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EU Regulators to Scrutinize Big Tech’s Digital Ecosystems in Merger Deals

 |  February 8, 2024

Margrethe Vestager, the EU competition chief, announced on Thursday that antitrust regulators will broaden their scope to include digital ecosystems and the impact of free products or services in investigations regarding Big Tech’s merger deals or market power.

The move marks an update to the EU’s nearly three-decade-old rules known as the Market Definition Notice, aimed at assessing whether companies possess the market power to stifle competition or manipulate prices. Vestager’s announcement comes amidst growing criticism from legal experts and academics who argue that existing antitrust and merger laws have struggled to keep pace with the rapidly evolving tech landscape, particularly concerning companies offering free services in exchange for user data.

According to Vestager, revising how regulators define markets is crucial for evaluating a company’s pricing power during mergers or its ability to exclude competitors in antitrust cases, as well as determining the concessions extracted from these firms.

Related: US Tech Giants Accept European Union’s ‘Gatekeeper’ Classification

Under the updated rules, the European Commission will now delve into the dynamics of multisided platforms and digital ecosystems, particularly those intertwined with mobile operating systems, to gauge a company’s market dominance. Furthermore, products and services offered for free will be scrutinized to assess their impact on market competition.

Market share calculations will also see a shift, with consideration given to factors such as sales volume, capacity, active user base, or website traffic.

Emphasizing innovation and non-price elements like product quality and supply reliability, the updated rules aim to provide a more comprehensive framework for evaluating market power. This shift could potentially have reverberations beyond the tech sector, impacting industries such as pharmaceuticals where innovation plays a pivotal role.

The announcement underscores the EU’s proactive stance in regulating Big Tech, signaling a concerted effort to ensure fair competition and safeguard consumer interests in an increasingly digitized economy.

Source: Channel News Asia