Cutting up tech giants won't 'release competitive forces,' Furman report co-author says
27 March 2019. By Lewis Crofts.
Forcing the likes of Google, Facebook and Amazon to sell off business units to curb their clout isn't necessary to inject more competition into tech markets, Philip Marsden, a co-author of a UK report on the tech industry, told MLex.
While the growing power of technology giants has triggered calls for "structural remedies," Marsden said opening up access to data is a better way to spur digital competition.
On March 13, an expert panel led by Professor Jason Furman, a former adviser to President Barack Obama, presented a report to the UK government suggesting ways to tackle a new generation of competition challenges prompted by the technology revolution.
The report recommended stricter merger reviews to police big companies buying startups as well as the forced sharing of data sets to help new companies enter the market.
US Democratic presidential candidate Elizabeth Warren, a Massachusetts senator, recently suggested that large tech companies need to be split up to wrestle back control of key consumer markets.
But Marsden, a member of the academic team that wrote the report, said his team concluded there wasn’t enough evidence to “justify that extraordinary remedy.”
“We didn’t think that it would result in some form of release of competitive forces that would be beneficial,” he told MLex on the sidelines of an event* in Washington DC.
“We were opposed to a structural remedy,” he said, adding that the UK’s competition authority already had such powers at its disposal.
Instead, the Furman group concluded opening up data access would spur more competition, taking inspiration from a solution already deployed in the UK banking industry.
— Mergers —
The UK’s competition watchdog broadly welcomed the Furman report earlier this month, but Marsden said there was a difference of approach in how to tackle “killer acquisitions,” where big tech snaps up smaller startups.
In response to the report, the Competition and Markets Authority said digital-market mergers face effective scrutiny without the need for "fundamental changes.”
The Furman panel suggested obliging “strategic” digital companies to tell the regulator about all intended acquisitions, and the CMA should take account of the scale, as well as the likelihood of harm resulting from the mergers.
Marsden said the “balance of harms” test is the “only economically coherent way of reviewing mergers,” noting the divergence with the CMA.
“What would you prefer the alternative be? Just to continue allowing all these potential kill-zone acquisitions?” he asked.
“Or would you rather actually examine whether the scale and magnitude of harm is something that we should be concerned about?”
Marsden said that enforcers and the legal community had a “polarized debate” on where to take antitrust enforcement in the digital era, but now it's time to take action.
He suggested a first step would be to open talks between regulators and the industry in a “participatory regulator model to agree standards.”
* "The ABA Fringe: Are the Europeans Creating Momentum in Digital Enforcement?" Charles River Associates. Washington DC. March 27, 2019.