Big Tech Companies' Unprecedented Success and the Abuse of Dominance in the EU and the US: A Comparative Analysis
| Author | Silvia Alves Félix |
| Position | LLB (Brunel), LLM (Soton) |
| Pages | 137-179 |
(2022) Vol. 12
Big Tech Companies’ Unprecedented Success and The Abuse of
Dominance In The EU And The US: A Comparative Analysis
Sílvia Alves Félix*
Abstract
Tech giants such as Google, Facebook and Amazon are known for acting in an anti-competitive
manner in the EU and across the world. Even though they have been heard in court, and
consequently, were obliged to pay large sums of money, it has not proven to better their commercial
practices substantially. Therefore, I intend to research the abuse of dominance by tech giants within
the EU and explore how to make the EU law more efficient in order to ensure competition within
the European Market. At the moment, Article 102 TFEU provides a very wide scope of what
constitutes an abuse of a dominant position, which does not offer legal certainty or clarity. In this
dissertation, I intend to demonstrate how can the EU legislation adapt to the digital age by taking
into consideration the EU’s most recent proposal: Digital Markets Act. This future Act will seek to
limit the power of Big Tech companies on the European market. Finally, I will explore the US legal
system as far as monopolisation is concerned in order to offer a comparative analysis between the
US and the EU, while resorting to case law to demonstrate the impact of EU Law in the US v Google
case, for example.
Introduction
ig tech companies, such as Google, Apple, Facebook, Amazon, and Microsoft,
known as GAFAM, have become rapidly relevant and even central in our day-
to-day lives. These companies have millions of active users worldwide on
their platforms due to their social aspect.1 They are undoubtedly advantageous to the
average consumer or citizen as they facilitate communication, offer easy access to
information quickly, create business opportunities, provide access to an increased
number of products and services, enable consumers to shop from all over the world and
make social interaction possible regardless the distance. 2 Consequently, these
companies enjoy an unprecedented form of market power.3 Given their utility, one
could question why their dominance within markets should be problematic, and why
* LLB (Brunel), LLM (Soton).
1 Statista. “Most popular social networks worldwide as of July 2021, ranked by number of active
users” Acces sed 30th Augus t, 2021 https://www.statista.com/statistics/272014/global-social-
networks-ranked-by-number-of-users/.
2 Daniela Eleodor, ‘Big tech, big competition problem?’ (2019) Quality-Access to Success, 20(3), 49.
3 Thomas Stuart, ‘Too little too late? –An exploration and analysis of the inadequacies of antitrust law
when regulating GAFAM data-driven mergers and the potential legal remedies available in the age of
Big Data’ (2021) European Competition Journal 1, 1.
B
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this dissertation (alongside many academic articles) explores how competition could
and should be harnessed to address their market behaviour.
First, these companies have been demonstrating a lack of fair play when acting in the
market, for example, by buying out their competitors or by undermining their
competitors’ success. It is common knowledge that these companies operate in every
corner of the world, which should mean they are aware of the rules and would comply
with them, but also that they would act as a role model to their competitors as their
market power is incomparable and unprecedented. However, recently, big tech
companies have been drawing attention to their anti-competitive behaviour in the EU
and the US, acting as gatekeepers of important online markets.4 Tech giants have been
accused of anti-competitive behaviour in the EU and elsewhere, for example, Facebook
purchased Instagram and WhatsApp, which used to be its biggest competitors. Despite
these purchases being allowed by the European Commission 5, they are being
investigated by the Federal Trade Commission.
Big tech companies’ ability to manipulate the market to their advantage by buying out
their competitors has created monopolies, which are detrimental to the consumer but
also for future competitors, for which the entrance into the market will be harder.
However, the Commission is permitting big tech companies to reach an ultra-dominant
position in the market by, for example, allowing Facebook to purchase WhatsApp and
Instagram, despite these companies being Facebook’s biggest competitors. The
Commission does not allow any anti-competitive behaviour but by allowing the
practices just mentioned, it is placing dominant big tech companies in a problematic
position. Facebook was already considered dominant in a market where ‘network
effects’ dictate the companies’ success. The Commission, by allowing Facebook’s
acquisitions of its competitors, is hindering Facebook’s ability to act in a competitive
manner and, almost, incentivizing it to act in an abusive manner.
Second, big tech companies advertise their services as free, but their concept of free is
controversial.6 A monopoly, or an abuse of dominant position, allows companies to
determine their prices for goods or services, which means consumers will end up paying
more for those goods or services because there is not an alternative provider. A
competitive market is more advantageous to the consumer because the higher the
number of competitors, the more affordable prices will be, increasing consumers’
choice of an option.7 However, in the context of big tech companies, there is not a
4 Rebecca Haw Allensworth, ‘Antitrust’s High-Tech Exceptionalism’ (2021) The Yale law Journal
Forum 588, 589.
5 Case No COMP/M.7217 - Facebook/ Whatsapp (2014) at [191].
6 Michal Gal, Daniel Rubinfeld ‘The Hidden Costs of Free Goods: Implications for Antitrust
Enforcement’ (2016) Antitrust Law Journal 80, 521, 525.
7 Laurine Signoret, ‘Code of competitive conduct: a new way to supplement EU competition law in
addressing abuses of market power by digital giants’ (2020) E.C.J 16 (2-3) 221, 227.
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traditional monetary exchange between companies and consumers. In fact, big tech
companies advertise their platforms as free services that any consumer can join and,
maybe, that is why these types of companies are under regulated.8 But nothing is free.
Even though there is not a payment per se, the currency is personal data.9 Big tech
companies’ consumers disclose their data willingly and subject themselves to have their
personal data shared with third parties. This is extremely advantageous for companies
because they will be able to target their type of consumer through advertisements. One
can also say it is advantageous for consumers because they are offered a personalised
list of advertisements. However, one could also question if using big tech platforms is
worth the circulation of personal data.
Third, big tech companies use consumers’ personal data and competitors’ business data
in order to improve their own business strategies.10 It is important to ascertain the nature
of platforms and understand if they are infrastructure providers and competitors,
simultaneously. For example, Amazon offers a platform to private sellers to do business,
but it has access to private sellers’ information as an infrastructure provider. In addition,
Amazon also acts as a retailer within its own platform.11 Should Amazon be allowed to
compete with those who use its platforms? Is it fair to have such a competitive
advantage? Probably not, but Amazon is offering the widest range of consumers
through its platform enabling a smaller business to reach consumers all over the globe.
From a third-party seller perspective, one should consider that even though Amazon’s
large consumer base is highly appealing, Amazon’s direct competition is fierce which
can hinder the success of a third-party seller using the platform.12
Fourth, big tech companies’ success is dictated by ‘network effects’, which refers to
the effect that one user has on the value of a product or service to other existing or
potential users.13 This means the higher number of active users, the more successful the
online platform will be. However, as noted in the American Microsoft case, a monopoly
is not formed just because the majority of consumers use a particular online brand.14
Within big tech companies’ context, users tend to focus on being active on platforms
used by their friends, but also their favourite celebrities, as well as platforms that offer
8Kelly Ranttila, 'Social Media and Monopoly' (2020) 46 Ohio NU L Rev 161, 174.
9 Rebecca Haw Allensworth, ‘Antitrust’s High-Tech Exceptionalism’ (2021) The Yale law Journal
Forum 588, 591.
10 Chris Jay Hoofnagle, Jan Whittington ‘Free: Accounting for the Costs of the Internet's Most Popular
Price, (2014) UCLA L. REV. 61, 606, 608.
11 Rebecca Haw Allensworth, ‘Antitrust’s High-Tech Exceptionalism’ (2021) The Yale law Journal
Forum 588, 604.
12 Fen Zhu, Qihong Liu, ‘Competing with Complementors: An Empirical Look at Amazon.com’ (2018)
Com. Strategic Management Journal, 39(10).
13 Daniela Eleodor, ‘BIG TECH, BIG COMPETITION PROBLEM?’ (2019) Quality-Access to
Success 20(3) New Skills for Managers in a Changing Digital World, 12th IBAB International
Conference 49, 51.
14 Microsoft Corp., 253 F.3d at [54].
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