German competition guardians Face to face with Google, Apple & Co.

Status: 23.06.2021 3:56 p.m.

The big tech companies from the USA are becoming more and more powerful all over the world. There are also new players from China. The Bundeskartellamt does not just want to accept market power.

From Sebastian Tittelbach, WDR

For a few months now, one hears an abbreviation more frequently in the office corridors of the Federal Cartel Office: GAFA. They are the first letters of the really big ones: Google, Apple, Facebook and Amazon. And Bundeskartellamt President Andreas Mundt has all of these in his sights. “We are talking about the most powerful companies in the world. We’re getting very strong companies in China – so this is by no means an American event, it’s a global trend.”

New rules have been in effect since the beginning of the year

German competition law changed at the beginning of the year. Since then, the cartel watchdogs have been able to take action against Internet companies more easily. And the 400-person authority from Bonn does not shy away from tech giants from overseas worth billions. “It’s not about throwing sand in the machine”says head of the authorities Mundt. “Our aim is simply to end anti-competitive behavior at these companies.”

Amazon already had to reorganize its marketplace under pressure from the Federal Cartel Office. Amazon has given the smaller retailers who offer their goods there more rights. The Federal Cartel Office is currently taking a look at Apple. “We know what kind of universe Apple maintains, and I personally see it that way that restrictions of competition are possible”, so Mundt. “And now let’s see how this process develops.”

The pandemic is leaving its mark

The corona pandemic did not leave the Federal Cartel Office completely without a trace. In 2020, the investigators only went out for a single search – for reasons of hygiene, the head of the authorities said: “We were out last summer, and we’re honestly looking forward to going back out now, if the numbers allow.”

Even without searches, the Bonn authorities found enough evidence to punish companies. She imposed 349 million euros in fines last year. Half a billion less than in 2019, but still well above the long-term average. Above all, steel and aluminum forges, manufacturers of street sewer castings, such as covers made of cast iron or concrete, and wholesalers of pesticides have to pay. Elsewhere, the cartel watchdogs were more flexible because of Corona: in the automotive industry, for example, they approved collaborations between companies so that the supply chains did not collapse completely in the pandemic. “Then other cooperations are possible between companies where you might have concerns outside of the pandemic, then say in the pandemic: The economic situation is such that you can and must cooperate”, explains the head of the Cartel Office, Mundt.

High hopes, more work

He has great expectations of the new competition register, which was launched in the spring. “The competition register is simply about registering companies that owe something. Violation of minimum wage et cetera.” Such companies can be banned from public tenders for three to five years.

The Bundeskartellamt expects more work on merger control in the current year. Because of the pandemic, there could be more company mergers. The cartel office will examine such mergers without any corona bonus, announces the head of the authorities Mundt. Because when companies merge, it is usually forever – but hopefully not the corona pandemic

Icons of Google, Amazon, Facebook and Apple on mobile phones. Photo: VNA Washington has proposed a global minimum corporate tax rate of 15%, lower than that proposed by the Group of Top Industrialized Countries (G7), but higher than some other countries such as Ireland. But the UK is still concerned that this plan does not go far enough to tax giant technology corporations such as Amazon, Google and Facebook. In a recent statement, Mr. Sunak emphasized the importance of fair taxation for technology corporations and called on the US and G7 countries to discuss this issue next week. The meeting of G7 finance ministers is expected to take place from June 4-5. According to Mr. Sunak, companies like Facebook also want to solve this problem, which can bring certainty and stability to them. Besides, Mr. Sunak also mentioned that the UK is considering a separate online sales tax, when large multinational corporations, especially digital corporations, do not pay taxes in the right places, right place and this is not fair. In 2015, member countries of the Organization for Economic Cooperation and Development (OECD) agreed in principle to a plan to prevent multinational corporations from evading taxes by moving their headquarters to countries with low tax rates. . Despite years of negotiations, progress has been insignificant. However, discussions have been revived with the recent proposal of US President Joe Biden. Recently, the US government has proposed to the OECD a tax rate of at least 15% for multinational corporations. This is the first time the US has officially proposed a global minimum tax rate. France and Germany have voiced their support for the US proposal for a global minimum corporate tax rate of 15%, and expressed hope for an early breakthrough in negotiations on this issue.

The above proposal is one of several to address a shortcoming in the Voluntary Code of Practice on Misinformation released in 2018 and signed by Google, Facebook, Twitter, Microsoft, Mozilla and TikTok. this switch. Google and other big tech firms will have to commit to limiting ‘ad embedding’. The EC wants platforms to tighten eligibility requirements and content review processes for programs to monetize content and share advertising revenue on its service to prevent the participation of competitors. posting content that is systematically considered disinformation. In contrast, ad technology companies must define the criteria used to place ads and apply measures to verify ad placement. The EC also wants companies to clearly and specifically label advertisements (related to politics or other areas, etc.), and distinguish them as paid content. The newly updated code also provides for the first time key performance indicators to allow authorities to verify that these companies are living up to their commitments. The EC will publish the updated Code of Conduct on May 26.

According to the Bloomberg Chinese tech giants like Jack Ma’s Alibaba and Tencent Holdings operate similarly to America’s Facebook and Alphabet. They mine user data to refine digital services. Data strengths will lead to better products. As a result, large technology corporations become richer, more powerful and easily dominate the market. Over the years, the Chinese government has gone further than the rest of the world in tightening control of the Big Tech group. In March, Beijing publicly plans to “rule” platform companies that accumulate data to monopolize and swallow smaller competitors. Chinese authorities fined Alibaba $ 2.8 billion for abusing their dominant market position. Dozens of other major Internet companies also spent a month correcting their anti-competitive practices. China is tightening control of major tech corporations, including Alibaba and Ant Group of billionaire Jack Ma. Photo: Reuters. Risk of nationalization of data Beijing is pouring money into digital infrastructure, drafting new data usage laws, and building new data centers across the country. China’s goal is to be at the forefront of economic transformation in the coming decades. “It’s not a short-term initiative. China really sees data as an economic engine,” said Kendra Schaefer, Head of Digital Research at Trivium China. According to the China Institute of Information and Communication Technologies, China’s digital economy grows much faster than GDP in 2019. Market research firm IDC predicts China will hold about 1. / 3 of the world’s data in 2025, or about 48.6 zettabytes, 60% more than the US. The Chinese regime’s challenge is to get big tech companies to join. Those are the organizations that hold the most data in a country of 1.4 billion people. Companies like Alibaba and Tencent have benefited when China blocked foreign companies like Google and Facebook. Now, they have to share those benefits Professor Zhao Yanqing At a Chinese economic forum, professor Zhao Yanqing at Xiamen University pointed out that big tech companies have to nationalize data. “Companies like Alibaba and Tencent benefit when China blocks foreign platforms like Google and Facebook. Now, they have to share those benefits,” he added. However, most analysts say that is unlikely. Nationalization of data can hamper innovation. Beijing is in need of technological breakthroughs as the US works with its allies to prevent China from making new strides. “China needs highly competitive companies,” said Associate Professor Lizhi Liu at Georgetow University. “Nationalization of data will hurt technology companies. If data is taken away, they also lose their motivation and ability to innovate,” the expert added. Beijing’s difficult position In recent years, Chinese lawmakers have turned their attention to security. According to a law in 2017, authorities will have access to most personal data when necessary, even requiring foreign businesses to store data of Chinese customers in the country. Chinese leaders are now stepping up the use of big data to improve government services. Firefighters can use data to respond more quickly to calls. Hospital data will help track people down and prevent Covid-19 from spreading widely. Data lays the foundation for everything from smart cities to financial regulation to surveillance activities against dissidents. The Chinese authorities are also developing the digital yuan, competing with Ant Group’s Alipay and Tencent’s WeChat Pay. These two platforms now dominate the Chinese mobile payments market. Ant Group’s Alipay and Tencent’s WeChat Pay now dominate the Chinese mobile payments market. Photo: Reuters. The digital yuan will allow the People’s Bank of China to collect huge amounts of data about people’s transactions. Authorities have also made significant progress in the corporate social credit measurement system, from paying taxes, protecting the environment to product quality. The Chinese authorities insist that they will not force businesses to deliver data. “As for the use, development and exchange of data, we are still exploring the mechanisms,” said Hu Jianhua, deputy general manager of the Guizhou Big Data Development Administration. “Enterprises have ownership of the data. We encourage, but do not force them to, disclose the data,” he added. Data privacy is China’s “biggest obstacle” in dealing with the tech giants Expert Angela Zhang of the University of Hong Kong Another solution is that the government also invests in businesses. Last month, Bloomberg reported that China has proposed to set up a joint venture led by the People’s Bank of China (PBoC) with major technology corporations. The joint venture will monitor the data of hundreds of millions of users. Financial Times reports that billionaire Ma’s Ant Group declined the proposal. However, according to Bloomberg , a few years ago, when not agreeing to share data with the PBoC, Alibaba and Tencent faced many troubles. “Data privacy is China’s ‘biggest stumbling block’ in dealing with the tech giants. There is a conflict in protecting user privacy and fostering competition among these giants. Different backgrounds, “commented Angela Zhang, director of the China Law Center at the University of Hong Kong. China’s biggest companies are also looking to reduce damage from Beijing’s new rules. After Alibaba’s investigation is over, CEO Daniel Zhang said the company will continue to work with the data privacy regulator. Last month, Tencent’s Pony Ma proposed stricter rules for Internet businesses, including Tencent. He also has a “voluntary meeting” with the country’s antitrust agencies.

Google faces many legal challenges globally, especially in Europe. The European Commission (EC) fined this giant billions of dollars in three different lawsuits and were appealed by Google. In any case, the world’s largest search company denies misconduct and maintains a view that they make choices that benefit consumers. Since 2010, the EU has launched three different antitrust investigations against Google, involving Google Shopping, Google AdSense and Android, resulting in three fines of nearly tens of billions of dollars. At the same time, Google must adjust its behavior to comply with regulatory requirements. On October 10, 2010, the EC officially investigated Google’s behavior in accordance with Article 9 of Regulation 1/2003 after receiving complaints from ICOMP Organization and a number of other companies. They complain that Google changed its Universal Search algorithm to promote Google Shopping products on the search results page, lowering the ranking of competitors. Therefore, they believe that Google discriminates against, anticompetitive through presentation of search results, depriving users of the ability to choose products and services. On June 27, 2017, Google was found guilty and convicted a fine of EUR 2.4 billion (2.7 billion USD), is the largest penalty for an abuse of monopoly at that time. Google denies the accusations and claims their services have helped the region’s digital economy grow. The penalty is equivalent to 2.5% of Google’s 2016 revenue. Currently, the company in the appeals process wants to mitigate or overturn the penalty. In addition, the EU Competition Commission (EUCC) decided to oversee Google’s PageRank algorithm. Google is responsible for reporting to the EUCC every 4 months. After being penalized, Google split the Google Shopping shopping service into its own company, operating independently. A year later, the EC fined Google again for forcing Android device manufacturers (OEMs) to install Google Search and Android suite of apps. The EC investigates Google based on two lawsuits, one from FairSearch, and one from Aptoide. FairSearch is a consortium founded in 2010, initially consisting of travel-related websites such as Expedia, TripAdvisor, and then a number of big names such as Microsoft, Nokia, Oracle. In April 2013, they filed a lawsuit against the EU, denouncing Google’s behavior with its Android operating system in violation of the EU’s anti-competition law. Meanwhile, Aptoide was filed in June 2014. Aptoide is an Android app market, competing with Google’s Play Store. Aptoide emphasizes Google’s approach making it very difficult for services like them to be installed on users’ devices. In addition, some components that used to belong to the Android Open Source Project have been migrated to the Google service suite, including Gmail, Google Maps and Play Store. So, on April 15, 2015, the EC started an investigation into Google based on the above two lawsuits. Google argues that what it does with Android is no different from what Apple, Microsoft do with iOS and Windows Phone. Device manufacturers can still release an Android phone without the Google suite of apps. On July 19, 2018, the EU declared penalty Google 4.3 billion EUR (5 billion USD). Google appealed in October 2018. According to a company spokesperson, Android makes more options available to users. This is by far the largest penalty imposed by the EU for a company for its anti-competitive behavior. Google has changed the way apps are distributed in the EU, charging OEMs for Play Store access, and in return OEMs no longer have to install Google Search and Google Chrome. In March 2019, Google said European Android users can choose which browser and search engine they want to use on the device. Most recently, March 2019, EU Google penalty 1.49 billion EUR (1.7 billion USD) for preventing competition in the online advertising market. The commission said Google had an exclusive contract with website owners, preventing them from cooperating with Google’s competitors. The investigation involved Google search-mediated search boxes and display ads. These ads are provided by Google AdSense for Search. This is a division of Google that allows websites and apps to monetize search ads. Google’s terms for website owners change over time, from a 2006 monopoly to a “flexible monopoly” a few years later. But EU authorities still believe it hurts competition and allows Google to control how competitors display their search ads, including the size, colors and fonts they use. According to Competition Commissioner Margrethe Vestager, this is a legal offense under EU law. That behavior lasted more than 10 years and deprived other brands of competitiveness, innovation as well as the interests of users. Google stopped using exclusive contract terms in 2016 only after the EC made a formal objection. In June 2019, the company announced an appeal. However, the three above-mentioned penalties do not seem to “disgrace” anything to Google. Shares of Alphabet, the parent company Google, are still growing close to 30% in 2020. Investors seem accustomed to the oversight of countries with Google. Not to mention, the prolonged legal process also makes the authorities tired. The effect that the punishment brings is not clear. For example, despite the change in Google Shopping, less than 1% of service traffic is diverted to other shopping websites. Therefore, the EC is about to overhaul digital regulations, related to the business models of companies like Google. They want Big Tech to be more accountable for content across platforms and ensure that competitors have a chance to compete with the big boys. It is expected to make a big change in business practices, even Big Tech’s business model. Law professor Ioannis Kokkoris from Queen Mary University said this is a move that shows the EU wants to strengthen its leadership position in the enforcement of the technology market. Many other national competition authorities will follow. Meanwhile, Alec Burnside – partner of the law firm Dechert – said that the new EU proposal reflects the increasingly recognized government must have new power to deal with technology giants. For its part, Google or another company may use legal process to highlight the negative impact of regulation on innovation and the overall economy, making the final regulation less stricter than the proposed ban. head. Other than lobbying, however, there is nothing they can do about it to discourage new regulation in the short term. Du Lam (Synthetic)

Alibaba was fined $ 2.8 billion for alleged monopoly.

JD.com, Meituan and ByteDance lead China’s first group of Big Tech companies to commit to complying with the law after China Market Surveillance Agency (SAMR) asked them to “learn lessons” from Alibaba. Group Holding in Beijing’s latest antitrust investigation.

On April 14, 12 out of 34 tech companies released a public statement pledging to do business in compliance with the law after SAMR warned of Alibaba’s recent antitrust sanctions and conducted self-testing. next month.

Earlier, e-commerce giant Alibaba was fined a record $ 2.8 billion for forcing small businesses to sell exclusive products on the platform. Monopolistic behavior is understood as how businesses eliminate competition of competitors by forcing customers to choose “one of two”.

JD.com has made eight promises including “never taking measures to force sellers to choose either and never abusing a dominant market position or making any exclusive deals. “. The e-commerce group also said it will “never publish illegal advertisements and never sell products of substandard quality”.

Meituan’s delivery staff.

Meituan promised not to impose unreasonable measures forcing sellers to “choose one of the two” and would not abuse its market position to limit competition. In addition, the company is committed to providing full support to the Chinese regulatory authorities. “Once we find evidence of illegal conduct, we will report it to regulators in a timely manner and readily cooperate with any investigation,” Meituan said.

ByteDance, the owners of short video apps TikTok and Douyin, made 13 promises in its public statement. China’s most valuable unicorn company says it will “not illegally collect and misuse user data” and adhere to “minimum guidelines” in collecting data from users. E-commerce platform Pinduoduo said it will “proactively assume more social responsibility”, as well as comply with legal and regulatory requirements.

The rest of the companies are expected to announce their public commitment over the next two days

Beijing’s targeting of key Big Tech firms including Kuaishou, Bilibili and Didi Chuxing comes at a time when the Chinese government is resolutely using antitrust laws and other regulatory methods to halt. out-of-control expansion.

SAMR has accused major tech companies of misconduct such as forcing sellers to choose only one trading platform, abuse of market dominance, abuse of big data to unfair pricing. for certain customers, ignoring poor quality products, leaking customer data, and tax evasion.

“No one is allowed to cross the regulatory lines and not touch the legal red line,” SAMR said on Tuesday.

34 Internet service providers are on the spot, many of which are listed on US and Hong Kong exchanges. Companies were asked to “raise responsibility and give priority to the national interests”.

“Companies must absolutely avoid disordered capital expansion to ensure China’s economic and social security, you must absolutely avoid monopolies to ensure fair competition,” according to Beijing’s statement towards Internet service platforms.

SAMR says companies have one month to do a “self-check and self-repair”, after which the government will conduct follow-up and “severely punish” those companies that fail to address the misconduct.