New Competition Rules In EU Will End ‘Self-Preferencing’ By Big Tech, Suggests Vestager

Tech giants will have to change how they promote themselves, suggested the European Union’s competition chief with the bloc preparing to amend its competition regulations.

A complete overhaul of digital regulation is expected to be announced by the EU later this month. It is expected that the new changed regulations will target the business models of Big Tech. Under the new proposed regulations, there will be greater oversight over illegal and harmful content while also making sure that smaller companies can rival major multinationals operating in Europe.

“With power, with strength comes responsibility and part of that is, for instance, that you don’t promote yourself when your services (are) in competition with other services,” Margrethe Vestager, the head of competition policy in the EU, said in a television interview on Friday.

Products of tech giants are often displayed by them at the top of online search engines which increased the chances of customers selecting those products more readily than otherwise. This business practice is called self-preferencing and was the basis of the a complaint against Apple by Spotify in 2019.

Apple had distorted the level playing field by abusing its AppStore dominance to favour its own music service, charged the Swedish digital music service in its complain. The changes being brought in the anti-competition rules by the European Commission, the executive arm of the EU, will also target this issue.

“The point is not so much the size” of companies but ensuring fair competition within the EU market, Vestager explained in the interview.

“That is the point, that if you have grown into this size that you actually do exercise control on yourself and that you enable other people to do their business in a way that is fair and square,” she said.

Revision of competition rules have often been demanded by European policymakers because they believe that the current rules are not designed to tackle anti-competition practices of companies in the digital economy.

Since 2015, many investigations against Big Tech have been led by Vestager. But there is a degree of frustration among policymakers as practical changes in business practices have not been brought about by the investigations.

For example, a record fine of 2.4 billion euros ($2.81 billion) was slapped by the European Commission in 2017 against Google over charges that the tech giant practiced a policy of promoting its own shopping comparison service instead of allowing similar access to rival companies. Following the case, some changes were instituted by Google. However not many changes were seen in the company’s practices in a study by Lademann & Associates in September. The study found that of the total traffic coming to Google Shopping, less than 1 per cent was transferring users to shopping websites of rival companies.

Going forward, there was need for sanctions against companies disrespecting market rules to be more retrospective in nature. Vestager also said.

“The fine only has the role to punish past illegal behavior, the second part is of course that you stop what you’re doing because it is illegal, and the third element is where we are pushing things… because we see how business, they suffer from illegal behavior in the marketplace,” she said.

(Adapted from CNBC.com)

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