The internet giants are caught in a vise between Margrethe Vestager and Lina Khan: dismantlement?

The Danish Margrethe Vestager is the Executive Vice President of the European Commission, responsible for competition; American Lina Khan is the chair of the Federal Trade Commission (FTC). These two “antitrust” women, on both sides of the Atlantic, are the bêtes noires of the GAFAM.

They are feared by Big Tech in general and by GAFAM in particular. The abuse of dominant positions by these digital giants, who have become Internet conglomerates through network effects and acquisitions of potential competitors, is more than ever in their crosshairs. Margrethe Vestager (left photo) and Lina Khan (right photo) – respectively executive vice-president responsible for competition policy at the European Commission since November 2014, and president of the Federal Trade Commission (FTC) since September 2021 – are making life (digital) difficult for them. The latest feats of these two “antitrust” authorities: the Danish announced on June 14 that the European Commission had sent Google grievances accusing it of abusive practices in the online advertising market; the American asked on June 12 before a federal court in San Francisco to suspend the acquisition of video game publisher Activision Blizzard by Microsoft, an operation opposed by the FTC, which has scheduled a hearing for August 2nd. With regard to the very large digital players, the two major competition watchdogs are also not afraid to invoke the specter of breakup, which is to the market what nuclear weapons are to war. The FTC and the European Commission have also already issued red cards and fined offenders.

Two antitrust authorities face the GAFAM
Dismantling, Margrethe Vestager mentioned it again explicitly on June 14 but without using the term: “The European Commission therefore considers, on a preliminary basis, that only the obligation [ divestment] by Google of part of its services would eliminate its competition concerns”. In this case of Google’s abuse of its dominant position in the online advertising market, where the French Competition Authority contributed significantly to the European investigation (1), the firm is accused of “favoring its own online display advertising technology services to the detriment of competing online advertising technology service providers, advertisers, and publishers”. And this, “since at least 2014”. The number one in search engines (with Google Search), video sharing platforms (with YouTube) and mobile operating systems (with Android) is accused by the European Commission of favoring its AdX ad-exchange (DoubleClick Ad Exchange), an advertising auction that allows publishers and advertisers to meet in real time, usually through auctions, to buy and sell display advertisements.

Splitting Google, Meta, Amazon or Microsoft?
Google’s two advertising purchasing tools, its “Google Ads” (formerly Google Adwords) and “Display & Video 360” (DV360), as well as the publishers’ ad server “DoubleClick For Publishers” (DFP), all favor AdX. “If [at the end of its ongoing investigation, ed.] the European Commission concludes that Google has acted illegally, it could demand that it divest [divest] part of its services. For example, Google could divest itself of its sales tools, DFP and AdX. This would put an end to conflicts of interest,” warned Margrethe Vestager (2). This is not the first time that the European Union has invoked the specter of dismantling Google. On November 27, 2014, nearly ten years ago, Members of the European Parliament adopted a non-binding resolution calling for the breakup of the Alphabet subsidiary in order to “separate search engines from other commercial services” to preserve competition in this area (3). In France, Arcep was in favor (4). Recall that in less than a year (June 2017-March 2019), Google has been fined three times by the European Commission for a total of 8.25 billion euros for “illegal competitive practices” (5).
In the United States, the GAFAM’s home country, the question of breakup has been raised for some years, well before Lina Khan’s arrival at the helm of the FTC, who does not rule out this possibility (6). Her predecessor, Joseph Simons, even made a mea culpa to the FTC: “We made a mistake,” he confessed in an interview with Bloomberg news agency (7) on August 13, 2019, referring to two acquisitions of Facebook approved by the FTC: Instagram in 2012 for 1 billion dollars and the instant messaging app WhatsApp in 2014 for 19 billion dollars (not to mention Oculus VR bought the same year for 2 billion dollars). For its part, Google received the green light to acquire YouTube in 2006 for 1.65 billion dollars, DoubleClick in 2007 for 3.1 billion dollars, and the Waze navigation app in 2013 for nearly 1 billion dollars. “It’s not ideal because it’s very complicated [to dismantle]. But if it has to be done, it has to be done,” said the former president of the FTC. His successor, Lina Khan, whose three-year term ends in September 2024, is on the same wavelength, she who developed her entire anti-monopoly doctrine on the Amazon case. Did she not publish in 2017 in the Yale Law Journal an article entitled “The Amazon Anti-Monopoly Paradox” (8)? Before taking the helm of the FTC, she had worked on the antitrust subcommittee in the US House of Representatives. This bipartisan “subcommittee on antitrust” had published in October a 451-page report entitled “Investigation of competition in the Digital markets” (9) recommending that the US Congress legislate to break up digital monopolies – even if it meant resorting to their “structural separation” or spin-off (10). Last January, the US Department of Justice (DoJ) initiated antitrust proceedings against Google in the online advertising field (11). Of course, Alphabet’s subsidiary is not the only Internet giant to be in dispute with the European Commission and the FTC. Apple is also in the sights of Margrethe Vestager, particularly for its practices on its App Store following a complaint from the giant music streaming company Spotify, which considers itself the victim of unfair competition in favor of Apple Music. The European Commission adjusted its grievances on February 28 (12). Last year, it opened another investigation, this time into Apple Pay for “abuse of dominant position” in mobile payment and contactless payment (NFC) from iOS devices (13).
For its part, the Meta Platforms group – the parent company of Facebook, Instagram, and WhatsApp – was fined on May 12, 2023, for infringement of the General Data Protection Regulation (GDPR) by the Irish “Cnil” (DPC) acting on behalf of the European Commission (14). Amazon, on the other hand, narrowly escaped in December 2022 by reaching an agreement with Margrethe Vestager to close two investigations. The e-commerce giant had until June 2023 to comply (15). More generally, the European Commission has published a list of the 19 “very large platforms” (VLOP), which, in Europe (16), will be subject to the reinforced obligations of the Digital Services Act (DSA). The “gatekeeper” type controllers of GAFAM have until July 3 to declare themselves to the European Commission, which will designate them by September 6 so that they can comply with the Digital Markets Act (DMA) before March 6, 2024.

In the United States, contested acquisitions
On the other side of the Atlantic, Lina Khan is opposed to the proposed acquisitions of Activision Blizzard by Microsoft (the FTC has taken legal action to block the operation), and of Within (virtual reality content) by Meta/Facebook. She has put Amazon under surveillance on several fronts, including imposing a fine on the e-commerce giant on May 31 for privacy infringements with Alexa and Ring. Regarding the acquisition of the MGM film studios by Amazon, the FTC was divided and therefore did not prevent this operation, much to Lina Khan’s dismay. Apple is also accused of preventing the repair of its iPhones. What is less known is that Margrethe Vestager and Lina Khan cooperate closely on many antitrust issues. @

Charles de Laubier

Leave a Reply

Your email address will not be published. Required fields are marked *