Disrupting competition law: do digital markets require new legal tools?

As digital dominance and disruption pose new challenges, competition law professionals must be ready to question the status quo.

Around the world, governments are scrambling to develop strategies that take advantage of the “fourth industrial revolution” and drive innovation through the digital economy.

Much of the government focus is on acting as investor, building digital infrastructure, assets and skills, and as enabler, regulating to promote transparency, security and trust in data. At the same time, there is growing concern about the power of large tech companies to undermine government efforts to promote digital innovation.

Governments and competition authorities are increasingly sceptical about whether we have adequate legal tools to promote competition in digital markets seemingly dominated by Big Tech.

These concerns are coming to a head around the world. In Europe some of Silicon Valley’s shining stars are being hit with massive fines for practices seen as blocking competition on the merits. Google has been fined a total of 9.3 billion over the last three years by the European Commission.

The UK is following the lead of others, making moves to clamp down on so-called “strategic acquisitions” by the mega-platforms. In Germany the competition watchdog has banned Facebook’s data collection practices; in Australia the ACCC‘s calls for regulation in its inquiry into the major digital platforms are causing a stir and across the world it’s raining Amazon probes.

Even in the United States, the heartland of free-market ideology, there have been calls for companies like Google and Facebook to be broken up and regulated like public utilities.

If the law is to evolve and adapt to meet these new challenges, competition law professionals must be ready to question the status quo.

Not surprisingly, FAANG (the five largest tech companies: Facebook, Apple, Amazon, Netflix and Google) is on the defensive. Levels of R&D investment by these companies are unparalleled. Venture capital funding in the tech sector is at a record high. The Big 5 perpetually innovate to stay ahead of each other in increasingly interconnected markets.

Even in the face of rapid technological change, size seems no protection from the gale of “creative destruction”. As the recent record of online competition shows, Big Tech companies aren’t immune to possible future disruption. In the words of former Google CEO Eric Schmidt: “Someone, somewhere in a garage is gunning for us.”

So, what does this mean for competition policymakers, law enforcers and practitioners – is the law itself being disrupted?

Digital markets pose fundamental challenges to legal doctrines designed to shield economies from the adverse impacts of excessive market power. Platform business models, multi-sided markets, massive data accumulation, explosive network effects, large economies of scale and scope, and disruptive innovation mean that competition issues are increasingly complex and conventional tools may no longer apply.

If the law is to evolve and adapt to meet these new challenges, competition law professionals must be ready to question the status quo.

There are many questions to be asked: Are traditional approaches to defining markets fit for purpose in digital markets? Should market definition be dispensed with altogether? What role should Big Data play in market power analyses? How should claims to dynamic efficiency be assessed?

And the ultimate question: At what point and with what evidence should competition authorities intervene in fast-moving technologically driven markets?

The University of Melbourne’s masters courses in global competition and consumer law equip students to consider these questions and participate effectively in the discourse and decision-making that is shaping the role of competition in a digital economy.

The program is designed and delivered by world-leading experts and offers the flexibility needed for working professionals; courses can be undertaken either wholly online, or partially online and partially on campus.

As a student, you will be immersed in issues and analysis at the cutting edge of this field. You will graduate with the knowledge and skills to explore new approaches and develop creative solutions to the distinct competition challenges of the digital age.

Applications to the University of Melbourne’s masters courses in Global Competition and Consumer Law are now open. Applicants do not need to have a law degree to be eligible for admission.

Professor Caron Beaton-Wells is Program Director, Global Competition and Consumer Law at the University of Melbourne. She is also the founder of Competition Lore, a podcast dedicated to the topic of competition policy, law and enforcement in the digital economy.