Germany creating a fairer playing ground for digital players

Germany is proposing new laws to prevent market monopoly by major tech companies
6 September 2018

German authorities are clamping down on the monopoly of big online companies by proposing new rules to regulate competition laws. Source: Shutterstock

Germany plans to give its competition watchdog more power, in an attempt to control tech giants such as Google and Facebook, and to prevent them from becoming monopolies in the country.

Under the initiative, Germany could block big players from taking over smaller rivals, curbing their expansion before they achieve scale.

This is in line with the view of many German authorities, who believe that big US companies have become too powerful, and infringe on prevailing antitrust laws.

The government’s intention of implementing “abuse control” measures are detailed in a study commissioned by the Federal Ministry for Economic Affairs and Energy (BMWi).

Due to the nature of the internet, which functions as a network, companies that reach a particular “tipping point” can quickly become a monopoly. The paper calls for the antitrust regulator to be given powers to control the markets before “new entrepreneurial strategies of powerful digital companies” removes any “competitive risks”.

Proposed strategies include ending attempts of “multihoming”. This means digital companies must work exclusively with business partners that are not competing against each other.

Another suggestion stated that regulators should have the power to stop big players acquiring smaller rivals as a strategy to edge out competitors.

A third recommendation asked for a new “data-for-all” law, which would require dominant online companies to share the data that drives their business. Competitors can use the data to train software algorithms to a standard on par with the market leader; this would, in turn, encourage competition in any monopolized markets.

An idea that has been discussed but not mentioned in the study is interoperability. Other policymakers argue that dominant companies should open up their platforms to allow users to contact members of other platforms – similar to how emails and SMSes work.

The strategies listed above reflect Germany’s dissatisfaction towards the operation of major tech companies, mainly stemmed from Facebook’s abuse of dominance to gather data on people without consent. In some instances, this includes people who aren’t members of the platforms.

Many German authorities hold the view that European regulators should never have allowed Facebook to take over Instagram in 2012, and WhatsApp a couple years after. Today, Facebook’s ecosystem of social networking apps have over 2.5 billion users.

In a report by Reuters, Germany’s Economy Minister Peter Altmaier said: “My goal is to make our competition law more effective. In doing so we must find the right balance between the growth chances of German and European platforms and preventing the abuse of market power.”

Altmaier is expected to set up a commission for drafting the changes to the country’s competition law, based on suggestions highlighted in the report.