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US Anti-trust Order - Anti-competitive Practices in Big Tech

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July 12, 2021

Why in news?

The U.S. President Joe Biden signed a new executive order aimed at cracking down on anti-competitive practices in Big Tech, labour and numerous other sectors.

What are the highlights?

  • The U.S. anti-trust order is aimed at cracking the dominance of big tech firms.
  • [Antitrust laws are made by governments to protect consumers from predatory business practices and ensure fair competition.]
  • Its purpose is to foster competition across a number of sectors.
  • The executive order includes 72 actions and suggestions involving multiple federal agencies.
  • The line of actions proposed include a set of new rules to be issued by the FTC (Federal Trade Commission) on –
    1. data collection
    2. increased scrutiny of fresh mergers in the technology sector
    3. scrutiny of the anti-competitive moves in the internet marketplaces
  • Other sectors under the scanner include travel, healthcare and agriculture.
  • The order calls for changes to how tech mergers and other anti-competitive behaviour by big-tech is scrutinised.
  • It also aims to bring down prices of goods and services that have risen over time.
  • [The rise was a result of companies in various sectors gaining control of their respective segments.]

What is the need?

  • A fair, open, and competitive marketplace has long been a cornerstone of the American economy.
  • On the other hand, excessive market concentration threatens basic economic liberties and democratic accountability.
  • It also affects the welfare of workers, farmers, small businesses, start-ups, and consumers.
  • In this regard, President Joe Biden said “Capitalism without competition isn’t capitalism. It’s exploitation.”
  • The problems in relation with the big tech firms that the order highlights include -
    1. collecting massive volumes of personal information
    2. acquiring new, unexperienced competitors
    3. holding a competitive advantage against small businesses
    4. corporate consolidation
  • Companies that run “dominant online retail marketplaces” can see how sellers are doing on the platform.
  • They can then use the data to launch their own competing products.
  • A fact sheet released by the government lists out transgressions, without naming companies and entities.
  • But apparently, the moves are aimed at firms such as the Amazon.
  • Such online selling platform’s dual role has been a concern.
  • This dual role enables a platform to exploit information collected on companies using its services to undermine them as competitors.

How is it in India?

  • In India, there have been a number of antitrust cases against big-tech companies like Amazon and Google.
  • They are being investigated by the Competition Commission of India.
  • But none has had any significant impact on the behaviour of the companies’ operations so far.
  • In 2018, the CCI fined Google Rs 136 crore for “search bias”.
  • However, this fine was set aside by the National Company Law Appellate Tribunal (NCLAT) just months later.
  • There is also the recent IT Intermediary Rules that impact social media companies like Facebook and Twitter.
  • Another one is the imminent amendments to Consumer Protection (E-commerce) Rules.
  • It increases compliance burden for Amazon and Walmart-owned Flipkart.
  • The Indian antitrust regulator is also studying the dependence of consumers and enterprises on a few large digital platforms.
  • A government-instituted review of the Competition Law has found the existent provisions “largely adequate and fit-for-purpose.”
  • But it has recommended overarching amendments for additional enforcement mechanisms.
  • This should work in the interest of speedier resolution of cases, which is particularly critical in the context of fast changing digital markets.

What impact will the U.S. move have?

  • The developments signal a greater consensus on preventing accumulation of “too much power” with only a few companies.
  • It also implies an affirmation in the U.S. of the recent anti-trust actions taken by the European Union, which has so far waged a lone battle against Big Tech.
  • How the US manages to rein in big-tech firms through the executive order could set precedence for other antitrust regulators.

 

Source: The Indian Express

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