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Popular Media If passed into law, this Digital Markets Act (“DMA”) would fundamentally alter the way these platforms conduct business in Europe. But European Commission officials have been so . . .
If passed into law, this Digital Markets Act (“DMA”) would fundamentally alter the way these platforms conduct business in Europe. But European Commission officials have been so preoccupied with how to regulate Big Tech that they never stopped to consider whether they should. Indeed, these new rules could have unintended consequences that hamper digital markets in the EU.
Read the full piece here.
ICLE White Paper There is a danger that the UK is heading for a significant and potentially damaging overhaul of its competition policy on the basis of thin evidence, rushed analysis, and no attempt to measure the costs, benefits and risks of the approach being undertaken.
There is a danger that the UK is heading for a significant and potentially damaging overhaul of its competition policy on the basis of thin evidence, rushed analysis, and no attempt to measure the costs, benefits and risks of the approach being undertaken. The fact that the Digital Markets Taskforce consultation period was only one month is itself an example of this – one month is an unreasonably short period of time if the consultation was being taken seriously, and suggests that instead it is merely window-dressing to give procedural cover to whatever the government plans on doing anyway.
This would be a mistake. The two main documents that have led to the creation of the Digital Markets Taskforce, the Furman Report and the CMA’s digital advertising market study, do not provide strong justifications for the changes they propose, which are sweeping. Neither of them consider the trade-offs involved with the interventions they propose in any serious detail, let alone attempt to measure them quantitatively, yet these trade-offs and risks – lower investment, reduced competition, less innovation, fewer startups being founded in the UK, and worse productivity growth for the UK over the years ahead – are potentially enormous, and could weaken the UK’s technology sector.
Read the full paper here.
Regulatory Comments The Commission’s interest in protecting the privacy of its citizens is commendable.
The Commission’s interest in protecting the privacy of its citizens is commendable. This concern, however, should be well tempered by humility, and the Commission’s ultimate decision should be guided by the understanding that contemporary technology and market innovations have afforded consumers a degree of choice unparallelled in the history of the European Union. While some firms may build their products with the requirement that consumers allow them to use personal information, others will not. And when consumers defect from products that do not meet their individual mix of privacy, price, and other preferences, firms will take notice and change their behavior accordingly.
This leads to another related point: innovation moves so quickly today that uniform prescriptive regulation intended to govern the behavior of many thousands of firms and millions of consumers is doomed to frustration if not outright failure. Moreover, broad regulations meant to bring industry to heel frequently work to the benefit of incumbents, driving out smaller competitors or making entry nearly impossible, only further narrowing consumer choices and guaranteeing less than optimal results for all of society.
With that said, there are certainly actions for the Commission to take that ensure a competitive environment in which consumer interests are adequately protected. Chief among these areas would be to enact regulations that control the damaging effects of costly data localization rules. Overall, however, the Commission would do best to leave much of the implementation of privacy regulations to the individual EU members who are most in touch with the challenges and desires of their own constituents.
TOTM Nearly all economists from across the political spectrum agree: free trade is good. Yet free trade agreements are not always the same thing as free . . .
Nearly all economists from across the political spectrum agree: free trade is good. Yet free trade agreements are not always the same thing as free trade. Whether we’re talking about the Trans-Pacific Partnership or the European Union’s Digital Single Market (DSM) initiative, the question is always whether the agreement in question is reducing barriers to trade, or actually enacting barriers to trade into law.
