[INTERVIEW] Competition law and online platforms in times of Covid19 : 3 questions to Rupprecht PODSZUN

Rupprecht Podszun is a law professor at Heinrich Heine University Düsseldorf, Germany, and the director of the Institute for Competition Law. He has just written the expert opinion on platform regulation for ‘Deutscher Juristentag’, an influential association of lawyers in Germany. He is the Vice President of Ascola, the Academic Society for Competition Law, and an Affiliated Research Fellow with the Max Planck Institute for Competition and Innovation.
Interview by Rachel Griffin.

Do you think the Covid-19 crisis will strengthen big tech companies in the long term?

The other day, I met my neighbour on the stairs. We had not seen each other for months. She asked me what my partner and I had been up to, and I asked her, too. She said: The Covid-19 period has reduced me to functioning, it no longer feels as if I was an individual living life to the fullest! Everything has lost its colours, the only distinctive sign is the colour of your mask. (Hers and mine were of this indistinct hospital green.)

This is Corona: You do not go out anymore – where to? You do not see friends anymore. All activity is turned to passivity. The little excitements of your first video-conference and exercise in front of a screen are long gone.

Such a lifestyle strengthens Big Tech. Activities that take us away from our mobile phones and computers are dying down; creativity, drive and individualism seem to slacken. Europe has always been so proud of its city centres with shops and bistros and everything. Now, all the interesting shops are closing down, good restaurants are lost (well, you can still order your food from a delivery service… hooray!) and institutions for live performances of the creative arts will be battered for a long time. At the same time, we get used to functioning without going outside, glued to the screen, binge-watching, teaching and learning online, shopping online, communicating online, and reducing ourselves to passive consumers who can easily be ‘datafied’ and thereby steered through our lives. We have seen a development into this direction before, but as with other areas in society, Covid-19 has worked as an accelerator.

This is not meant as a criticism of the lockdown measures. I just try to paint a picture of the wider implications of this period. This obviously makes us more dependent on technology, not least since there is no exit plan for the post-Covid-19-period in Europe.

Apart from producing good online consumers, Covid-19 obviously leads to gains for several online companies. They have another advantage: Their deep pockets. Corona leads to a reshuffle in the economy, with a lot of chances for those who can buy up companies and who can fill the voids left by Corona. The Big Tech companies have the financial means to take over even more business in the long term.

As the EU prepares to introduce new regulation of online platforms in its Digital Services Act, what do you think should be its policy priorities?

Reflecting on the scenario I just put forward, I think that we as competition lawyers contributed in the past by reducing competition law and regulation to productive efficiency concerns. The focus on ‘consumer welfare’ put us on a wrong path, even though some economics obviously did help a lot in applying competition law in a meaningful way. But we lost sight of why we do competition law after all. My understanding is that competition enables us to decide autonomously about how to use our economic resources. That is what a market economy is about – sovereign decisions by free individuals.

In my humble opinion, lawmakers should have this in mind when dealing with online platforms today. That entails giving real choice to users, breaking-up lock-in effects in digital ecosystems and stopping the exploitation of personal data without consideration.

The EU is reportedly considering introducing new competition powers to enable more active intervention for ‘market optimisation’, preventing tipping points which lead to monopolies. Do you think this would be an effective way to rein in the tech giants?

‘Market optimisation’ is a term that I cannot relate to. I have lost any belief in an optimum or in perfection, at least for us mortals (maybe different with les immortels). Markets are a permanently developing forum that is never perfect, never reaches an optimum but is constantly moving. Public authorities should never try to ‘optimise’ them. Or anything, probably.

The New Competition Tool that the EU Commission is proposing seems to put the focus on lower barriers for enforcement. We can do a lot with Art. 102 TFEU once dominance is established, and if we can convince the courts that new cases may arise from time to time with new theories of harm. Dominance is a requirement that we interpret in a rather old-fashioned way. In my view, there is no doubt that some of the Silicon Valley companies are extremely powerful, yet whether they are dominant under our interpretation of the term may be a difficult matter. Addressing economic power is what competition law is about, so I welcome changes into that direction.

Convincing the courts becomes equally important. I am interested to see how judicial review is developing if the Commission’s powers are strengthened. Obviously, businesses need legal safeguards when institutions like the Commission test new tools. Yet courts also need to be open enough to adapt to new phenomena such as the unprecedented power of a few companies.

Having said that a major obstacle is the duration of proceedings – and that is a tough issue to tackle. Some ex ante regulation is necessary, as well as a thorough review of internal procedures at competition agencies and standards set for proving violations of the law.

Even if we have all that, I do not see the monopolistic positions created in the past tumbling quickly. The job is rather to stop the top companies from expanding into ever more fields (e.g. through platform envelopment). This is what the New Competition Tool seems to be designed for.

Other policies may be much more important for Europe: Investment in education, research, and innovation; better conditions for entrepreneurs; a vibrant culture of activity.

You can read more works by Rupprecht in his blog D’Kart or follow him on Twitter.