IGF 2021 WS #115 Fan the Flames? Regulating Competition in Digital Markets

Time
Friday, 10th December, 2021 (10:15 UTC) - Friday, 10th December, 2021 (11:45 UTC)
Room
Conference Room 8

Organizer 1: Private Sector, Western European and Others Group (WEOG)
Organizer 2: Technical Community, Western European and Others Group (WEOG)
Organizer 3: Civil Society, Eastern European Group
Organizer 4: Technical Community, Latin American and Caribbean Group (GRULAC)

Speaker 1: Veronica Piccolo, Technical Community, Western European and Others Group (WEOG)
Speaker 2: Paola Galvez, Private Sector, Latin American and Caribbean Group (GRULAC)
Speaker 3: Thierry Nathanael Kopia , Private Sector, African Group
Speaker 4: Raashi Saxena, Civil Society, Asia-Pacific Group

Format

Panel - Auditorium - 90 Min

Policy Question(s)

Regulation, competition and innovation: How could regulatory and self-regulatory frameworks help foster more competitive Internet-related markets, a larger diversity of business models, and more innovation? How to enable equitable access to data, marketplaces or infrastructures for fostering competition and innovation on the Internet?
Protecting consumer rights: What regulatory approaches are/could be effective in upholding consumer rights, offering adequate remedies for rights violations, and eliminating unfair and deceptive practices from the part of Internet companies?

Additional Policy Questions Information: 1) How do the ongoing regulations to address the market imbalance created by large tech companies impact small businesses? 2)In the example of the side effects of the ongoing regulations on other businesses, what is the best model to predict the consequences of emerging regulations concerning competition on the Internet? 3) What role can the multi-stakeholder approach play in the creation of effective regulations on competition and should it be revised or modified?

Anti-competitive practices are not a new issue. They have always been there; however, as the Internet-related markets boomed, not only during the COVID-19 pandemic but also before, and large tech companies grasped a huge market, the extent of such monopolistic practices changed and shifted to digital platforms. The change, on the other hand, necessitated a sophisticated approach to regulating Internet-related markets. Of course, it is on the regulatory bodies to ensure a competitive market structure, and apparently, they have taken this duty quite seriously. For example, the recent Media Bargaining Code in Australia that was aimed to restore market power balance between local news media business and large digital platforms like Google or Facebook is interestingly promoted by another tech giant, Microsoft, in other large economies arguing that it is good for democracy. Such emerging regulations targeting Internet-related markets are not only local or regional; another example of the impacts of similar regulations can be seen in the EU General Data Protection Regulation as an ongoing one, and in the EU Digital Services Act (DSA), the EU Digital Markets Act (DMA) and the EU New Competition Tool (NCT) as emerging ones.

Emerging regulations on competition and concentrated market structures do not only emerge but they leak into other jurisdictions - not surprisingly, other competitors catalyze the “export” of those regulations. In this case, however, it is arguable to what extent the impact of those ongoing or emerging regulations has been measured by regulatory bodies, in particular concerning their positive or negative impact on small businesses. This session is going to listen to the opinions of not only the government, but also the private sector, civil society, and academia and shed a light on the inner potential of such anti-competitive regulations. As a result, it will explore various regulatory approaches to develop a best practice. Assuming a multi-stakeholder discussion model for emerging regulations on competition as one of the possible solutions, the session will also discuss how important this model is in regulating competition in Internet-related markets. The discussion will try to find out the roots of that emerging issue in zero or limited involvement of various stakeholders in drafting competition-related regulations. In this regard, the session will emphasize the need to build inclusive regulations and explore ways to do this in anti-competition regulations. Hence, the session also responds to the call of the IGF to address the main focus area of Economic and social inclusion and human rights.

SDGs

8.2
8.3
9.1
17.16
17.17

Targets: In many ways, regulation is the key method by which governments seek to achieve the SDG targets. As such, it is incredibly important to ensure those regulations are responsibly drafted, proportional, and adapted to the local conditions of each jurisdiction. By far, the most effective way of achieving this is through a multi-stakeholder model; the advocacy of which is the purpose of this session. In particular, the SDG targets 8 and 9 relating to a focus on developing strong economic policies will be strengthened through this session; which elaborates on what is required to create effectively and considered regulations. This focus on collaboration also links into the SDG target 17 which focuses on public, private, and civil society partnerships. A large part of this session focuses on the government being responsive to other stakeholders when making the regulation, which is a core part of the SDG target 17.

Description:

This session will discuss the emerging regulations on competition in Internet-related markets and the importance of a multi-stakeholder approach when regulating competition today. Some issues around the focal point of the session have been brought by the Media Bargaining Code in Australia and the Digital Markets Act (DMA) in the EU - both affecting the Internet-related markets regardless of the size of businesses. Still, the issues to be discussed are not limited to these regions but aim to cover a larger regional scope from the perspectives of Africa, Latin America, and Asia. The regional diversity of speakers will provide this opportunity to see the big picture in the emerging regulations on competition, and the session will also rely on the inputs brought by participants. Without prejudice to positive or negative impacts of such regulations, the session aims to ask the panelists to explore the best model(s), as well as the multi-stakeholder approach, to measure the impact of emerging regulations, especially on small businesses and naturally on consumers. The ongoing regulations will definitely guide the whole discussion as an example.

In short, the session invites the broader audience to rethink the pros and cons of ongoing competition regulations in digital markets to guide the emerging ones and ask whether their impacts could be improved through a multi-stakeholder approach. The session is a response to the call from the IGF to focus on Economic and social inclusion and human rights, on the issue of emerging regulations.

Expected Outcomes

The primary outcome of this session will be capacity building in the area of competition regulation; giving attendees a view into global issues of regulation, and proposing a multi-stakeholder approach to new regulations. As the competition regulations in Internet-related markets are emerging, the session aims to guide the governments who are in the process of discussing such regulations, and the civil society to use comparative approaches and concerns as an advocacy tool. Thus, the main outcome of the session is expected to be triggering a long-term, yet the intensive process of discussions on competition regulations on various multi-stakeholder platforms, also other than the Internet Governance Forum (IGF). To do this, the session organizers are planning to conduct a one- or two-weeks follow-up online advocacy campaign on social media (mainly, Facebook, Twitter, Instagram, and Vote. One). The campaign will be conducted via short Instagram-friendly “swipeable” posts prepared by the organizers which will contain the policy outcomes of the session. The messages as a solution to the emerging issue or recommended criteria for the assessment of emerging regulations will be short, precise, and easily utilized for advocacy. The session organizers will prepare and disseminate the messages on all possible online platforms with their contacts and networks. Regarding the discussion about the multi-stakeholder approach, the session also aims to critically assess this model and question whether it is a “one size fits all” model in all kinds of regulations, including competition, or if it should be modified to any extent. The outcome of the session in this part will also be beneficial to the IGF itself since the Forum is in the stage of shaping its future models. Since the session organizers believe that any model is not ideal and can be improved for better outcomes, the session will debate on this model in competition regulations and leave it to the participants to broaden the scope to other regulations.

The session aims to facilitate a panel discussion where participants are able to ask questions and leave comments both online and onsite. For this purpose, the session will feature both online and onsite moderators who will have regular communication to keep the participants equally engaged. While the onsite moderator will hear the participants’ questions, physically attending the session, the online moderator will be keeping an eye on the questions and comments that are shared online and bring these into the discussion by communicating them to the onsite moderator. The session is going to ensure interactions through a Q&A and comment section in the online application where the session will be taking place (e.g. Zoom). The organizers may potentially utilize the Slido application for live Q&A and comments as an alternative. Both online and onsite moderators will make sure that the questions and comments are not overlooked, but play an important role throughout the session. In this regard, the organizing team is planning to ensure stable and effective communication between onsite and online moderators. In case the panel will fully take place online, the on-site participants should leave comments or questions in the online environment as well.

Online Participation

Usage of IGF Official Tool. Additional Tools proposed: The session organizers are considering using Slido for online questions and comments. The online moderator has prior experience in using Slido in conferences, that's why he will be in charge of the platform and deliver the questions to the onsite moderator. The details of the communication between them have been explained in 8b.

Key Takeaways (* deadline 2 hours after session)

Governments should not ignore the fact that local small and medium-sized enterprises are not often in the same level with big tech companies in complying with those regulations that can even be destructive to the SMEs. That’s why the governments should not always rush in the regulation without proper impact assessments.

In the drafting process of digital market regulations, the multi-stakeholder approach may sometimes result in compromising the small and medium sized companies, even though the private sector is represented by big tech companies.

Call to Action (* deadline 2 hours after session)

Hear small and medium-sized enterprises in the multi-stakeholder meetings in the discussion of digital market regulations. Reorganize the ratio between the small and large enterprises in such discussions and involve more academia.

Rethink digital market regulations before adopting and conduct proper impact assessments considering the future impacts as well. Reconsider if the regulation by "hard law" is the only feasible solution.

Session Report (* deadline Monday 20 December) - click on the ? symbol for instructions

As planned, the session organized by the Internet Society Youth Special Interest Group (aka Youth Observatory) opened with the moderator's short introduction of the topic and esteemed speakers with various geographical and academic/practical backgrounds. This report will divide the discussions based on the Policy Questions as executed in the session.

PQ 1: How do the ongoing regulations to address the market imbalance created by large tech companies impact small businesses? 

Veronica Piccolo, a member of the Ca' Foscari University of Venice and #DearGovernments, started by stating the huge number and role of small and medium enterprises (SMEs) in the European economy. She identified the SMEs in Europe as competitors and customers of big tech companies, while their roles as competitors are rare. Continuing with the difficulties in the regulations in favour of the SMEs, she gave the example of the Mergers and Acquisitions, the rules of which usually do not allow finding violations when the SMEs are "eaten" by big tech companies. The reason lies in the assessment criteria of such mergers which often take into account the annual turnover, let alone the long-term impacts of such practices are usually overlooked by competition authorities. Nevertheless, she found hopes in the direction taken by the European Commission lately by the adoption of the Digital Markets Act and Digital Services Act given that the Commission is well aware of the importance of innovation by the SMEs. 

Following the question from the audience by Cory Doctorow, the member of the Electronic Frontier Foundation about the requirements of the size of firms in the Copyright Directive and Digital Services Act, she also briefly touched upon the problems arising from the contrast between the Digital Markets Act and Digital Services Act given the prohibition of targeted advertisements in the latter. Also, after the online moderator, Elliot Mann asked whether we need something beyond amending competition law, such as taking a ground-level approach suitable for the competition in the digital markets by bringing new terms, Veronica Piccolo answered that this is what the policymaking in the EU is going towards via the New Competition Tools.

Thierry Nathanael Kopia, a local entrepreneur and inventor from Burkina Faso, took the floor to give a comparative analysis of the emerging regulations around the world in search of the best practices that included the EU and Japan. In the absence of such solid regulations in the African region, generally, he mentioned that the problems the SMEs face are more or less the same around the world, whether there is a regulation or not. He added that the issue raised in the PQ1 is not only limited to competition, and there are other sides of the coin, such as the issues of data protection, consumer protection. 

PQ2: In the example of the side effects of the ongoing regulations on other businesses, what is the best model to predict the consequences of emerging regulations concerning competition on the Internet?

Paola Galvez, an advisor of the Peruvian Government, the Presidency of the Council of Ministers, started to answer this question by mentioning the challenges faced by governments, especially, the Peruvian government, because most of the time the government representatives have a difficult time with understanding the dynamics of digital markets when the delineation of competition law is blurred by digitization. However, it is not only the governments challenged by the digitization of markets. When governments rush in the regulations, the local entrepreneurs (as well as, SMEs) also struggle with complying with such regulations - they either have to leave the market or sell their business to larger enterprises. That's why she continued that prompt regulations in the digital markets may not be the optimal solution; governments may wait in such cases, instead, conduct regular assessments, question-and-tests of the market, as well as the assessment of post-implementation periods. Regarding the issues of liability, she added that there is a mismatch between the transboundary nature of digitization and the fragmentation of regulations. Therefore, regulating all technologies one by one may not be a good idea after all.
Another topic that popped up in her speech was the impact of the COVID-19 pandemic on the policymaking process of digital market regulations, in general.

PQ3: What role can the multi-stakeholder approach play in the creation of effective regulations on competition and should it be revised or modified?

In this phase, Paola Galvez continued with the success of the multi-stakeholder approach in the emerging digital market regulations in Peru and other Latin-American countries she is aware of. She described how the equal participation of all stakeholders is mandatorily enforced by law, more precisely, the Urgency Decree of Peru, the law that she thinks, provides for a proven model to cope with the complexity of digital market regulatory discussions. The Peruvian Government also hosts an Innovation Lab that includes a group of researchers who regularly (notably, before the pandemic) were travelling to the rural areas to explore the talent gap and further problems challenging innovation in the regions.

Raashi Saxena, a member of the Steering Committee of the Internet Rights Principle Coalition, presented a first-hand experience of the implementation of the multi-stakeholder approach by the I4Policy Foundation of the UN in the AI Policy Development. The policies like the ones concerning AI connect many stakeholders, and they naturally must be taken a multi-stakeholder approach to hear ad interacting with everyone before coming up with a final policy. She added that, however, in any implemented multi-stakeholder approach, the mere inclusion of everyone must be avoided, and the priority must be the effective participation of the stakeholders and promotion of the participation of the underrepresented communities. She did not forget to mention the downsides of the multi-stakeholder approach, such as budget and time concerns, as well as human resources. She finished with the remarks that the multi-stakeholder approach in the AI policymaking they are working on is, in fact, working.

Veronica Piccolo added that although it has been argued that the multi-stakeholder approach cannot always be inclusive, and it is not always suitable for complex regulations, it has been proven that in practice, this method works well, such as in the discussion of the impact assessment of the New Competition Tool. However, the academic representatives were not sadly very involved in the discussion of that tool in the EU, therefore, they must be empowered. Despite these concerns, she was convinced that the multi-stakeholder approach can be improved and relied on.

After the presentations, Theirry Nathanael Kopia raised his concerns from the voice of the SMEs that if the multi-stakeholder approach is promoted, it should not be done by compromising the interests of the SMEs, whose interests can be underestimated with the involvement of big companies. Veronica Piccolo agreed with this concern.

This discussion was resumed by the comment from Vittorio Bertola, a member of a Germany open software company, Open-Xchange, who described the struggles their coalition was having when desiring to be involved in the policy discussions even though good practices exist like the IGF. Vittoria Bertola pointed out the financial gap between SMEs and big tech companies because the former is not always having access to high-level discussions to raise their voice. He said that the regulations like Digital Markets Act that differentiates between big and small companies are more favourable, while most of the regulations do not take into account such differences that make it difficult for the SMEs to comply with.

In the last minutes of the session, Elnur Karimov, a Doctoral Student in Law from Kyushu University in Japan and Regional Engagement Director of the Youth Observatory, asked the question of how the emerging digital regulations can, at least, be challenged by those SMEs whose interests were not heard or were merely ignored in the policymaking process. Veronica Piccolo clarified that the Digital Markets Act was, indeed, supposed to be flexible by updating the blacklisted activities in the Digital Markets Act, however, to what extent such (in fact, infant) regulations are adaptable will be seen in the next years. This question was also answered by Theirry Nathanael Kopia who mentioned that in order to achieve success in challenging big tech companies by the SMEs, the SMEs need to be more organized; otherwise, independent actions taken by the SMEs may, unfortunately, come unsuccessful.

The session moderator, Daphne Stevens from PERFECT DAY closed the session by introducing key takeaways and expressing gratitude to the speakers, organizing team and the audience for their valuable contributions.

Rapporteur: Elnur Karimov