New market investigation powers slimmed down in EU tech regulation

Established Internet giants and tomorrow’s digital gatekeepers alike could face dawn raids, information demands and interview requests for top executives, so EU officials can determine if they're complying with new tech rules or if their expansion risks “tipping” markets, according to draft legislation unveiled today.

New investigations could last up to two years, but they're a far cry from the sweeping plans originally envisaged. The European Commission said today that what remains of the original designs will strengthen broader powers to open up tech markets.

This summer, EU competition chief Margrethe Vestager floated the prospect of a “New Competition Tool,” which could have been a powerful new regime to intervene in markets where competition appeared to be misfiring, but no abuse was detected. It could have gone far beyond tech industries.

During drafting that concept was subsumed into the Digital Markets Act — a draft regulation presented today (see here) that aims to reduce the power of Google, Amazon,com, Apple and Facebook over vital digital platforms.

“The original idea has been folded into the DMA,” Vestager told reporters today, stressing that investigation powers could be deployed either to check that the big platforms were abiding by promises, or to sniff out the gatekeepers of the future.

“It is exactly to make sure we don’t have the tipping of a market,” she said.

The draft legislation itself states that market investigations can be conducted to designate a gatekeeper or establish whether it's abiding by the list of prohibitions and obligations the law imposes.

Also, for new companies that look like they might emerge as gatekeepers, officials can open an investigation and must “issue a public report at the latest within 24 months from the opening” of the probe.

The conclusion of that investigation could be a proposal to add the new company to the list of gatekeepers, or expanded the list of prohibited conduct to include its activity.

If a company is seen to be a gatekeeper-in-the-making, the commission can impose some — but not all — obligations on it to ensure a market doesn’t tip.

The investigative powers in the law closely resemble core antitrust procedures, where companies can be asked for data, forced to make staff available for interview, or undergo surprise inspections.

National regulators can also trigger such a market investigation. If three or more of them get together and tell the commission they suspect a company should be added to the list, the commission then has four months to take a look.

Vestager didn’t specify what internal division of the commission would enforce the rules.