Antitrust and intellectual property law expert Thomas Vinje believes enforcement has been largely ineffective when it comes to rebalancing the power many of the larger tech companies purportedly have, as many consider fines to simply be the cost of doing business.
Addressing a Global Competition Review webinar on Thursday, Vinje said that in digital markets, once dominance is established, it tends to remain in place. He said that was true of IBM and Microsoft in the past and it is now true of Google, Apple, and Facebook.
He rejected the notion put forward by some that the market will just level itself out once precedents are set by some breakthrough companies disrupting the ecosystem.
"Digital markets do not move fast once dominance is established," he said. "It's often said -- I've heard many say -- we don't need to act, we don't need to enforce antitrust laws because these markets move so fast that any problems will be solved by the market. Frankly, that is just not what has happened … it's not how these things work."
He would argue such markets do not generally correct themselves once dominant positions are established, as they are often protected by very intense network and scale effects. It's one of the reasons why antitrust enforcement has not acted as the silver bullet, he said.
"By the time enforcement is finished, the dominant company has typically achieved the aims, its aims, and reversing the harm is really rarely possible," he said. "So I'd suggest the conquering moves fast but the resulting system is long lasting … and innovation is lost by virtue of that."
The second reason Vinje suggests as to why antitrust enforcement has been largely ineffective in this realm is that remedies are often not effectively formulated.
"Frankly, in Europe at least, appropriate enforcement action is not undertaken," he said, pointing to exceptions such as Microsoft and its Internet Explorer browser choice battle with EU regulators.
"There was an effective browser choice screen, heavily negotiated, and it was largely effective, unlike the choice screen that Google has implemented in reaction to the commission's Android decision."
According to Vinje, the fines imposed by regulators are being regarded by dominant companies as not being "anything other than the cost of doing business".
"Google is a good example, they've been fined over €8 billion in the span of a few years and I, at least, see no signs of Google remedying its conduct," he added. "Antitrust enforcement needs to be complemented by regulation."
Addressing the actions of the companies that have been caught up in allegations of dominance, Vanje said these companies probably do consider their actions to be of good faith, but employees have started to see the bigger picture.
"I think it's human nature to believe in what one is doing, and to believe in oneself, and it's human nature if you're working for a company to believe in that company … they believe in what they're doing, they believe they're only acting correctly, and they believe that the antitrust enforcement is inappropriate, they genuinely believe it," Vanje explained.
"What can happen, and I think the reputational thing is bound to happen, after facing antitrust enforcement for a sufficient number of years and having the light shined on it, and having a lot of publicity about it, and I understand this happened inside Microsoft … the Kool-Aid dissipated and they came to actually see, 'Wait a minute, what we're doing is not entirely kosher, the issues that are being raised actually have some legitimacy'."
He said this has led to a significant cultural shift within the company.
Also appearing at the webinar was chair of Australia's competition watchdog Rod Sims, who is leading the charge for the country's digital platforms attack.
He considers the best way forward for reining in tech giant dominance to be international alignment.
"[Legislation has] got to be really well researched and put together in an extremely considered way," the ACCC chair said. "Having a thousand flowers blooming is great, we get creativity, we get thought about how else you go about it … but we need alignment of direction. We don't really want some people going this way and others going that way.
"I think it's important we get [laws] right and bring some level of international alignment."
Sims cited the five US antitrust Bills targeting major digital platforms and the new Bill on app marketplaces, the European Commission's draft Digital Markets Act, Germany's new competition legislation for digital firms, the UK's proposal to apply new rules to particular digital firms with "strategic market status", as well as regulatory developments in Japan, and draft legislation in South Korea targeting app marketplaces.
"In terms of enforcement, there are now so many cases against the dominant platforms it is difficult to keep track of them all," he added. "Here in Australia … the ACCC has a number of investigations and active litigation on foot. We currently have two cases in court, one against Google and the other against Facebook, which both relate to how the companies use users' data."
"The key point, I think, from all of the above, is that while these enforcement actions and market studies are necessary to tackle the problems arising from dominant digital platforms, they are not enough on their own," Sims said.
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