Bonn, by Jana Ballweber (KNA)
With the kind permission of the KNA Media Service – German is the original language
When a US judge ruled last fall to officially grant Google the status of a monopoly, many suspected that the big digital companies could be at each other’s throats under antitrust law. The court cases against Google and Facebook parent company Meta continued this week – and many observers are now raising the possibility of the companies being broken up.
At the organisation “Rebalance Now”, Aline Blankertz deals with the question of how the monopoly power of large tech companies can be restricted. In an interview with the KNA media service, she assesses the chances of success of the US proceedings, talks about the EU’s attempts at regulation and what better digitalisation for everyone could look like.
KNA-Mediendienst: Ms. Blankertz, what exactly are the current competition proceedings against Google and Meta in the USA about?
Aline Blankertz: It’s about many different things. At Google, there are proceedings relating to AdTech, i.e. the advertising market, the Chrome browser and the search engine. In all of them, there is talk that divesting or breaking up the company could be a way of addressing the concerns.
MD: What concerns?
Blankertz: That Google is able to impose conditions that are not compatible with competition. That the ecosystem Google has created harms competition and impairs innovation. It’s very similar with Meta. It’s mainly about social networks and the question of whether Meta has harmed competition by buying WhatsApp and Instagram.
MD: Instagram was taken over by Facebook in 2012, WhatsApp in 2014. Why are the proceedings only being conducted now? Couldn’t it have been checked beforehand whether it was compatible with competition?
Blankertz: There was merger control. But it was obviously too optimistic.
MD: Is it really a realistic scenario that there will be a breakup? And what could it look like, given how closely linked the different parts of the company are, for example in the area of data or technology?
Blankertz: Such a break-up doesn’t have to be perfect to work. Of course, there was an exchange of knowledge and technical expertise, so the clock can’t be turned back. Nevertheless, the sale of parts can lead to the emergence of other competitors.
MD: What consequences would a break-up have for users?
Blankertz: Not much has to change for them. Facebook is actually forced to separate user data from Facebook, Instagram and WhatsApp anyway. These are different apps, different platforms. But the question is: who would the parts of the company then be sold to? And what would the competition look like? Nothing would be gained if WhatsApp was taken over by Google. It is not a foregone conclusion that a future owner of one of these platforms would create a better offering. That would require more extensive supervision.
MD: So could the judges order Instagram, for example, to continue operating independently?
Blankertz: In any case, you can restrict which bidders are allowed to bid and which are not – even if this would mean that the expected bid would not be as high as possible.
MD: Many people are surprised that Donald Trump is going ahead with the proceedings against Google and Meta at all, after he had replaced the people at the US competition authority FTC who had been instrumental in driving these proceedings forward. What is behind this politically?
Blankertz: The Facebook proceedings had already begun under the first Trump administration. There is great skepticism in Trump’s environment about the enormous power of tech companies. It’s difficult to assess the political strategy behind this, because a lot of things happen with Trump. Letting the proceedings run their course is a huge threat to the companies. Whether they will actually be completed is another matter.
MD: That means he wants to have something on his hands against the corporations. But does the Trump administration also have a political line on competition law?
Blankertz: Not a consistent one.
MD: What about the assessment of European legislation? With the Digital Services Act on platform regulation, Trump has made it very clear that he doesn’t believe in European regulation. Are there similar influences on the Digital Markets Act (DMA)?
Blankertz: Absolutely. Vice President Vance has made it very clear that major penalties against US companies would be seen as an affront to the US. Just because the US government is now taking action against companies does not mean that the EU would welcome intervention. We can already see that the DMA decisions on Apple and Meta have been delayed and were only announced this week. At this point, the pressure is probably already effective.
MD: Has the Digital Markets Act so far proved to be an effective tool against monopolies in the digital economy?
Blankertz: Well, the question is what effect was hoped for. The DMA was never intended to really break the power of the big companies. It was more about translating the results of the proceedings that had been conducted since the 2000s into rules so that they could be enforced more easily. In this respect, it can be said that the DMA has had a small impact. There is a bit more interoperability, certain rights that other companies using the platforms have. But by and large, the tech companies can easily circumvent the rules.
MD: In other words, there is no instrument that Europe can use to fundamentally change market conditions?
Blankertz: It’s a question of political will. Much more could be done with competition law if people dared to conduct these proceedings. However, the technocratic bubble in which competition law is treated has been very soft-pedaled over the last twenty or thirty years. We are seeing a penetration of big tech, which has poured a lot of money into science and think tanks, so it is currently very difficult to imagine that the competition law will be used so decisively. That’s why I would be a little cautious about saying that there is no instrument. We can enforce competition law more strongly and we can also regulate more strongly. We just have to do it.
MD: If we take a step back for a moment: Why are digital monopolies such a big problem in the first place? What negative effects do they have?
Blankertz: Generally speaking, it is critical when companies are no longer subject to market discipline. This gives them an incredible amount of negotiating power, which they can use against other companies – and also against the politicians who are supposed to regulate them. We then see that these powerful companies cause a large proportion of the undesirable effects. That is at least one correlation.
MD: And competition is the solution?
Blankertz: Not necessarily. We need regulation in many areas because we know, for example, that companies that are in competition do not necessarily become more energy efficient. But regulation can be enforced more effectively if the companies are not monopolies.
MD: What regulatory measures could be envisaged to accompany stricter enforcement of competition law?
Blankertz: That would affect many areas: Environmental impact, working conditions, impact on mental health, shifting the democratic course to the right, and so on. Basically, effective regulation is needed for all of these areas. This also includes restricting some platforms and functionalities. If we require companies to collect and use less data, personalization must be reduced. We must have the courage to say that regulation is not business as usual, but has an influence on how products are designed.
MD: How are the EU and Germany positioned on this issue? Tiktok was banned in Europe for certain applications that would have been addictive.
Blankertz: At the moment, we are seeing a strong political trend against regulation, towards more so-called competitiveness and a smaller role for the state. I have little hope that there is a real willingness to intervene more strongly, beyond selective activities such as Tiktok. The coalition agreement also talks a lot about competitiveness. We can see that the Federal Cartel Office has also become much more cautious and is focusing on innovation and growth.
MD: Is this a development related to the debate about digital sovereignty in the USA? We want to strengthen European companies and therefore keep regulation off their backs?
Blankertz: Yes, that plays a role. There are also aspects of the debate that I think are to be welcomed, for example a more strategic use of state procurement. At the same time, however, this could also mean that we end up with more European champions, which are not exactly conducive to competition, but rather reinforce intra-European dependencies.
MD: What does strategic use of government procurement mean?
Blankertz: Alongside more consistent enforcement of antitrust law and regulation, I would see this point as the third major factor towards better digitalization. It may sound very dry and unambitious at first, but every year hundreds of billions* of euros flow from the German state to the big tech companies. This money is then not available to develop other, better services.
MD: In other words, the money should not be seen as a bargaining chip against Microsoft to improve their services and make them fairer, but should actually strengthen the competition and thus competition?
Blankertz: Exactly, and these competitors would then ideally be subject to greater democratic control. It’s certainly a rocky road, but we have to start walking it at some point.
MD: Can there be a better and fairer digitalisation that is profit-oriented? Or is the debate part of a much larger discussion about the capitalist economic system?
Blankertz: We also have areas in our economic system that are not primarily profit-oriented, such as education, healthcare and roads. There could also be a greater role for the state in the area of digital services of general interest. I don’t think we need to change the economic system in order to substantially improve the digital technologies we have.
*Correction: It’s probably several billion, at least hundreds of millions.
Photo by Rahul Chakraborty on Unsplash
