Co-constructing digital regulation

The competitive challenges of the digital economy remain a priority for the Autorité that warrants its long-term commitment and the deployment of significant resources.

In 2022, the Autorité used significant resources to deal with major cases, such as the continuation of its sector-specific investigation into cloud computing, the resolution of the dispute between press agencies and publishers and Google over related rights, and the successful conclusion of proceedings against Meta in the online advertising sector.

Assessment of a resolute action and outlook on emerging issues.

ADAPTING REGULATION
TO NEW CHALLENGES

On the institutional front, the Autorité is actively involved in discussions aimed at developing the sectoral regulation at European level.

In particular, the adoption of the European Digital Markets Act (DMA) will make it possible to monitor the behaviour of the major platforms more effectively. The Autorité will be mobilised to support the implementation of the regulation.

With regard to merger control, the Autorité has been strongly in favour of an updated and broader approach to the application of Article 22 of Regulation 139/2004. The use of this tool, which enables national authorities to ask the European Commission to review certain transactions “below the thresholds”, will in fact, without affecting current legislation, provide the necessary flexibility to target mergers which would otherwise have escaped scrutiny, and allow a better control of acquisitions of companies with high-value in the digital innovation sector.

Lastly, the Autorité is contributing to the work on the European Data Act, in a context marked by the growing role of data in many new business models.

ASSESSING EMERGING ISSUES

The Autorité can act on its own initiative to issue opinions. This is an opportunity to explore new topics, anticipate market trends and understand the issues at stake in fast-changing fields such as online advertising. Expertise in strategic and emerging markets means anticipating the future and equipping ourselves to react quickly and appropriately when the time comes.
The Autorité previously carried out two panoramic sector-specific inquiries on online advertising, “search” in 2010 and “display” in 2018.

A LARGE-SCALE SECTOR-SPECIFIC INQUIRY IN THE CLOUD

In this respect, issues relating to digital technology and the digitisation of the economy are naturally the subject of particular investment and monitoring by the Autorité.

In 2022, the Autorité decided to launch a sector-specific inquiry to assess the competitive situation in the cloud computing sector, and to examine the consequences of the emergence of these critical infrastructures in all sectors, in conjunction with the relevant sector authorities.

The Autorité’s opinion provides an overall analysis of this complex ecosystem. In this context, the Autorité examined in particular the competitive dynamics of the sector and the presence of players in the various segments of the value chain, as well as their contractual relationships, in an environment in which multiple alliances and partnerships are concluded for the provision of cloud services.

The focus was also put on defining the relevant markets in the sector, assessing the position and competitive advantages of the various players involved and examining the commercial practices that may be implemented. The opinion assesses whether certain players are likely to hold particular positions and competitive advantages, particularly with regard to their investment capacity, access to certain infrastructures, their ability to differentiate themselves or to offer a wide range of services. Several major players could accumulate several advantages and also take advantage of their well established position in digital markets to support their expansion (risks related to the advantages gained from the ecosystem by certain players).

Moreover, the Autorité analysed certain practices implemented or likely to be implemented in the cloud sector, to assess whether any of them could restrict the development of competition on the merits:

technical practices likely to hinder customer migration and the use of multiple cloud service providers;
trade, contractual or pricing practices likely to increase the barriers to entry or expansion in certain markets or to extend the market power of a player;
consequences of the vertical integration of certain players and potential conglomerate effects;
risks associated with horizontal practices and merger practices that may exist in the sector.

In the course of its investigation, the Autorité conducted numerous informal interviews with key economic stakeholders, notably in France, and held discussions with institutional players (The French National Cybersecurity Agency (ANSSI), The French data protection authority (CNIL), The French Directorate-General for Competition, Consumer Affairs and Fraud Control (DGCCRF), The Directorate General for Enterprise (DGE), The General Directorate for Internal Security (DGSI), The Center for expertise for digital platform regulation (PeRen), The European Banking Authority (ABE)) as well as with several competition authorities. It then sent out a number of questionnaires and interviewed three hyperscalers¹.

The Autorité may, where appropriate, make proposals to improve the competitive functioning of the sector (Press release of 27 January and 13 July 2022).

THE FRENCH AND EUROPEAN CLOUD MARKETS ARE BOOMING

The cloud represents all shared services, accessible via the Internet, on demand, paid per use and, by extension, some of the underlying infrastructures (notably data centres).

Examples of cloud services are online document storage, online emailing and video streaming services. The French and European cloud market is booming, with average annual growth expected to exceed 25% over the next few years, resulting in strong value-creation challenges for the economy.

This growth is accompanied by significant support from public authorities in the research and development of innovative technologies, in order to support the digitisation of the economy as well as European and French industry. The national plan to support the French cloud industry is a good illustration of this.

A DEDICATED SERVICE TO IDENTIFY THE ISSUES OF TOMORROW

Created in 2020 and positioned within the Investigation Services, the Digital Economy Unit is composed of data scientists whose role is primarily to monitor technological developments and identify future challenges.

Among the rising topics, the emerging technology of AI chatbots such as ChatGPT will certainly be a subject for antitrust regulators in the near future.

In this respect, Margrethe Vestager declared that it was “already time to ask what healthy competition in the metaverse should look like, or how a tool like ChatGPT could upset the balance”². Such virtual services and universes are likely to revolutionise the nature of competition in many markets and will require vigilance on the part of the authorities, who are already preparing to respond to these new challenges. Conversational AI may disrupt search engines and could reshuffle the cards when it comes to analysing abuse of dominance. These platforms require large amounts of data as well as computing capacity that are only accessible to dominant players. There is also a connection with the cloud as generative AI requires significant storage capacity.

OF NOTE

The Autorité makes available the first tool for viewing its publications. Developed by the Autorité’s Digital Economy Unit, in partnership with the University of Stanford’s Computational Antitrust project, this tool, intended for competition law stakeholders (case officers, researchers, lawyers, etc.), is in the form of a network graph in which the Autorité’s publications are represented and linked by the citations they contain. It therefore makes it possible to identify the interconnections between the various publications at a glance and gives the user an overview of the Autorité’s case law to date.

Find out more

TAKING ACTION
ON THE GROUND

Against a backdrop of accelerating technological innovation, the issue of time has become absolutely central to an effective competition law approach to developments in the digital sector and the new emerging practices. The Autorité’s decision-making practice must reflect this speed while striking the right balance between the need to intervene and the need to not stifle innovation. In recent years, the Autorité has used a number of the procedural tools at its disposal to intervene in a timely manner and find appropriate responses to rapid technological and market development.

INTERIM MEASURES: AN ESSENTIAL TOOL FOR RAPID INTERVENTION

First and foremost, the Autorité can use its emergency powers such as use of interim measures, which enable it to act effectively and in a timely manner to prevent serious and irremediable harm to competition or to the company that is the victim company. For example, it ordered interim measures against Google in 2020 in the related rights case, in 2019 in the Google Ads case, and against Engie in 2016 in the case concerning its market offers to companies. This makes the Autorité one of the most active authorities in Europe when it comes to using this instrument. The Autorité used this instrument again in May 2023 against Meta, in the Internet advertising veriﬁcation sector (Decision 23-MC-01 of 4 May 2023).

The scope has been further expanded since 2021³, as the Autorité now has the possibility to impose interim measures ex officio, and not only following a request made by a company, incidentally to an application on the merits. This is an additional opportunity to act without delay, on its own initiative, when it becomes aware of conduct that could harm competition, particularly in sectors where the positions of the stakeholders are changing very rapidly, such as the digital sector.

THE COMMITMENTS

Negotiated commitments – an alternative to traditional litigation, typically a much longer procedure – are also a particularly effective way of rapidly and permanently restoring the proper functioning of the market. The advantage of this procedure is that it places economic stakeholders at the heart of the process, enabling them to coconstruct appropriate remedies for the competition concerns identified by the Autorité.

The Autorité applied this procedure for example in the iPhones case in 2010 and in the Booking case in 2014. In 2022, the Autorité used this procedure for Google and Meta, whose commitments are now being closely monitored by a trustee.

META’S COMMITMENTS IN THE ONLINE ADVERTISING SECTOR

Following a referral by Criteo in September 2019, the Autorité’s investigation services raised concerns about a number of practices that could affect competition conditions, on the one hand between the various advertising intermediation service providers, and on the other hand between Criteo and Meta. In the context of a negotiated procedure, the companies of the Meta group (Meta Platforms Inc., Meta Platforms Ireland Ltd., and Facebook France) proposed commitments in June 2021, which were then subjected to a market test and reviewed by the Board.

Following a negotiation process that aimed to improve the initial proposals, the Autorité finally accepted and made binding the proposed commitments for a period of five years and thus closed the procedure. These commitments are designed, in particular, to facilitate access to Meta’s partnership programme for companies in the advertising services sector, to oblige Meta to provide advertising service providers with a new programming interface and to train its sales teams in compliance. This is the first time that a competition authority has accepted commitments from Meta in antitrust proceedings (Decision 22-D-12 of 16 June 2022).

GOOGLE’S COMMITMENTS CONCERNING RELATED RIGHTS

In June 2022, at the end of a dispute lasting several months between Google and press publishers over remuneration for their content, the Autorité accepted commitments from Google. This latest phase supplements two previous landmark decisions, since in April 2020 the Autorité had already issued interim measures, and then sanctioned Google, in July 2021, with a fine of 500 million euros for non-compliance with these measures.

The combination of these various means of action (interim measures, sanctions, commitments) has created an environment that offers greater stability and guarantees of fairness for publishers and press agencies. For the first time in Europe, Google’s commitments provide a dynamic framework for negotiating and sharing the information needed for a transparent assessment of the remuneration of direct and indirect related rights.

The commitments set out a complete process from the start of negotiations to their conclusion, all under the supervision of a trustee, whose opinions will be binding on Google and who will be able to call on experts in intellectual property, finance, the press and advertising. They also include a mechanism for finding a solution in the event of a blockage through the intervention of an arbitration tribunal, whose costs will be borne by Google.

The commitments will apply for a period, by five years and be renewable once for a further fiveyear period on a reasoned decision of the Autorité (Decision 22-D-13 of 21 June 2022).

POINT OF VIEW

JEAN-MARIE CAVADA

President of the Société des Droits Voisins de la Presse, which is responsible for negotiating, collecting and distributing related rights for press publishers and agencies.

What was your experience of the legal battle regarding the application of related rights in France? And what are the next steps in the process?

As far as I am concerned, the legal battle was ﬁrst and foremost a long three-year journey in the European Parliament, as Vice-President of the Legal Affairs Committee (JURI) of the Strasbourg Legislative Assembly in 2019. The balance of power then took a long time to consolidate and was very diﬃcult to enforce once the plenary vote had been taken, after the trialogues negotiations, as the insidious weight of lobbying continued to operate in Brussels and Paris. But the French transposition of this directive (Copyright, Related Rights) was carried out rapidly. Just three months after Brussels, France was the ﬁrst European country to pass this text, which is now setting an example for the rest of the world.

However, if the legislative stage is one thing, it is quite another to apply the law. For this second sequence, I would like to say that the influence of the Autorité de la concurrence has been and remains indispensable. Initially, the inertia of an American giant that was supposed to respect our laws led a publishers’ association to take legal action before the Autorité. The Autorité raised its voice. With nothing moving, a second procedure led to a heavy penalty: a 500 million euro ﬁne for the recalcitrant company, together with a list of requirements. It was at this point that our “Press Related Rights” collective management organisation was set up, whose members were able to receive the impartial support of the Autorité through the work of its teams and its President. Sanctions were followed by the monitoring of the proper functioning of the market, through “commitments”, whose compliance is now monitored by the Autorité through a trustee.

Negotiations are now underway. Whatever the impatience (understandable if we accept that, in a democracy, a law is to be applied and not discussed), I would like to thank the Autorité de la concurrence for taking this matter in hand with strength and ﬁnesse. Indeed, if I look at our European neighbours, press publishers in many countries are on their own. Some countries have not yet transposed the directive into national law, while others have done so but with little eﬀort to enforce its content. Others have even seen the legislative legitimacy of their transposition challenged before the European Court of Justice in Luxembourg. Fair pricing will obviously have to become the rule between press “suppliers” and platform “buyers” of content. And to achieve this, unity, and the patience that consolidates strength and exacting standards, can build a healthy, and fairly balanced market.

1/ Very large companies that have built global hosting capabilities and developed dedicated applications used by millions of users.

2/ Margrethe Vestager, Siecledigital.fr, 3 March 2023.

3/ Ordinance No 2021-649 of 26 May 2021 on the transposition of Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, known as the ECN+ Directive.