Scrap over tech gatekeeper rules in EU Parliament exposes tensions in draft law

An administrative scrap over which group of EU lawmakers gets to lead scrutiny of a new law to curb the power of the biggest platforms reveals the tensions inherent in the draft bill: hard and fast rules versus a more flexible approach that could give the platforms room for maneuver.

The European Parliament's decision on which committee to appoint as leader on the Digital Markets Act file will play into philosophical battles over the law’s DNA: a regulatory straitjacket or an antitrust-inspired tool with more tailoring?

The European Commission put forward the legislation in December, proposing to designate as "gatekeepers" a handful of large platforms — expected to be at least Google, Apple, Facebook and Amazon.com. These would then have to abide by 18 “self-executing” obligations designed to loosen their grip on markets and make business more contestable.

The rationale is as follows: The antitrust cases of past decades have taught officials a lot but failed to halt the march of the tech giants. So new prohibitions are needed that don’t require years of argument and assessment, rather they should ban certain conduct without further discussion.

For at least half the list of banned practices that’s the case, according to the commission's proposal. But for the other half of the prohibitions, the EU executive says, there may need to be some “tailoring” to a specific business area — in what's called a “regulatory dialogue.” But it stresses that this isn’t like a competition probe with the to-and-fro of lawyers and economists. Not even close.

And that's the main battleground for the law: a struggle between antitrust-style assessments and hard-law prohibitions. The commission is down at the hard end of the scale, the platforms argue for more assessment to be sure that procompetitive behavior isn’t being banned.

Why does this matter for the European Parliament? And why is there a tug-of-war between committees over who gets to lead scrutiny of the draft bill, and ultimately amend it?

On one hand, the Economic and Monetary Affairs Committee, or ECON in the parliament's jargon, which is responsible for oversight of EU competition law, believes the antitrust-inspired legislation falls in its purview. A committee letter from mid-February, seen by MLex, says the draft law “mirrors” antitrust case practice and “builds on” those powers.

On the other hand, the Internal Market Committee, or IMCO, which is responsible for laws that knock down barriers to the EU single market, argues that it should be in the driving seat.

Also jockeying to take the lead is the Committee on Industry, Research and Energy, or ITRE, responsible for industrial policy and innovation. It views the issue as less about form and more about substance, seeing the legislation as a measure to develop an industry, new services and jobs.

This may mean highlighting tensions in the law’s legal underpinnings: Has the law been correctly drafted? Are the curbs it seeks to introduce appropriate?

The stakes

Competition chief Margrethe Vestager has stressed time and again that the Digital Markets Act is all about harmonizing the way EU countries tackle tech platforms, to avoid fragmenting the bloc’s legal landscape.

But ECON sees it differently. Irene Tinagli, the committee's chairwoman, wrote in a letter to the European Parliament's president that this rationale might explain “the need for a separate legal instrument but does not change the nature of the proposal, whose purpose and provisions are clearly in the domain of competition policy.”

Given Vestager’s framing of the law, and its legal underpinnings, IMCO has the strongest hand to play to win the lead in shepherding the law to adoption. But ECON may seek to get control of certain articles in the text, stressing that there are provisions related to mergers, investigations, fines and structural separation, all of which emanate from competition law. ITRE could also lay claim to some articles.

Senior EU lawmakers are expected to review the spat on March 9, when the deadline expires for members of the parliament to register their interest. Ultimately, it may make no substantive difference: Lobbying on the legislation will be long and intense, and all voices will be heard.

And even if ECON is in the driving seat on some provisions, it won’t necessarily mean a softer ride. Lawmakers on that committee have been increasingly tough on tech companies over the years, calling repeatedly for them to face stiffer regulation and possible unbundling.

Moreover, even when the parliament has argued its way to a final position on the draft bill, there will then come unpredictable months, maybe years, of hard negotiation with EU governments and the commission to shape the final look and feel of the law.

What seems to be an esoteric debate between parliamentarians will play into this, opening a window on the wider and increasingly loud EU debate over how best to regulate the tech giants: hard regulation versus more flexible scrutiny.