The European Commission has recently published a landmark piece of legislation, The Digital Markets Act, which represents the first real check on the power of the big technology firms in decades. While there have been many previous attempts to curtail monopolistic behaviour, this ruling specifically targets their ability to exert such extensive control over markets and dominance of whole areas of the technology ecosystem.
We have needed this kind of legislation for some time now. From an end-user perspective, it would be natural to assume that ‘the cream will rise to the top’ and that the products which dominate particular markets do so because they are genuinely the best available. However, the reality is that ‘big tech’ is not necessarily ‘best tech’. There’s no doubt that these companies initially achieved their best in class status, by creating market-validated, high quality products. As time has passed though, they have used this position to ring-fence markets and keep competitors – and potentially innovation – at bay.
It’s no surprise therefore that The Act has defined these companies as ‘gatekeepers’. They assume this position over time in a number of ways, including:- preventing consumers from linking up with companies outside their platforms; denying users a choice in terms of pre-installed applications and software; and pushing users towards their own products and services on their platforms, rather than allowing third parties to compete on a level playing field. This results in consumers and businesses being offered an illusion of choice, with potentially better alternatives denied access to customers who might really value their products.
While it may be easy to take a swing at the big tech players for stifling innovation at smaller businesses, we must be mindful not to underestimate their role in creating new markets and driving economic growth. Like it or not, the big tech companies play an essential role in stimulating innovation. They can play a pivotal role in validating markets and creating opportunities for others to realise as-yet untested technologies. They also have the capacity to dedicate enormous resources to the research and development of new technologies. When combined with huge teams, packed with the best talent, this can result in the truly groundbreaking invention which opens the doors for others to realise their potential. Indeed, those working at these companies will often use their experiences in these environments as the foundation for their own companies and ideas, creating a virtuous cycle of growth.
However, we need to ensure that the voices of smaller companies are heard, and hopefully this legislation provides the route to do so. The Act includes policies such as allowing businesses to access data they generate through their use of the ‘gatekeeper’ platform, as well as enabling them to promote their services and conclude their contracts outside of the larger company’s infrastructure. These rules are bolstered by a robust system of fines, which will provide an effective system of consequences and accountability in the face of non-compliance.
It might sound idealistic, but if we create a truly level playing field, everyone can win. By providing smaller businesses more direct routes to the top of their given market, we can ensure that both consumers and enterprises have a wealth of options when it comes to choosing the right technology for them. There’s something to be gained for the big tech players too: by engendering greater competition, these large companies will be pushed harder and the wider innovation ecosystem will benefit enormously from companies big and small striving to extend the boundaries of what is possible. They may also find that as new technologies come to the fore, other opportunities for growth arise – whether through integrating new tech to improve existing platforms or even acquiring ‘rising stars’ that are developing the next piece of game-changing technology.
We have of course seen what we thought were ‘watershed moments’ in the regulation of big tech in the past, but The Digital Markets Act is targeted in such a way that it should bring about genuine change and democratise access to what were previously closed spaces for challenger companies. This legislation will reinvigorate Europe’s tech ecosystem and, although some may not feel it right now, there will be no ceiling on the ambitions of companies both small and large.
