It’s time for the Competition Bureau to turn its eye on Big Tech

This is an opinion piece from ITWC columnist David Crane.

Do we really want to live in a world where a handful of monopolistic tech giants determine how we live, what we buy and what we pay, where we make our travel arrangements, how we access entertainment, what startups get access to the global platforms and on what terms, how our health is managed, and perhaps even how we vote? I don’t think so.

Yet the power of Big Tech – and the ability to abuse that power – seems to be growing inexorably, and may grow even faster with artificial intelligence technology. “While we might like to see how these companies deliver services , goods and innovation in new and exciting ways, eventually we are going to have to ask ourselves, as a country and as a civilization, just how much power we’re comfortable having consolidated in the hands of so few businesses,” Christopher Mims wrote recently in The Wall Street Journal.

So is Big Tech too big? Do companies like Google, Amazon, Alibaba, Facebook and others need better regulation to protect consumers and ensure fair competition, curbing their ability to use their power to prevent competition or impose unfair rules on users of their networks? There is a growing sense that the answer is “yes” but the question is how best to do it. Ideally, we want to maximize the benefits while limiting the costs.

As Margrethe Vestager, the European Union’s Competition Commissioner, put it in recently while imposing a record $2.7 billion USD fine on Google for manipulating its search engine in favour of its own businesses over those of competitors, “Google has come up with many innovative products and services that have made a difference to our lives.” But, she said, “Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own shopping service in its search results, and demoting those of its competitors,” In other words, Google “denied other companies the chance to compete on the merits and to innovate.”

In Canada, we need our own examination of the potential for abuse by Big Tech, and clear analysis on how to reap the benefits from Big Tech while regulating these companies so that the public interest is well protected. That’s why our own Competition Bureau should undertake a study of the present and future challenges emerging from the growing power and reach of Amazon, Google, Facebook, Alibaba and others.

One of the fundamental responsibilities of government is to ensure competition – which means preventing monopoly. A monopolistic business can overcharge customers, stifle competition and innovation and prevent newcomers from challenging existing business models.   The Competition has a key role in competition advocacy and in studying sectors to help regulators determine how best to regulate. The Competition Bureau, in fact, is already doing this with FinTech.

In May last year, the Competition Bureau launched a consultation process to increase competition and spur innovation in the financial services sector – focusing on lending, payments and financial advice – in an increasingly digital world. It held a conference in February bringing together financial institutions, new FinTech players and regulators to help strike the right balance between bringing more competition to the financial services sector, including expanding the opportunity for FinTech start-ups, while balancing this against the need for consumer protection and financial stability.

As John Pecman, Commissioner of Competition, put it, the Competition Bureau wanted to “explore the competitive impact that innovation is having on the sector and identify barriers to entry faced by new companies. We wanted to determine to what extent there is a need for regulatory reform to promote greater competition.” The Competition Bureau has promised to produce a report by the end of this year. One British plan it has looked at is what is called open banking, which will come into effect in Britain next year.  With a single digital app, an individual or small business could share data securely with other banks and third parties to manage their assets with multiple providers rather than relying on a single provider. This would provide an important entry point for emerging FinTech companies.

But the Competition Bureau needs to take a further step and look at the future regulatory needs to ensure fair competition and consumer protection as the power of Big Tech companies expands and their tentacles reach into more and more businesses – the entry of Amazon into the supermarket business with its takeover of Whole Foods being one of the latest examples. Amazon is already the world’s biggest bookstore and seems intent on gain control over many segments of the retail world while its Android mobile phone system dominates the mobile world.

While corporations love to declare their belief in competition and free markets, in their secret hearts they would like to be monopolists able to stifle competition. The job of government is to prevent that from happening. It’s time for the Competition Bureau to turn its eye on Big Tech.

David Crane can be reached at [email protected]

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David Crane
David Crane
David Crane is a noted commentator on Canadian innovation issues. He was previously a business and economics writer with the Toronto Star.

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