THE COWEN INSIGHT
Despite tough rhetoric against Facebook/Google/Amazon/Apple, traditional US and EU legal tools have had limited effects. This deep dive explores how the US and Europe may adapt their Big Tech policies in the coming years.
Direct Regulation of Internet Platforms a Possibility
After the Google investigation and GDPR largely failed, Europe has a Plan B: direct regulation of platforms. On paper, this could be concerning. The question is whether the EU bureaucracy can actually enforce rules in a dynamic tech market. We expect both the EU and US to pursue direct regulation of the platforms.
In addition, in Europe, we anticipate an antitrust decision against Apple’s App Store in summer 2021. In the US, Biden likely continues lawsuits vs Google and Facebook. A new lawsuit likely vs Amazon (60%) but unlikely vs Apple (40%).
US & EU Augmenting Legal Arsenals Pertaining to Tech Companies
The US and Europe are looking to supplement their legal arsenals beyond traditional antitrust lawsuits for reining in Facebook, Google, Amazon and Apple. In the US, Democrats are moving left on Big Tech and Biden controls key agencies – FTC and DOJ. We expect Biden to continue the antitrust lawsuits against Google and Facebook.
Biden’s FTC is likely to explore direct regulation of all Big Tech platforms. This would include policies such as no self-preferencing, data sharing, etc. to limit platform power. There’s a slight chance Congress will pass antitrust, privacy or Section 230 legislation.
In Europe, the European Commission’s December 15, 2020 proposal will provide important specifics for possible direct platform regulation. It begins an ~18 month review in Parliament. Passage is not certain, but we believe it would likely be around mid-2022. Effective date would be ~Q4 2022. On paper, EC’s platform rules are likely to be problematic as it would include items including no self-preferencing, data sharing and new due diligence on sellers on eCommerce platforms like Amazon. However, Europe’s bureaucracy is slow (e.g. GDPR), so the key will be whether new rules are actually enforced.
We also anticipate an EC antitrust decision in mid-2021 saying Apple’s App Store violates EC competition law. This is a potential headwind for App Store revenues and a boost for app developers.
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