebook and Google are data-driven businesses (and are therefore dependent on advertising revenue), Apple and Microsoft generate the lion’s share of their revenues from hardware and software products. Amazon operates as a retailer and a marketplace, which is driven by taking a share of sales revenues.

The roundtable agreed that these different business models, and therefore financial incentives, are critical to both the analysis of competitive effects, and remedy design. This is especially true for Google and Facebook, where allegations of anticompetitive abuses through data use (or misuse) strike at the heart of their business model. This represents a clear paradigm shift for antitrust enforcement, which has traditionally focused on conduct which is ancillary to, rather than at the core of, the business model of investigated businesses.

More fundamental and radical intervention (than competition authorities have pursued in the past) is on the horizon. This demands that careful consideration be given to what remedies are appropriate, in circumstances where there is the real potential to undermine business models which, notwithstanding concerns raised by authorities, are generally recognised as delivering significant consumer benefits.

3. Antitrust does remain fit for purpose, but its purpose is not without limit

While the roundtable broadly agreed that antitrust rules as a whole remain effective and relevant, the broader regulatory context is also important. And policymakers need to consider digital markets in a holistic way. The Bundeskartellamt’s Facebook decision, and its subsequent suspension by the Dusseldorf court, demonstrates the apparent legal limits on the scope of competition authorities’ power. But the key question for policymakers is where this enforcement should sit. If perceived consumer harm cannot be resolved in the silo of either competition or data protection law, is the answer to expand their remit, or to move to broader sectoral regulation?

This question is being grappled with by policymakers around the world. Given the commonality of these challenges across jurisdictions, the globalised nature of digital markets, and the evolving nature of thinking in this space, it was agreed by the roundtable that international collaboration is critical. At the same time, GAFA and others have an important role to play in helping shape regulation, and have been actively engaging with governments around the world. Even with a concerted effort on all sides however, and as authorities and policymakers experiment with the best way to regulate digital markets, divergence – and the concomitant compliance burden – is inevitable.