Tech Giants Risk Extra EU Scrutiny as Report Raises Concerns

(Bloomberg) -- The European Union’s antitrust regulator should keep up tough enforcement of big technology firms, according to a team of experts hired to guide the watchdog’s future work.

"Under-enforcement in the digital era is of particular concern because of the stickiness of market power" when a small number of firms can quickly crowd out rival services, the European Commission was warned in a report published Thursday.

Powerful internet firms could be ordered to share essential data as an alternative to breaking them up, academics Jacques Cremer, Yves-Alexandre de Montjoye and Heike Schweitzer suggested in the report.

Margrethe Vestager, the EU’s antitrust chief, is trying to address a growing clamor to move against big tech and stem a tide of disruptive digital innovation. She’s tried to forestall this by asking the experts to identify problems and recommend whether the EU’s competition law tools need to be updated. Any decisions on changes are likely to rest with her successor after she is due to step down later this year.

"We may need to step in if powerful companies are trying to make it harder for people to multi-home" by using multiple services at the same time, Vestager told a gathering of smaller European competition authorities in Bucharest, Romania. Regulators "will have to stay alert to new ways companies can use their power to drive out competition" and shut down opportunities for others.

While the EU closed its last big tech probe with a third fine for Google last month, Vestager told reporters she was hoping to move forward with an Inc. investigation before her term is due to end. The next step would likely be the start of a formal investigation that could eventually lead to a fine or an order to change behavior.

The report urges enforcers to remain skeptical of big tech firms, saying they "may want to err on the side of disallowing potentially anti-competitive conducts" and require such firms to show any benefits. That’s especially the case where a company is trying to expand into new markets "growing into digital ecosystems, which become ever more difficult for users to leave." Strategies that lock in customers should be forbidden if there aren’t clear consumer advantages.

"Requiring dominant players to ensure data interoperability may be an attractive and efficient alternative to calling for the break-up of firms" which would allow consumers benefit from the variety of services offered by big companies, the report says.

Data protection rules don’t prevent powerful firms from being mandated to allow users’ data to be moved from rivals, the experts said. "more stringent data portability." Orders to share data access or data interoperability "may need to be imposed" under strict terms if a firm isn’t aiding rivals providing complementary services, like after-sales.

The report doesn’t call for changes in how the EU handles mergers despite officials’ concerns that their revenue thresholds for filings miss deals where target firms make no money, such as Facebook’s takeover of WhatsApp. They do call for extra scrutiny of deals that might allow a technology platform take over an emerging mini-rival.

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