Significant developments focus on technological competition issues
The economic downturn induced by the COVID-19 pandemic has had a negative impact and fundamentally changed businesses in different industries. Nonetheless, the tech industry has thrived in the post-pandemic era, as consumer appetite for technology has rapidly increased in light of remote working. However, the growth of the tech world has not always been a bed of roses, and anti-competitive practices have been particularly prevalent among large tech companies, such as Google and Facebook, internationally.
The steady growth and size of large technology companies has allowed companies to potentially abuse their dominant market position and impose restrictive practices on their business partners and customers. The anti-competitive practices carried out by these tech companies have not gone unnoticed, as they have become the target of competition regulators in a number of jurisdictions. South Korea has recently been at the forefront of regulating competition in the tech sector as it deals with aggressive new anti-competitive practices.
This article explores the various technology-related competition concerns that have emerged globally over the past year and the measures adopted by competition regulators in various jurisdictions to remove anti-competitive practices and encourage healthy competition in the world. technology industry.
Korean Fair Trade Commission ruling on Google’s operating system1
On September 14, 2021, the South Korean competition regulator, the Korea Fair Trade Commission (KFTC), issued a corrective order and a fine against Alphabet Incs Google for abusing its dominant position in the mobile operating systems (OS) market. The US tech giant has been reported to have abused its dominant position in the mobile operating system market (via the Android operating system), forcing mobile device makers such as Samsung and LG to sign anti-fragmentation agreements (AFA). AFA content prohibited mobile device makers from installing a custom operating system, called “Fork OS” or “Android Forks,” which is a modified version of Google’s Android operating system.
It has been claimed that Google has moved closer to these device makers by imposing AFA as a condition for mobile device makers to enter into Google Play Store licensing agreements and pre-access rights to the system. operating systems, which are crucial for the deployment and use of the applications. on several types of devices.
The implications of Google’s anti-competitive practices had prevented other competitors from entering the mobile operating system market, with mobile device manufacturers bound by the AFA which limited their autonomy to implement competing operating systems. . It was determined that the constraints imposed on Fork OS’s entry into the market led to reduced consumer accessibility to devices running on Fork OS.
Due to Google’s anti-competitive practices, the KFTC imposed a hefty fine of around $ 177 million. In addition to the fine, the KFTC also issued remedial orders requiring Google to take the following actions:
(a) cease requiring device manufacturers to enter into AFA under the Google Play Store license agreement and the Android operating system pre-access rights agreement;
(b) inform device manufacturers of KFTC sanctions; and
(c) amend the existing AFA to set out the corrective orders imposed and report the changes to the KFTC.
The measures issued by the KFTC also extend to other connected devices running Android, as Google’s AFA has also restricted the launch of devices from other tech companies, such as smartwatches and TVs.
The move is not only a positive step to boost competition in the mobile operating system market, but also reiterates the KFTC’s position that even tech giants, such as Google, will not escape regulation. in a constantly evolving sector.
South Korea’s bill banning exclusive in-app payment services2
In addition to the above, South Korea is showing no signs of slowing down regulation of giant tech companies with a clenched fist, as Google and Apple were under scrutiny for their practices in the app payment market. In August 2021, South Korea became the first country in the world to pass amendments to its telecommunications law, dubbed the “anti-Google law,” which prevents Google and Apple from forcing developers to use their systems. integrated billing and restrict them. charge a commission to app developers on in-app purchases.
This measure has been long in coming in order to prevent technology companies from overexerting their dominance in the payment by app market. The ramifications South Korean lawmakers impose on these tech companies will likely have a ripple effect around the world and potentially influence lawmakers and regulators in other countries to consider and take proactive steps to address these issues.
Australia enacts new media law3
Exploring the competition regulation of tech giants in other jurisdictions, Australia passed Australia’s Competition and Consumer Law Amendment Act 2021 in February 2021. new law developed by the Australian Competition and Consumer Commission (ACCC) establishes a mandatory code of conduct (Media Codee) which applies to news media undertakings and digital platform companies when trading in the information content made available by digital platform services. In essence, the Media Code requires digital platforms such as Google and Facebook to negotiate a fair payment with news agencies when posting news content in their search and news feed functions, respectively.
The media code was introduced amid reports that Australian internet users were missing local news sites in Google search results and following an 18-month ACCC investigation of digital platforms . In response to the allegations, Google admitted that it was intermittently blocking certain Australian news sites from users as part of “experiments” it was conducting on newspaper website searches.4 Such experiments were enough to demonstrate that Google has inordinate power and can remove news and news content entirely if it wants to. The implementation of the Media Code is a step in the right direction to ensure that publishers and journalists receive a fair share of their individual work and sets a precedent for regulating large tech companies with regard to the monetization of the media. contents.
Lessons to take away, and many more to come ….
The legal framework that regulates the converging communications and multimedia industries in Malaysia is the Communications and Multimedia Act 1998 (CMA 1998), which falls under the jurisdiction of the Malaysian Communications and Multimedia Commission (MCMC).
In view of the 1998 CMA and the guidelines issued by the MCMC, the MCMC does not have the power to suppress technology companies that carry out activities that fall outside the scope of the 1998 CMA (for example, activities that do not require a license from the MCMC). However, the Competition Act 2010 (CA 2010) remains the general competition framework that promotes and protects the competition process in Malaysia and falls under the Malaysian Competition Commission (or MyCC). Notably, the 2010 CA also acts as a safety net in response to such regulatory loopholes, and activities carried out by companies in technology-driven companies that fall outside the scope of the 1998 CMA will still be subject to the law. at the 2010 CA.
The measures that have been implemented by regulators in other jurisdictions are setting precedents that can potentially influence the MCMC to refine current legislation and take a more holistic approach to local regulatory practices. The MCMC’s limited mandate over all activities of the digital tech industry will likely encourage future legal developments in the legislature to curb the exploitative behaviors of tech giants. With this in mind, tech companies should take note of the actions taken by the KFTC and Australian regulators, as they can serve as a benchmark for the MCMC to implement any changes to the 1998 CMA to take a more stringent approach. in matters of anti-competitive practices regulation. That said, it should be noted that the 1998 CMA and 2010 CA prohibit (among others) abuse of a dominant position in the relevant markets and that any activity of a dominant player that significantly restricts competition violates existing laws and could be liable to financial penalties.
Going forward, further uncertainties are expected to arise, which will challenge competition regulators as digital giants attempt to deploy their dominant position in the market to commercial advantage. Balancing the need to attract industry development and investment with ensuring a competitive environment for all players will redefine the role of regulators like the MCMC by adopting a more stringent approach to managing business activities. technological.