Journal : Global Times (Chinese) Date : Author : Lee Kun Ding Kuaiqing, Special Correspondent in the US and Germany Page No. : NA
URL : NA

On the 15th instant, the European Union announced an draft important bill regulating digital services — the “Digital Services Act” and The Digital Market Act — in order to strengthen content supervision and safeguard free competition. These two bills are considered to be directed against US Silicon Valley giants such as Google, Amazon, Apple, and Facebook. Before the EU prepared legislation to say “no” to “power-abusing giants”, the United States has also escalated the tug of war between regulators and the largest technology companies, as e.g. the US Federal Trade Commission and a 46-state cross-party group. On the 9th, a wide-ranging antitrust lawsuit was filed against Facebook, accusing the social media giant of acquiring or crowding out emerging technology companies that might one day become its competitors. Why is the anti-super network platform monopoly in Europe and America so urgent? Fang Xingdong, Dean of the Institute of Internet and Society at Zhejiang Institute of Media, told the Huan Qiu Shi Bao reporter that as long as these Internet giants harm competition, innovation and the interests of consumers, they should be acted against for antitrust. There are also German cyber policy scholars who said that when these digital platforms not only possess super market power but also super political power, it will naturally make decision makers in European and American countries come down upon them.

Don’t want “the dragon slayer warrior to become the evil dragon”

“What does it mean for the EU to legislate to strictly regulate digital platforms?” Deutsche Radio said on the 21st that for many years, debates about how to regulate large Internet platforms have existed, and the new bill proposed by the EU not only has a profound impact on the regulation of these platforms, but will also change the ecology of the global Internet. Related reports also said: “The most important thing is that the most powerful technology companies will have less voice on the Internet, while small and medium Internet companies and governments will have more voice”.

Prior to this, the US Federal Trade Commission (FTC) lawsuit held that Facebook’s acquisition of WhatsApp and Instagram was unfair and ultimately caused harm to consumers. Facebook is just the second technology giant to face major legal challenges in the United States recently. On October 20, the U.S. Department of Justice and 11 states announced an antitrust lawsuit against Google Inc., requesting the court to rule that Google’s actions in maintaining search and search advertising are illegal, and that Google’s exclusive deal with mobile phone manufacturers protects its monopoly position. According to Bloomberg News, the combined antitrust lawsuits against Google and Facebook are the largest monopoly case since the US Department of Justice sued Microsoft in 1998.

“The European Union wants to limit the market power of technology giants.” The German “Stuttgart News” reported on the 18th that the last time the European Union formulated “comprehensive rules of the game” on digital services and online platforms was 20 years ago. At that time, there were still some small and medium-sized Internet companies in Europe competing with American giants, but now, almost all European Internet ecology is monopolized by American super platforms. According to media outlets, the EU’s current digital plan is aimed at US technology giants such as Facebook, Google, and Amazon. “This is related to the values ​​of the EU and the future of the EU’s digital economy”.

The New York Times report also combed that since June 2019, US federal regulatory agencies began to increase investigations into Google and Facebook. “Even an antitrust investigation of Google in the search field can be traced back to 2013.” The report also said that the US states have a long history of challenging large technology companies. In the “milestone” antitrust lawsuit against Microsoft 20 years ago, state attorneys general played a vital role.

“In short, those startups that were at a disadvantage but high-spirited and dared to challenge the status quo have become monopolies that only existed in the era of oil tycoons and railroad tycoons”. On October 6 this year, the U.S. House of Representatives Judiciary Committee released an antitrust investigation report on the four major technology giants of Google, Facebook, Amazon and Apple, which seemed to remind the public not to forget that “the dragon slaying warrior can become a dragon”.

Some media concluded that every 20 years or so, the U.S. government would raise the banner of antitrust against a technology giant: In January 1969, the U.S. Department of Justice officially filed an antitrust lawsuit against IBM, believing that it had a monopoly. The mainframe market hindered healthy competition. This game continued throughout the 1970s. It wasn’t until 1982 that the case was dropped due to a “no legal basis” sentence; in May 1998, the US Department of Justice and 20 state attorneys general Sued Microsoft for violating the “Antitrust Law”, claiming that Microsoft illegally prevented other software vendors from competing with it, but this cross-century lawsuit did not let Microsoft fall into the fate of being split. Today, the “sword of Damocles” from the US government has fallen on the heads of Internet giants such as Google and Facebook.

“This is related to the upgrading of technology.” Fang Xingdong, Director of the Internet and Society Research Institute of Zhejiang Institute of Media and Communication, told the Huan Qiu Shi Bao reporter that technological change is basically one generation every 10 years, but the cycle of industrial change is generally 20 years. “Because the first 10 years are an upward cycle, and the second 10 years are a mature period, the general anti-monopoly starts when the technology is relatively mature, so the anti-monopoly wave in the United States is generally a 20-year cycle.” Fang Xingdong It was pointed out that IBM is the monopoly giant in the mainframe era, Microsoft is the monopoly giant in the PC era, and the current giants such as Google, Facebook, Amazon and Apple dominate the mobile era. “The next 10 to 20 years may focus on the field of artificial intelligence. There will also be new monopoly giants”.

“A rare consensus of the two parties in the United States”

When commenting on China’s measures to strengthen anti-monopoly and prevent the disorderly expansion of capital, the U.S. Quartz Finance Network said: “In terms of restricting the ‘concentration of power’ of a few technology monopolies, Beijing is not the only party showing strong will. The same is true of the European Union.

“Today’s technology giants are too big, too strong, and too profitable”. Bloomberg reported that governments have no choice but to bring these companies to court, pass new competition laws and even split them up. They have initiated started a head-on contest. The article also quoted a German congressman as saying: “The big ones are getting bigger and bigger, but not getting better”. Some US media said that through a series of acquisitions, Facebook and other “tech oligarchs” have now accumulated unusual market control. Today’s technology leaders are only accountable to shareholders, but their companies are “rich as the enemy”. For example, the revenues of Apple and Amazon in fiscal year 2019 were as high as 260.2 billion and 280.5 billion US dollars, which exceeds the GDP of some countries.

The “New Republic” magazine of the United States believes that “worries about the power of big technology companies are one of the few points on which the Democratic and Republican parties of the United States can reach consensus.” The New York Times published an article on the 9th that the investigation has led Google to be prosecuted by the US Department of Justice two months ago. Although the prosecutor no longer asked to split Google in the prosecution, the Republican and Democratic parties will at least file another prosecution against Google by the end of this year.

Song Guoyou, Deputy Director of the Center for American Studies at Fudan University, believes that the current drawbacks of the monopoly of the US Internet giants are becoming increasingly apparent, including excessive abuse of dominant position, infringement of information, and suppression of innovation. He told the “Huan Qiu Shi Bao” reporter, “The United States is raising the banner of antitrust at this time, which also reflects that the US government has become more and more aware of the negative aspects of Internet giants”.

The US and Europe’s anti-monopoly guns against super-internet platforms sounded almost simultaneously, but some analysts believe that the EU’s regulation of technology giants is more for defensive purposes, while the US’s regulation is partly for market purposes and partly for political purposes. In this regard, Fang Xingdong’s view is that the anti-monopoly logic of the United States and Europe is roughly the same, that is, monopolistic behavior harms competition, innovation and consumer interests, but this time the two sides have different focuses. He told the “Huan Qiu Shi Bao” reporter that the EU’s anti-monopoly measures are largely focused on the protection of human rights and values, and the most sensitive thing in the United States is the destruction of the US democratic political system caused by the monopoly of Internet giants. The two recent U.S. election have had a great impact, such as the phenomenon of “fake news”, that has never been cured. Fang Xingdong said: “The problem of the Internet super platform has surpassed market competition and economic problems, and has profoundly affected the entire social and political order”. He also mentioned the “Arab Spring” of  10 years ago when the United States advocated free flow of information, hoping to subvert the regime of other countries through social platforms such as Twitter.  But now, social platforms are beginning to turn upside down to affect the political operation of the United States.

In an interview with the Huan Qiu Shi Bao reporter on the 21st, Berlin Internet policy scholar Stefan Vihain also said: “Now, there are almost no laws in the world to restrict US super-network platforms. They not only have supermarket power, but also super political power. To a certain extent, its power has surpassed the governments of many countries, and may even evoke a “color revolution”. It is not difficult to understand why even US President Trump and Congress look at these platforms with a not so pleased eye and take restrictive measures”. He believes that this anti-super-network platform monopoly started in the West and is a movement “from top to bottom”. Vihain also emphasized: “The European Union has set an example for the world. In the future, more countries will formulate similar rules to oppose the monopoly of US technology giants”.

Talking about the future trend of anti-monopoly issues, Song Guoyou said that even if these Internet technology giants will not face the fate of being split, they will definitely be restricted. This is the consensus of the world’s major economies. But he also said that whether it is Europe, the United States or China, the government and legislators still have to face how to better develop the digital economy. Therefore, it is necessary to carefully strike a balance between antitrust and global competition to protect domestic companies.

Split the giants? The EU knows that it is not realistic

“Can global antitrust actions challenge the big technology companies? Or, as in the past, will the EU’s actions against monopolistic giants such as Microsoft and Google only be fines ?” An article on the US Council on Foreign Relations website also raised this question. Worried about the slow implementation of anti-monopoly law enforcement, it is difficult to directly restrict technology companies. The British “Financial Times” article believes that the warning issued by the “Digital Markets Act” is that technology companies that have been fined three times within 5 years will face demands for splitting. This shows that the European Union recognizes that the existing competition laws are imperfect and have failed to contain Silicon Valley giants. And the Harvard Kennedy School of Government scholar, Deepayan Ghosh, and the London School of Economics and Political Science Professor Nick Kawudri recently wrote in the “Washington Post” that “the prosecution of Facebook is not enough”, it is the company’s business model that is the problem. The lawsuit against Google in October and the current lawsuit against Facebook both relied on the “narrow antitrust model” of how digital platforms should be regulated, and therefore failed to solve the most important problem: acceleration of toxic content by large tech companies, i.e. the negative social side effects brought about by the basic business model of communication.

Regarding the legislation to be drafted by the European Union, Google Europe Business and Operations President Matt Brittin told the Frankfurter Allgemeine Zeitung in Germany on the 21st: “The two EU bills are truly important basic steps for European digital development in the next 20 years. This is welcome. Protecting innovation and strengthening the digital single market are the main goals we clearly support, but the details are decisive, and we hope that the EU will remain open”. There is also speculation in the German media that these giants will step up their lobbying for the bill. It can be changed, because “Google, Facebook, Amazon, Apple and Microsoft have already spent 19 million euros in lobbying in Europe in the first half of 2020”. It is also said that, after all, these laws are not expected to be approved until 2022, because the European Commission must finalize the final bill together with the 27 member states and the European Parliament. But for the lawsuit filed by the US Department of Justice, Kent Walker, Google’s senior Vice President of legal affairs, previously responded that the lawsuit has “serious flaws” and is not beneficial to consumers, so Google will stick to its position. Facebook CEO Zuckerberg also regarded the split of the company as a “life or death” threat and vigorously defended the relevant allegations.

“Bloomberg Business Weekly” analyzed that the future of the US Internet technology giants may not be easy because “The Federal Trade Commission is trying to achieve something that has never happened in 40 years: the disintegration of one of the largest companies in the United States. The last American giant to be split was AT&T (American Telephone and Telegraph Company) in 1984”. On the Internet, some people believe that the government needs to break up giants such as Facebook and Google, and others call for stricter regulations to restrict the use of data by these companies. In Fang Xingdong’s view, in view of the new type of monopoly presented by the Internet platform, the split may not necessarily solve the problem fundamentally, and may even backfire. He told the “Huan Qiu Shi Bao” reporter that generally speaking, antitrust measures are usually through huge fines or structural adjustments, that is, splitting, but several US Internet platforms, including Facebook, are very large. Forced to go in for independent development, they may turn into several new super platforms because each has a strong network”. Fang Xingdong said that in the past, Europe has been leading the world in Internet anti-monopoly, but its anti-monopoly measures are generally restricted to fines.  And did not take more radical measures such as splitting. One of the important reasons for this is that these giants are not based in the EU but in the United States, and fining is relatively operable. “The EU’s approach is to immobilize the structure and target only behavior”, Fang Xingdong said. (But)”If you want to break up these giants, it would stretch the EU too much, and the EU should know that this would be unrealistic”.

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