Germany and France push forward with Big Tech crackdown, rather than waiting for EU-wide laws
Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.
Europe may be gearing up to crack down on Big Tech with a set of new laws covering antitrust and illegal content, but its most influential countries—Germany and France—aren’t hanging around to see how that works out.
On Tuesday, Germany’s competition regulator—the Bundeskartellamt, or Federal Cartel Office—gained the ability to restrict the activities of tech firms that are of “overriding importance across markets.” For example, a dominant e-commerce giant won’t be allowed to favor its own products over those sold by third-party merchants over its platform, or to stymie its competitors by withholding certain data from them.
This sort of market abuse was already illegal in Germany, as it is elsewhere in Europe—the crucial difference is that the German watchdog can now impose restrictions before the abuse takes place, rather than having to wait until after the fact. It can even intervene in cases where a company is not yet dominant in its market (the usual signal for antitrust regulators to pay attention) but is likely to become dominant soon.
The change was heralded late last week, when the German parliament approved an amendment to the country’s antitrust law.
The aim is to make it possible for regulators to keep up with the rapid pace of the tech world, where companies can gain tremendous power very quickly. In line with that goal, the amendment also speeds up the legal process for antitrust cases involving tech giants—when such a company wants to appeal against a Cartel Office decision, the case will go straight to Germany’s Federal Court of Justice, rather than first going through the Düsseldorf High Regional Court as is customary with most antitrust cases.
“The German legislator is an international pioneer here,” said Cartel Office president Andreas Mundt in a Tuesday statement. “Similar instruments are also being discussed at the European level, but the legislative process there is still at the very beginning.”
Indeed, in mid-December the European Commission unveiled a long-awaited proposal called the Digital Markets Act, which covers much the same ground as the new German law.
The Commission, which has already formally accused Amazon of using merchants’ data to unfairly compete with them, also proposed a Digital Services Act that would force the likes of Facebook and Twitter to be more transparent about their fight against disinformation and illegal content.
However, the European legislative process is a slow one. Now that the Commission has made its proposals, they will have to go to the European Parliament and the Council (representing EU countries) for amendment and negotiation. Then, once everyone has agreed on a final version, it will probably take some time before the new laws come into force. The whole process typically takes a couple years at least—and longer if a lot of lobbying is going on, which is likely to be the case here.
While Germany is jumping the gun on the antitrust front, France is doing the same regarding disinformation and hate speech.
Last weekend, the French government amended a bill on “republican principles”—which is mostly about combating Islamist extremism—to include content-moderation obligations for large online platforms. The amendment is extremely similar to the Commission’s proposal for an EU-wide law, requiring Big Tech firms to be transparent about how they are fighting illegal racism and homophobia on their platforms.
Cédric O, France’s digital economy chief, said in a tweet that the move was “in anticipation of” the EU Digital Services Act. The plan is to have the amendment expire at the end of 2023, by which time the DSA would supposedly be in place.
This is hardly the first time France has decided it can’t wait for the EU to crack down on Big Tech. Its insistence on pushing forward with new revenue taxes, affecting the likes of Apple and Amazon, has caused a major diplomatic clash with the U.S.—the Trump administration very nearly imposed massive tariffs on French goods in retaliation, but suspended that action last week.
Jumping the gun
Germany and France’s tactics are not going down well in some quarters.
One EU official told Politico Europe that, if the French are incorporating the Commission’s digital-services proposal into their national law so that the eventual EU-wide law doesn’t end up deviating from it, “then they are mistaken…It merely will make discussion at the Council level more difficult.”
Meanwhile, the Information Technology and Innovation Foundation (ITIF)—a reliably pro-Big-Tech think tank that counts Amazon, Facebook and Google among its backers—reacted critically to the German antitrust shift.
“Unfortunately, this initiative ignores both the need for European-wide regulations adopted in a concerted manner and the need to address Europe’s innovation gap,” grumbled ITIF senior policy analyst Christophe Carugati in a Thursday statement.
“The initiative not only runs the risks of soon becoming obsolete once these [EU] acts are adopted in early 2022, but it also constitutes a considerable political pressure on the Commission to regulate digital markets in a way consistent with the German perspective, irrespective of other national viewpoints.”