By Sam Schechner, Liza Lin and Chong Koh Ping
Beijing is adding new momentum to efforts in Brussels and
Washington to curb the power of big tech companies.
China recently joined the chorus of governments advancing plans
to impose new competition obligations on a small cadre of large
technology companies, including Amazon.com Inc., Facebook Inc. and
Alibaba Group Holding Ltd.
In November, China unveiled its first draft guidelines
overseeing competitive behavior by digital giants. The proposals
include blocking companies from crunching consumer data to set
discriminatory prices, or selling products at prices below cost to
gain market share. This month, it heightened scrutiny of
electronic-payment companies, warning that nonbank payment firms,
if found to be dominating the market, could face antitrust
investigations.
China's moves come as the European Union and the U.K. pursue
similar efforts. In December, an EU bill was proposed to oblige
major digital platforms to refrain from many potentially
anticompetitive actions, such as promoting their own products over
those of competitors. The U.K. plans legislation empowering a new
digital-competition unit to enforce codes of conduct for companies
that dominate strategic digital markets.
Driving the proposals are a growing number of policy makers,
competition specialists and smaller tech rivals in Europe, Asia and
the U.S. who say fresh laws are needed to ensure that new tech
rivals can emerge to challenge the digital giants.
"With each passing year, it's increasingly clear that the
platforms are very entrenched and that absent a policy change
that's unlikely to change," said Jason Furman, a Harvard University
economist who led a panel that provided the road map for the U.K.'s
digital-competition proposals.
Some free-market proponents argue that proposed
digital-competition rules go too far. They are likely to hobble
digital markets or empower big companies that can exploit the
rules, leaving consumers worse off either way, said Mark A.
Jamison, director of the digital-markets initiative at the
University of Florida and a visiting scholar at the conservative
American Enterprise Institute.
"You're trying to turn these companies into utilities," Mr.
Jamison said. "In the case of electricity, maybe that's great. But
in the case of digital platforms, that's the opposite of how these
markets work."
China's involvement in what has been a largely Europe-led push
for tech regulation is a new twist. Chinese internet companies had
been mostly spared antitrust scrutiny because of an overriding
national policy to groom domestic technology champions. Instead,
regulators often used antitrust rules as a tool to stem the market
influence of foreign companies in the country.
The aura of invincibility for Chinese technology businesses
disappeared after an October speech from Alibaba founder Jack Ma,
who lashed out at the government's tight financial regulation,
prompting a regulatory crackdown on his internet juggernaut.
While Mr. Ma's speech might have been the trigger for heightened
digital-competition scrutiny, some said the new stance likely
reflected broader worries about the growing influence of tech
businesses.
"There have been longstanding concerns about the increasing
concentration in the Chinese tech sector," said Angela Zhang, a law
professor at the University of Hong Kong.
China has one of the shortest histories of antitrust regulation
among the major global economies, having only adopted an
antimonopoly law in 2008. This has allowed lawmakers to draft rules
more tailored to the current industry and targeted at
win-at-all-costs strategies used by internet platforms, said Kevin
Xu, a venture capitalist who runs the technology blog
Interconnected.
This month the head of the Chinese antitrust regulator
reiterated in an interview on state media that strengthening
antitrust and unfair competition rules is a priority. The moves
bolster a government strategy of relying more on China's domestic
economy and consumption for growth, he said.
Companies including Alphabet Inc.'s Google are facing increasing
pressure in areas from competition to privacy and taxes. Antitrust
regulators are pursuing cases in the U.S. and in Europe, and EU
privacy regulators are expected to announce some of their first
big-tech decisions this year. Policy makers in the U.K. and EU have
proposed new content-moderation obligations for social-media
companies.
Facebook has said it is open to the new competition proposals.
"We support rules that help foster innovation, enable competition
and protect consumer welfare, and we acknowledge that these rules
must apply to us," a spokesman said.
An Amazon spokesman pointed to a blog post in which the company
said the bloc should ensure that "the same rules apply to all
companies."
Alibaba and Google declined to comment. When Alibaba was singled
out for antitrust investigation, it said then that its businesses
are operating as usual. Google has previously said the EU proposals
would "appear to specifically target a handful of companies and
make it harder to develop new products to support small businesses
in Europe."
In the U.S., where Google and Facebook currently face multiple
antitrust lawsuits, bipartisan momentum is growing for tech
regulation.
Last year Democrats on the House Judiciary Committee released a
report calling for changes to antitrust laws, including the
creation of nondiscrimination requirements and rules prohibiting
dominant platforms from engaging in self-preferencing. House
Republicans, in their own report, endorsed a narrower set of
changes, including requirements that tech giants make their
services interoperable and allow clients to export their data from
one company to another.
A global overhaul of digital competition faces obstacles. In
China, any meaningful enforcement of antitrust rules would also
mean cracking down on state-owned enterprises, monopolies that
dominate industries such as telecom and finance. It could take
years for the EU to debate and enact its proposed law. Partisan
divisions in the U.S. could complicate passage of new tech
regulations.
Christian Borggreen, vice president of the Computer &
Communications Industry Association, which represents large
technology companies, including Amazon, Facebook and Google, urged
legislators to avoid "a patchwork of local, sometimes conflicting
rules for the global digital economy."
Said Brussels-based Mr. Borggreen: "Legislators should work
together to ensure that the digital economy remains open and
competitive, and that it continues to enable growth."
Write to Sam Schechner at sam.schechner@wsj.com, Liza Lin at
Liza.Lin@wsj.com and Chong Koh Ping at chong.kohping@wsj.com
(END) Dow Jones Newswires
January 24, 2021 05:44 ET (10:44 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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