Creating a Regulatory Framework for the Digital Economy
OpinionZEW President Professor Achim Wambach on Regulating Dominant Online Platforms
Joining recent expert forums in Brussels, Canberra, Chicago and London, the German government in September set up the Berlin commission “Competition Law 4.0” to develop proposals for creating a regulatory framework that meets the challenges posed by the digital economy. Government agencies all around the world, including those in the United States, have ramped up efforts to reign in the leading online digital platforms and pass new competition law for the digital age. In Germany, legislators are currently working on the tenth amendment to the country’s Act Against Restraints of Competition (GWB), which like the previous set of revisions devotes much of its attention to the digital economy. From all these efforts, guidelines for an economic order for the digital economy can be derived.
The central question guiding these efforts is how best to deal with the enduring market dominance of the largest online companies. Previously, governments have been focused on monitoring competition and enforcing antitrust regulations. The continued dominance of these companies shows that conventional antitrust law has its limits. New ideas are needed for regulating these industries. According to the plans for the tenth amendment to the GWB, companies with “outstanding cross-market significance for competition” shall be subject to certain rules, such as the prohibition of self-benefiting behaviour.
Data doesn’t lose its value when used. This speaks for ensuring access to data. At the same time, data access must be weighed against data protection concerns, the preservation of trade secrets and incentives for generating data. Recent measures have focused more and more on data access. For instance, antitrust authorities have examined whether in cases of abuse data access could lead to more competition.
Platform and Data Economy Also Affects Conventional Companies
The tenth amendment to GWB stipulates that denying access not only to physical infrastructure but also to data may constitute an abuse of market power. It would be helpful to require dominant online platforms to provide users with data governed by the GDRP in real time on request. This could create new business models for accessing data. The economy of platforms and data affects not only digital companies but also conventional businesses. To make use of opportunities for technological and market-related changes, these companies must experiment with new approaches, internally and in cooperation with others.
But there is little experience with these new forms of cooperation. And it is often difficult to predict how antitrust authorities will view such cooperation on a case-by-case basis. Given this uncertainty, the reluctance of conventional businesses to cooperate with others on digital projects is understandable – and unfortunate. It would be better if the EU Commission offered a voluntary application procedure for novel forms of cooperation in the digital economy, so that companies could receive immediate input on whether their planned cooperation is legal. Steps in this direction are also planned in the tenth amendment to the GWB.
Right now, governments are adjusting the economic regulatory framework to better reflect the concerns raised by the digital economy: the regulation of dominant online platforms, increased access to stored data and the facilitation of new forms of collaboration between companies. As the digital economy continues its rapid development, the recent spate of expert forums devoted to competition in the digital age will certainly not be the last.
A longer version of this piece initially appeared on 22 October 2019 in “Die Welt”.
