Tech on trial in 2021
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Regulators were tough on Big Tech last year but US and EU officials will be expected to put the likes of Facebook and Google under even more scrutiny in 2021.
Big platforms will come under renewed pressure as regulators probe their acquisitions of smaller rivals and seek to impose tougher rules to curb their power, according to law firm Freshfields’ global antitrust report.
The prediction comes amid growing unease with Big Tech, seen in Brussels as “too big to care”. EU citizens have become weary of mainly US-based companies and their apparent unwillingness to pay their fair share of taxes and intrusions into users’ privacy.
Freshfields points to budget increases for key enforcers, of which part will go to boost teams that will probe companies like Apple and Amazon. The UK’s competition market authority has seen a 19 per cent increase in its budget, while the US’s Department of Justice has had an 11 per cent rise, the law firm says.
Brussels will draw from the EU’s seven-year budget to bolster its staff to tackle the power of large online platforms. EU regulators official and temporary staff of up to 55 people per year from 2022. There will also be a redeployment of existing resources.
“There is a backlash against Big Tech, and there is a sense that markets haven’t delivered in terms of broader benefits for society, including concerns over inequality and sustainability,” says Sascha Schubert, a partner with Freshfields in Brussels.
Mr Schubert says people are concerned that Big Tech’s economic dominance is also translating into political power, as seen with Twitter’s decision to ban Donald Trump (a move that was condemned by some senior European leaders, including German chancellor Angela Merkel).
Regulators will also be keenly watching Big Tech’s attempts to gobble up smaller competitors. US regulators have accused Facebook of abusing its power to crush rivals and have called for penalties that may lead to the company being forced to sell WhatsApp and Instagram.
“The agencies will surely keep the tech sector at the top of their lists. In the past, buyouts of start-ups by the larger tech players were, by and large, not caught by merger control rules because they were either not reportable or not deemed worthy of further investigation,” the report says. “But future acquisitions by ‘Big Tech’ should expect more scrutiny, regardless of the size of the target.”
The EU is also likely to push for the adoption of two pieces of draft legislation it published late last year: the Digital Services Act, which will make it legally binding for platforms to police the internet; and the Digital Markets Act, aimed at curbing the power of Big Tech in the bloc. This will be the first time the EU overhauls internet rules in two decades.
Separately, Mr Schubert says competition regulators will continue to be under pressure to address markets where there is “a trend to increasing consolidation and concentration”, particularly in sectors with three or four major players.
Freshfields also thinks protectionism will be on the rise in the pandemic-stricken world. The report notes that G20 governments carried out national security-related investment measures at a rate of one a week last year on average. The pandemic, in Mr Schubert’s view, has only accelerated countries’ “need for a certain degree of economic autonomy and for sovereignty over critical sectors”.
Chart du jour: Turkish diplomatic delights
The FT has kicked off a new series exploring Turkish president Recep Tayyip Erdogan’s muscular foreign policy and attempts at regional influence. The chart above shows how Turkey has steadily increased its diplomatic presence — mainly in Africa and Asia — as Mr Erdogan celebrates Ankara “rising up” on the global stage. Read more from the first part of the series from Laura Pitel. (chart via FT)
US secretary of state Mike Pompeo has been snubbed by EU officials and Luxembourg’s foreign minister, on what would have been one of his final diplomatic trips in office. Reuters has the scoop on Mr Pompeo cancelling a visit to Luxembourg and Brussels at the last minute, after officials made clear they did not want to meet the close ally of Mr Trump after the storming of the Capitol building.
Italian prime minister Giuseppe Conte has sought to fend off a political crisis by rejigging his country’s landmark recovery plan after it was trashed by Matteo Renzi, a former prime minister and his junior coalition partner. La Repubblica reports that Mr Conte submitted a new draft to his cabinet on Tuesday detailing how Rome intended to spend more than €200bn in EU loans and grants after Mr Renzi threatened to withhold his party’s support — a move that could have triggered a government collapse. The new draft may do the trick as it allocates about €20bn to the health sector as demanded by the former prime minister. Italy awaits Mr Renzi’s verdict.
The EU’s chief vaccines negotiator has insisted Brussels bought up enough of the right jabs in the face of criticism from some national politicians about a botched procurement programme. Sandra Gallina told MEPs on Tuesday that no member state had signed “parallel contracts” to secure vaccines and the commission has bought as “much as was offered” (FT). Her intervention came as the EU concluded exploratory talks with Valneva to purchase 30m doses of its Covid-19 vaccine, with an option for 30m more.
Le Monde looks at how the crisis-riven and “paralysed” French left is at risk of being wiped out in next year’s presidential elections. France’s leftist parties and greens had been exploring a joint alliance for the presidential vote that will take place in 18 months. But Le Monde reports of “deadly divisions”, with some Green officials saying the party will go it alone and far-left leader Jean-Luc Mélenchon rebuffing the joint ticket. Leftist parties are also haggling over who should be the presidential candidate, with moderates such as Paris mayor Anne Hidalgo and former Socialist party candidate Ségolène Royal in the mix — but no representative from the far-left. One Socialist official calls it “a perfect storm to produce a catastrophe”.
Economist Dani Rodrik thinks the EU’s recent China investment deal is a way for Beijing to buy “insurance against future restrictions” in the bloc. The agreement has come under heavy fire from human rights advocates. Mr Rodrik thinks the agreement should not be judged on how far the EU can export its values to China but if it allows “Europe to remain true to its own”. (Project Syndicate)
Coming up on Wednesday
An advocate general at the European Court of Justice will in the morning deliver an opinion on whether Belgium’s data protection authority has the power to stop Facebook from using cookies to track users in the country, even if they don’t have an account on the platform.
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