Arguably, the number one focus of antitrust scrutiny at the moment is digital markets. Tech giants have an unprecedented influence over global economies. Given how few of them are completely dominating the markets, regulators’ concerns are perfectly warranted. Let’s explore some of the issues involved.
Digital Giants’ Market Dominance and Abuse of Power
Ask a random person to name a few digital giants they know — and they’re nearly guaranteed to list Google, Meta, Amazon, and Apple. These companies have immense user networks and dominate sectors ranging from search engines to social media to e-commerce and beyond.
Tech giants’ market power is extreme, and unsurprisingly, this concerns both consumers and policymakers. Fair competition, consumer choice, and data privacy are only some of the issues typically brought up in conversations about monopolies in digital markets.
Moreover, current tech giants have unparalleled access to user data, which makes it easy for them to develop targeted marketing strategies. As a result, they further reinforce their market standing and kill market competition. It’s basically a feedback loop that benefits the few top market players.
Data Privacy and Consumer Welfare
Collecting and analyzing consumer data is a universal practice these days. Every industry — from healthcare to finance, but especially e-commerce and social media — relies on it for most of its business functions, including marketing, customer support, and R&D.
The problem with digital giants, however, is how they collect consumer data (and how much of it they can access). It’s no wonder Google, Meta, Amazon, and Apple are all scrutinized by antitrust regulators. Competition authorities are interested in how these companies leverage data to maintain market power and to what extent their actions harm consumer welfare — through price discrimination, creating filter bubbles, and more.
Anti-Competitive Practices
The harm that tech giants cause the average consumer is only part of the problem, though. An equally concerning topic for antitrust regulators is digital leaders’ alleged anti-competitive behavior, such as exclusive contracts, predatory pricing strategies, and acquisitions of potential competitors. These practices make market entry borderline impossible for new businesses, and fair competition ceases to exist.
An illustrative example of how anti-competitive behavior works would be Google’s practice of prioritizing its own products and services in search results. Smaller competitors can’t even reach the consumer, which leads to market consolidation and reduced innovation (as well as ensures that Google remains the uncontested market leader).
Legal Framework and Regulatory Challenges
One of the biggest issues when it comes to digital markets is how outdated the legal framework is. Antitrust laws, such as the Sherman Act and Clayton Act in the U.S., were developed a long time ago. They address monopolistic practices in traditional industries but aren’t adequately suited to address the antitrust concerns in digital markets.
Adapting these laws to digital markets requires interpreting how digital dynamics, such as multi-sided platforms and data-driven ecosystems, fit within existing legal frameworks. This takes courts and regulatory agencies more time than it takes digital markets to evolve, so they’re constantly one step behind.
Also, the global nature of digital markets creates an additional challenge for antitrust regulators. Regulations vary across countries; what’s considered fair in some is not allowed in others. To address multinational tech companies’ anti-competitive practices, regulators have to constantly navigate cross-border transactions and differing regulatory standards. That makes them even slower and increases the delay.
Case Study: European Union vs. Google on Search Engine Dominance
In 2017, the European Commission fined Google for unfairly promoting its own shopping comparison engine (CSE) in search results and accused the company of abusing its dominance in online search. As a result of the ruling in this case, Google was forced to adjust its search algorithms to comply with the EU’s antitrust regulations.
What Now?
So far, the European Commission vs. Google case remains the only one that has led to concrete results and made one of the world’s tech giants significantly review its business practices.
Others have been under scrutiny for years — including Amazon’s alleged interference with e-commerce competition and Meta’s social media monopoly — yet the investigations are still ongoing. Regulatory actions and legal proceedings are evolving, but they struggle to keep up with digital markets’ pace.
