U.S. Way Behind in Protecting Competition Among Big Data and Big Broadband — Costing Consumers

Europe Takes the First Step to Reignite Competition in the Digital Age; While America Remains Stuck in the 20th Century

Washington, D.C. — Last week, the Consumer Federation of America (CFA) partnered with Public Knowledge to weigh in on the European Commission’s Inception Impact Assessment regarding a new competition tool for the digital age. The European Commission is exploring the possibility of expanding its antitrust toolkit in light of concerns about gaps in the current EU competition rules.

“We fully expect the U.S. to witness a similar debate and adopt policy to end the abuses of these dominant digital platforms,” said CFA’s Director of Research Mark Cooper.

To that end, CFA is releasing the fourth in a series of working papers that provides detailed historical and economic analysis of the abuses in the two most important segments of the digital communication sector — Big Broadband Networks and Big Data Platforms. The report, entitled Big Data Platforms, a New Chokepoint in the Digital Communications Sector: Meeting New Challenges with Successful Progressive Principles, outlines the primary challenge facing regulators today: harnessing the benefits of emerging technology, while ensuring that consumers, rather than a select few companies, are able to reap the benefits of innovation today and in the future.

The new paper addresses the structural features of digital markets that have given the largest tech companies outsized influence over the economy and over communications.  The paper puts big data platforms in the larger context of structurally similar markets, like big broadband networks, internet service providers, and business data services, to understand the progressive policies that have been successful in the past and can be adapted for the digital age.

“Network effects and economies of scope and of scale — structural characteristics that are particularly strong in these infrastructure industries — can make promoting competition a tricky task,” said Cooper. “But it’s a task we’ve faced before in other industries with pragmatic steps like sector-specific expert agencies and simple bright lines to prevent the worst abuses.”

Of particular concern are “gatekeepers,” companies that control access to customers or key infrastructure. In the absence of regulation and oversight, gatekeepers have every incentive to abuse their status in order to harm competitors, who rely on these gatekeepers to access the market.

As part of its investigation into a new competition tool, the European Commission is looking into a number of structural challenges, including gatekeeper control. CFA is hopeful that, if done well, the European Commission’s new tool can itself become a global model for competition policy.

“We applaud the European Commission for taking an important first step to acknowledge and address the existing gaps in competition regulation and enforcement,” said Amina Abdu, an Antitrust Advocate at CFA. “But these issues extend beyond Europe. The difficulty of protecting consumer welfare while promoting efficiency and innovation is a problem with which many governments are grappling. The solution will require re-envisioning the status quo and developing new and creative pro-competitive, pro-consumer regulation.”

Mark Cooper, 301-384-2204
Amina Abdu, 202-656-1282