The necessary coordination of public policies in the digital field

The digital and tech sector is one of the leading concerns of competition authorities. Yet the challenges entailed by the digitisation of the economy, and in particular the rise of platforms, go well beyond competition policy and cover in particular questions of sovereignty, protection of personal data, pluralism and even the freedom and independence of the press. The decisions taken by competition authorities around the world therefore need to find linking points with these other issues, and rule on practices that are also likely to contravene other public policies (as was the case in the Google related rights case) or on "opportunistic" practices that involve undertakings taking advantage of the necessary implementation of public policies to put up additional barriers to entry around their ecosystem (as was the case in the Apple app tracking transparency case).
The Autorité is fully mobilised to meet these contemporary challenges, from issues related to the dominance of large platforms, to the use of personal data, to the cloud and perhaps the metaverses of tomorrow...

RELATED RIGHTS: FRANCE LEADS THE WAY IN EUROPE

With the adoption of the directive on related rights, the European legislator pursued the objective of establishing a regime of legal protection for publishers and press agencies, taking into account the specificities of their sector and its role within a democratic society. France was the first European country to transpose this directive, in 2019. The ambition to reconfigure the balance of power between publishers and news agencies, on the one hand, and online platforms, on the other, is therefore one of the main objectives of the French law, which aims to give publishers the means to achieve a stabilised cooperation with digital players, by providing for appropriate remuneration for the use of their content (Law No. 2019-775 of 24 July 2019).

From November 2019 on, several unions representing publishers or news agencies referred the matter to the Autorité, arguing that Google had abused its dominant position by making any good faith negotiation impossible, and by having imposed zero remuneration for their related rights. In April 2020, the Autorité decided to issue interim measures against Google, requiring it to negotiate in good faith with publishers and news agencies for the reuse of their protected content (Decision 20-MC-01 of 9 April 2020). The publishers and news agencies still considered that they were unable to negotiate with Google, and referred the matter to the Autorité again in the summer of 2020, for non-compliance with the injunction. In July 2021, the Autorité then fined the search engine €500 million for non-compliance with the injunctions, and ordered it to comply under penalty of daily fines of up to €900,000 per day of delay (Decision 21-D-17 of 12 July 2021, for more details, see p. 49). Considering that the commitments subsequently proposed by Google addressed the competition concerns expressed, the Autorité made them binding and closed the procedure (Decision 22-D-13 of 21 June 2022).

By mobilising the tools of competition law to fight abuses of dominant positions, the Autorité indirectly helps safeguard the pluralism of the press and free, high-quality information.

GOOD TO KNOW

The Autorité de la concurrence and the Pôle d’Expertise de la Régulation Numérique (PEReN) signed an agreement on the terms of their cooperation. The conclusion of this agreement is part of the general willingness of the authorities to put in place the means, particularly the technical means, to effectively address the challenges of the digital economy. Thanks to the signing of this agreement, the work devoted in particular to the development and optimisation of tools allowing the automatic and standardised retrieval of information accessible online will be able to intensify. This will subsequently benefit all State services that intervene in matters of digital platforms regulation.

Press release, 11 May 2021

PROTECTION OF PERSONAL DATA, PRIVACY, SELF-PREFERENCING: KEY CONCEPTS CENTRAL TO THE ANALYSES

The implementation of the GDPR (General Data Protection Regulation that came into force in 2018) and the 2009 ePrivacy Directive oblige platforms to adapt their policies vis-à-vis personal data, in particular to comply with the principle of collecting consent. These necessary adaptations prompt new and sometimes complex situations, and are carried out under the watchful eye of the competition authorities, who in particular must ensure that no distortion of competition occurs as a result of these changes.

In the context of its policy to strengthen privacy protection for its customers, in September 2020 Apple announced, upon updating its iOS 14, its intention to introduce a consent request for installing a new app. Having received a complaint from associations representing the various players in the online advertising sector, the Autorité found that the conditions for issuing interim measures were not met and that Apple’s introduction of a new feature in its operating system, allowing iPhone and iPad users to block the collection of their personal data, did not appear to be an abusive practice and could be regarded as necessary and proportionate to the objective pursued (Decision 21-D-07 of 17 March 2021, for more details, see p. 54).

Moreover, the diversification of platforms and the vast expansion of their ecosystem are likely to facilitate the application of discriminatory practices, the main risk being that they could attempt to favour their own services and subsidiaries to the detriment of third-party operators. Several recent cases illustrate the growing importance of these issues.

For example, in the Apple case, the Autorité decided to pursue the investigation into the merits of the case in order to verify whether the changes introduced did not lead to discrimination (self-preferencing) and in particular whether the consent window for personalised advertising, the App tracking transparency (ATT), rolled out by Apple, was not more restrictive for third parties than for its own services.

A STRONGER REGULATION OF DIGITAL GIANTS TO BE PUT IN PLACE WITH THE DIGITAL MARKETS ACT

Legislation intended to ensure fair and open digital markets is on its way to being adopted at the European level with the Digital Markets Act (DMA). This regulation provides a powerful additional tool to effectively combat some of the most harmful behaviours of ‘gatekeepers’.

It will become a complementary instrument to competition policy, allowing for rapid action on digital markets that evolve very rapidly and where the damages caused by certain practices can be irreversible. Indeed, whereas up until now competition authorities have intervened ex-post, with the DMA, the regulation will also become ex-ante, with a list of obligations or prohibitions that will be laid down a priori for these platforms under supervision. The European Competition Network will play a central role in the coordination between national authorities and the Commission, to ensure coordination between competition law and the DMA. It is in this spirit that the European Competition Network has published a joint document setting out a concrete vision of the contribution that national competition authorities could make in the specific implementation of the DMA.

Joint paper of the heads of the national competition authorities of the European Union, How national competition agencies can strengthen the DMA, available in the Authority’s press release of 23 June 2021. (For more details on the DMA, see our dossier on Europe, p. 24).

This same concept of self-preferencing can be found at the heart of the Google Shopping case. In this case, which had a particularly structuring impact on competition law, the European Commission had handed Google a fine worth €2.42 billion in June 2017 for abusing its dominant position by favouring its own comparison shopping service over competing comparison shopping services. These practices had led to a fall in traffic for almost all competing product comparison sites, potentially foreclosing them from the market, leading to price increases and less innovation (European Commission, 27 June 2017 Google, Alphabet v. Commission). The General Court upheld this decision in 2021, ruling that Google’s self-preferencing had a certain form of abnormality and indicated that “in view of its ‘superdominant’ position, its role as a gateway to the internet and the very high barriers to entry on the market for general search services, it was under a stronger obligation not to allow its behaviour to impair genuine, undistorted competition on the related market for specialised comparison shopping search services.” (General Court, 10 Nov. 2021, Google, Alphabet v. Commission, pt. 183).

In France, the Autorité also fined Google in 2021 for abusing its dominant position in the market for ad servers for publishers of websites and mobile apps. Servers act as aggregators of advertising inventory offerings, and offer these inventories on demand via marketplace platforms. In this case, the Autorité found that Google had given preferential treatment to its proprietary technologies in the interactions between its ad server and its bidding platform, to the detriment of its competitors and publishers. As Google did not contest the facts, the Autorité accepted the principle of a settlement. The commitments proposed by Google will change the way its DFP ad server and AdX bidding platform operate. (Decision 21-D- 11 of 7 June 2021, for more details see p. 52).

SERVICES AND NEW TECHNOLOGIES: HIGHLY STRATEGIC ISSUES

The rise of digital technologies is fostering the emergence of new ecosystems and the appearance of services based on new, essential facilities. In order to understand these changes, the Autorité initiated several large-scale sector-specific inquiries to study in depth the issues raised by these rapidly expanding phenomena. At the European level, the behaviour of certain players is also currently being closely scrutinised in the context of litigation procedures.

Cloud computing

In January 2022, the Autorité announced the launch of a broad sector-specific inquiry into the market for cloud services (data storage via a cloud). Although these markets are dominated by primarily American and Chinese giants (known as hyperscalers), they are currently heavily invested by French and European players, whose activity is undergoing rapid expansion, with an average annual growth expected to exceed 25% in the coming years. The Autorité intends to conduct a comprehensive analysis of the competitive functioning of the sector, with the objective of examining the competitive dynamics, the players, their contractual relationships (alliances, partnerships) but also to study more broadly the consequences of the emergence of the cloud in all sectors of the economy, in close collaboration with the sectoral authorities. Several months of study will be required, with final findings expected in early 2023 (Press Release, 27 January 2022).

As regards litigation, a coalition of around 30 European cloud players Coalition for a Level Playing Field, including eight French companies, filed a complaint with the European Commission against Microsoft in early 2021, concerning its OneDrive storage offering. Microsoft was accused of tying its cloud offering to its other software offerings, such as Teams or Windows Services, thereby creating a barrier for its competitors. The issue is particularly important for consumers’ freedom of choice in terms of their digital tools, in particular as regards storage and sharing. Another group of companies, including French player OVH Cloud, also filed a complaint against Microsoft with the European Commission in the summer of 2021, for practices that allegedly limit consumer choice in the market for cloud computing services via tied selling and preferential pricing when its customers for office softwares (Microsoft office 365 suite that includes Word, Excel, Teams, etc.) install the software on their Azure cloud platform.

FinTech and BigTech

The banking and financial sector is currently undergoing profound changes, characterised by the development of FinTech and BigTech companies and their business models which differ from those of the traditional, established players, in particular as regards the emergence of innovative payment methods for consumers and new diversified services. In particular, contactless payment by bank card, mobile phone and connected smartwatch has developed to a significant extent, in conjunction with the rise of e-commerce. All of these services, channels and alternative payment methods are based on recent technological developments, in particular cloud computing and blockchain, which, although not specific to the payments sector, are likely to have a profound and lasting impact on the way this sector works.

In its sector-specific inquiry published in April 2021, the Autorité highlighted the great “agility” of FinTech to develop new innovative services while seizing the opportunities created by regulation. It also noted that the traditional banking actors resorted to various strategies to keep abreast of the most innovative segments of the market: takeovers via acquisitions, equity investments, internal development, etc. Finally, the overview presented in its study highlighted the emergence of large Big Tech platforms, which enjoy multiple advantages. In the Autorité’s view, this in-depth assessment is an essential preliminary step. It will subsequently allow the Autorité to address effectively the various competitive harms that may arise from the risks identified. These include the risk of strengthening the market power of BigTech and foreclosing consumers, the risk linked to data ownership by payment service providers managing accounts, the competitive risks associated with the use of blockchain, and the risk of calling into question the universal banking model and marginalising the traditional banking players (Opinion 21-A-05 of 29 April 2021, for more details, see p. 57).

As regards litigation, the behaviour of certain players is already being closely scrutinised at the European level. This is the case in particular for Apple, whose payment system is being closely examined by the competition authorities. Indeed, the European Commission opened an investigation in June 2020 to assess whether Apple’s behaviour as regards Apple Pay violated EU competition rules (EC Press Release, 16 June 2020). Margrethe Vestager stated in this regard that “It is important that Apple’s measures do not deny consumers the benefits of new payment technologies, including better choice, quality, innovation and competitive prices.” For its part, the Dutch competition authority (Autoriteit Consument & Markt – ACM), fined Apple for preventing dating apps, such as Tinder, Bumble and Meetic, from using other payment systems in addition to Apple’s system, within the AppStore. Noting Apple’s failure to comply with its decision, the ACM fined it €5 million per week until it brought its behaviour into compliance. In June 2022, the ACM agreed to Apple’s proposal to change its terms as regards dating apps. Different payment methods will now be authorised in Dutch dating apps (ACM Decision, 11 June 2022).

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