INTRODUCTION:
In recent years, antitrust regulators have been paying close attention to dominant tech companies and their practices, scrutinizing them for potential anti-competitive behaviour. The rise of dominant tech companies has raised concerns about their market power and potential unfair practices in relevant markets. The largest technology companies, such as Amazon, Apple, Facebook, Google, and Microsoft, have been the focus of multiple investigations, lawsuits, and fines related to antitrust violations. This issue has come under scrutiny once again with the recent actions of the Competition Commission of India, which imposed hefty fines on Google for violating antitrust regulations.
Antitrust laws are designed to promote competition and prevent monopolistic behaviour in the market. These laws are particularly important in the technology industry, where the dominance of a few companies can have significant implications for innovation, consumer choice, and economic growth. One of the key issues driving the crackdown on big technology companies is their control of data.
Companies like Facebook and Google have access to vast amounts of personal data, which they can use to target advertising and gain a competitive advantage. Antitrust laws are concerned that these companies may be using their control of data to unfairly dominate the market and limit competition.
Antitrust & Fair Competition Law in India: A Comprehensive Overview
The Competition Act 2002 governs antitrust and competition law in India. A key objective of the Act is to prevent practices that may harm competition, restrict trade, or result in monopolies. It encompasses both anti-competitive agreements and abuse of dominant position, ensuring a level playing field for businesses.
India's competition law history began with the Monopolies and Restrictive Trade Practices Act (MRTP Act) in 1969, aiming to prevent economic concentration and restrictive practices. After economic liberalization in 1991, a more responsive competition law was needed. In 2002, the Competition Act was enacted to regulate anti-competitive agreements, abuse of dominant positions, and mergers. The Act came into force in 2009, with merger control provisions implemented in 2011.
CONCERNS REGARDING BIG TECH COMPANIES:
Consumer Surplus
An underappreciated empirical observation is that products in large tech companies’ ecosystems generate large consumer surpluses—the difference between the price a consumer pays for an item and the price they would be willing to pay.
Google Search, Gmail, Apple’s Safari, Apple and Google Maps, Amazon’s cataloging, and Meta’s Facebook, WhatsApp, and Instagram products are free at the point of use and offer time savings, better product matching, or substantial online entertainment. A range of other free products and services are often bundled with pay‐for products on the platforms too.
These observations do not prove that Big Tech platforms never engage in harmful, anti‐competitive conduct. It is theoretically plausible that customers would have seen even better services, more innovation, and cheaper advertising if anti‐competitive acts were eliminated in markets where these firms had a large dose of monopoly power.
Yet the obvious value creation we’ve seen suggests we need convincing evidence that breaking up these companies or restraining their conduct would substantially benefit consumers. Indeed, the obvious network effects of search, social media, and online marketplaces—the idea that the utility of a platform to a user increases with the total number of users—imply that a company having a high market share might be efficient, rather than a problem.
Skepticism of Antitrust
Existing antitrust legislation and its enforcement should not be immune from criticism. Old, murky statutes and conflicting case law mean that, over long periods of time, business practices risk becoming treated as violations, creating uncertainty for businesses.
Political power and ideological interpretation of law infuse much of antitrust’s historic application. Actual cases often hinge on very contestable concepts, such as how to precisely define the scope of the relevant market for the product in question. The Brookings Institution’s Cliff Winston, in a detailed review, found scant evidence that the real‐world application of antitrust policies with regard to monopolization, mergers, and collusion has done much to improve consumer welfare over time.
That said, the application of antitrust laws could be so much more economically dangerous than we have seen in recent decades. Over the past 40 years, enforcement has at least been largely based on the consumer welfare standard that seeks to judge tangible harms of conduct or mergers through the prism of economic efficiency.
Before this economic focus, a “big is bad” default assumption about companies permeated case law, with firms deemed violators based on their market concentration, while preferential downstream contracting or bundling of products by firms was often just assumed to be anti‐competitive, despite the possibility of benefits to consumers.
The result was a range of decisions in which the complaints of business competitors were prioritized over consumers’ interests. This response left the laws open to abuse and corporate rent seeking, with subsequent empirical studies finding that lots of behavior deemed anti‐competitive would have reduced prices or improved product quality.
The Big Tech Reform Push
Big Tech’s critics have struggled both to show that these companies monopolize actual relevant product markets and to prove that their conduct harms consumer welfare.
Adamant that these firms are dangerous to economic well‐being anyway, campaigners argue that Big Tech’s purported power is itself proof that the consumer welfare standard is an inadequate metric for judging their conduct, or that inherent features of these digital platforms mean that consumer harm is likely in the future if these companies are allowed to continue unchecked.
As a result of these starting points, reform proposals have included abandoning the consumer welfare standard; outlawing a range of business conduct and putting the burden of proof on defendants to defend or justify why it is necessary; creating a new federal regulator to manage competition for digital platforms; breaking up digital firms over a certain size, irrespective of the impact on consumers; and imposing merger bans for specific firms in certain markets.
Worse still, many such proposals would create a two‐tier legal system whereby online digital tech companies with a certain number of users or degree of market capitalization face a different regulatory regime for business conduct or merger activity than smaller firms or those in other sectors. This approach would clearly distort competition, not enhance it.
Monopoly Fatalism
History suggests that any long‐term monopoly fatalism about Big Tech companies is misguided. Throughout the 20th century, the Great Atlantic and Pacific Tea Company (A&P), Myspace, Nokia, Kodak, Apple’s iTunes, Microsoft’s Internet Explorer, and more were all said to have strategic economic advantages that meant they had unassailable dominance. The clear lesson is that reining in companies on the basis of speculative projections of future harms would be extremely foolish.
In the face of the longer‐term forces of creative destruction, the welfare gains from attempting to eliminate all forms of wrongdoing and their static inefficiencies are likely to be small.
Keep Antitrust Focused on Economics
Finally, policymakers should recognize that antitrust and competition laws are bad tools for dealing with noneconomic issues, such as privacy, national security, free speech, and political influence.
Many Big Tech critics write as if it is obvious that tougher antitrust laws would improve these outcomes. The mistaken belief is that tougher antitrust enforcement would deconcentrate markets and thus foster more competition to weed out platforms with undesirable user policies.
But there is no inherent economic reason we should expect this result. Larger companies that can invest in expensive technologies might be more efficient in dealing with bad actors online. For example, one might imagine Google is better placed to keep YouTube “clean” than if the site had remained an independent company.
These five companies, ie- Apple, Microsoft, Google, Facebook and Amazon-- touch all of our lives in some way — sometimes in ways we aren’t even aware of, perhaps buried in the infrastructure of the internet that we use all the time. Many people don’t quite understand what they’re being accused of, what antitrust laws are or what they do, and why it’s not as simple as “break up Big Tech” or “let the market decide.”
Apple is the king of premium phones, tablets, laptops, and watches. It’s also the king of vertical integration: It owns the iPhone, the operating system, and the App Store, which is the only way outside developers can get their apps on iPhones. Apple even makes some apps of its own. Now, the company is accused of abusing its control over its mobile devices to harm competition, stifle innovation, and inflate prices. Apple says it’s just giving its customers what they want and expect.
Amazon dominates the e-commerce world and has a very profitable cloud computing arm, but some say that dominance has come at a price, paid by businesses that rely on its Marketplace platform or sell directly to Amazon, warehouse and delivery workers, and consumers. Now, the company is facing antitrust lawsuits and complaints in the US and abroad, and the threat of laws that would forbid it from preferencing its own products.
Microsoft is one of the most valuable public companies in the world but it has largely been left out of the Big Tech reckoning, perhaps because it had its own version two decades ago. Does it have enough goodwill banked now to get its latest acquisition — the biggest in its history — through?
Facebook, now known as Meta, is the social media giant. It makes billions off of targeted ads based on our data and is accused of spending some of those billions to acquire potential competitors, either to kill them off or use them to secure its dominance.
Google is so interwoven into the fabric of the internet that it’s literally synonymous with internet searches. It dominates the world’s smartphone operating systems, web browsers, email providers, search engines, and the digital ad market. Allegedly abusing this dominance has led to billions of dollars in fines for antitrust violations abroad and antitrust lawsuits from almost every state attorney general in the United States as well as the Department of Justice.
Conclusion:
Big Tech companies have been under attack from a new antitrust movement that sees them as anti‐competitive monopolies. In actuality, these firms all run large ecosystems of activity or platforms that have produced significant value to consumers, and they compete with one another across numerous different domains.
Critics appear to think that tech platforms are inherently different from other industries, or that their dominance justifies overhauling antitrust laws or enforcement entirely. Proposals for reform are numerous, but one common feature is for a shift away from judging these businesses’ conduct according to the consumer welfare standard. Although current antitrust laws are flawed, this shift would risk undermining the competitive market process, eliminate options that consumers prefer, and quell innovation in the digital sector.
BIBLIOGRAPHY
Written By,
Ishika Fatnani,
Intern, Chanchlani Law World
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