Concerns that antitrust authorities are ill-equipped to tackle competition concerns in digital markets are fading as major tech companies become more “fragile” and agencies prioritise other issues, according to the Organisation for Economic Co-Operation and Development.
Frédéric Jenny, chair of the OECD’s competition committee, said on Thursday that antitrust watchdogs across the world stopped prioritising enforcement in digital markets last year as concerns about underenforcement in the online economy gave way to more pressing issues.
In 2022, competition authorities and other law enforcers had to respond to “the slowing down of globalisation” and growing inflation as a result of the war in Ukraine, while also focusing on key sustainability goals and the long-term effects of the coronavirus pandemic, he told the OECD’s Competition Open Day.
Simultaneously, the “fragilities” of big tech platforms have started to emerge, Jenny said, noting that Amazon, Meta, Alphabet and Microsoft recently announced they will collectively incur more than $10 billion in losses due to mass redundancies, increases in real estate costs and other cost-saving measures.
Google is facing stiff competition in the AI market, which is a race it might lose, Jenny said. Meanwhile, Facebook and Apple both lost large amounts of their capital value in 2022 because their financial results fell below expectations. The latter is also increasingly fragile because of its dependency on China for production, he said.
These weaknesses are clear signs that the digital sector is becoming more difficult to operate in and therefore more competitive, Jenny said.
Meanwhile, agencies in the EU were able to shift their focus away from the big tech companies following the adoption of the Digital Markets Act, which acts as both a complement and a substitute for competition law enforcers across the bloc., he said
Cooperation has also allowed competition authorities to increasingly acquire a better grasp of the dynamics of digital markets and this is helping them better challenge the behaviour of major tech platforms, Jenny said.
This has allowed for an uptick in enforcement, with Google facing fresh scrutiny in the US, India and Germany in the first two months of 2023 alone, as has Apple in the UK, Mexico and Brazil.
The feeling of being “powerless” to police the major tech platforms has now changed, he said.
But there are still two major blind spots that authorities must work harder to cover in 2023, Jenny said. Agencies must better analyse the relationship between restitution to competition within an ecosystem and between ecosystems, as well as the relationship between innovation and competition in the digital sector, he added.
The OECD Competition Open Day concluded on Thursday.
