France and the Netherlands signal support for EU body to clip the wings of big tech

Pre-emptive action should intervene prior to the stage where damage becomes irreversible,” French digital minister, Cederic O, and Mona Keijzer, the secretary of state for economic affairs for the Netherlands, write in a joint position paper where they also argue that: “Intervention is justified when the asymmetric bargaining power of structuring platforms leads to negative consequences.”

The two ministers went further in accompanying remarks to the press, with the Financial Times reporting that their support for intervention against big tech’s market muscle includes keeping the option of breaking up companies “on the table” — although their stated preference is for rules that prevent such an “ultimate” step being necessary.

The intervention by two high profile EU Member States comes as the European Commission is working on a major package of pan-EU legislation to update the bloc’s ecommerce rules — including devising a new regime of ex ante rules for so-called ‘gatekeeper’ platforms. 

In recent months press reports have suggested EU lawmakers are considering forcing such platforms to share data with smaller rivals and/or limiting how they can make use of data — such as via strict purpose limitation.

They are also reportedly considering rules to ban self-preferencing and apply conditions on bundling, as well as requiring annual audits of ad metrics and reporting practices.

Although the package remains at the draft stage for now, with the Commission saying only that it’s committed to introduce the Digital Services Act (DSA) by the end of this year.

Commission lawmakers are also eyeing expanded powers for competition regulators to proactively tackle the network effects that can apply in digital markets — and have, in recent weeks, been consulting on a new competition tool for this purpose. 

The French-Dutch intervention thus sends a strong signal of support to the Commission for regulating big tech — and a warning shot against watering down policy measures.

Competition chief and Commission EVP, Margrethe Vestager, who is one of the key lawmakers drafting the DSA, has previously cautioned against breaking up tech giants as a solution to competitive imbalances in digital markets — calling instead for a finer grained regulatory framework which regulates their access to data.

Such an approach would be akin to a structural separation, without the huge legal challenge involved in actually breaking up businesses, is the thinking.

The French-Dutch position paper reflects back many of the ideas the Commission is actively considering, per recent press leaks. So it may be intended to send a message that key Member States are on the same page.

The paper advocates for intervention to apply to platforms that have “considerable market power” in at least one market, while warning against imposing “unnecessary obligations” to platforms without any gatekeeper position.

It also suggests a “platform-by-platform approach” by regulators to determine whether or not a platform is a gatekeeper or not, noting: “It is important to stress that classical methods of market definition cannot always be used effectively in digital markets.”

Platform-specific factors such as the characteristics of the service and the behaviour of users should factor into the analysis of whether it holds a structural position, they also suggest — before again hitting a cautious note and urging that “a right balance” be struck between a platform-specific analysis and “the need for a reasonable level a legal certainty”.

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