Brussels eyes bigger stick to take on Big Tech

A new competition instrument originally meant to apply to a wide range of sectors will now be targeted at the digital sector.

The European Commission is beefing up its weapons to take on Big Tech.

Under Commission Executive Vice President Margrethe Vestager, the bloc’s executive arm is planning to merge two major legislative initiatives on competition into a single text, EU officials told POLITICO.

One is the so-called New Competition Tool, a market investigation tool that would allow competition enforcers to act more swiftly and forcefully. The other is a part of the Digital Services Act, a new set of rules due to be unveiled in December for companies like Google, Apple and Amazon.

Combined, the new powers would be known as the Digital Markets Act and would carry a hefty wallop for tech giants in its crosshairs.

“We’re working on a new legislative proposal focused on digital markets, which would feature two complementary pillars, a combination of ex ante regulation and case-by-case enforcement,” Vestager said in a speech Thursday.

The Commission started seeking feedback in June on the New Competition Tool (NCT) as well as on the Digital Services Act (DSA), which will include a list of do’s and don’ts for so-called “gatekeeping platforms” — or those who are indispensable for other companies to reach consumers online — to curb what it sees as anti-competitive behavior.

The plans come as Big Tech companies face intensifying antitrust scrutiny on both sides of the Atlantic.

In the United States, the Justice Department and state prosecutors investigating Google for alleged antitrust violations are considering whether to force the company to sell its dominant Chrome browser and parts of its lucrative advertising business.

In Europe, Apple and Amazon are currently under investigation by Brussels’ competition authorities. Some of the Commission’s draft provisions in the DSA include preventing those companies from favoring their own services on their platforms and from exclusively pre-installing their apps on operating systems, according to a draft list of banned behavior.

No love lost on the NCT

In its new form the New Competition Tool, which was originally meant to apply to a wide range of sectors including financial services and agri-food, will now be targeted mainly at tech companies within the Digital Markets Act despite Vestager’s original inclination to make it applicable for the entire economy.

“The case-by-case enforcement side would allow us to investigate digital markets and intervene, including by imposing remedies, where we identify structural market issues or failures,” the Danish politician said last week.

How exactly the Commission will merge the DSA’s ex ante rules for gatekeeping platforms with the New Competition Tool remains at this stage an open question.

The Commission’s decision to drop the idea of a wide-ranging instrument to target only tech companies is likely to please the New Competition Tool’s powerful enemies. Germany’s Federation of German Industries (BDI) and France’s Movement of the Enterprises of France (MEDEF) both strongly pushed back against an instrument that would apply to the whole economy.

The tech sector, which also criticized the New Competition Tool, is now unhappy it will only target them. “Structural competition issues are not by any means limited to digital markets,” said a spokesperson for Booking.com, adding the company regrets that the focus is now “much narrower.”

The Digital Markets Act is still expected on December 2, one EU official said. It will undergo the classic “co-decision procedure,” which requires the approval of both the European Parliament and EU countries.

The Digital Services Act package’s legislation focused on content moderation will remain a separate instrument.

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