Mrs. Schweitzer, you are an expert in competition law, advise EU Commissioner Margrethe Vestager and the German government, which wants to set limits on tech giants like Google , Amazon , Facebook and Apple . Do you actually use these so-called GAFA platforms yourself?
am quite convinced of the many advantages of the GAFA economy, use Google, Amazon and Apple products myself. But I’m not on Facebook.
Because you care about your data?
Such concerns can be had on Facebook, but for me it’s more because I lack the time to use social networks. But of course I know how Facebook works.
The US has GAFA, China has Alibaba. Why has not a platform developed to this extent in Germany?
There are also quite successful platforms here, but they are much smaller, for example in the field of events, dating or real estate – not giants like Facebook or Google. The fact that these come from the USA and not from Europe, is not due to a too tight competition law, but rather to the particularly in the USA particularly pronounced risk and innovation readiness. We are catching up – but it would be helpful to support this process with an innovation-friendly legal framework.
How are risk-taking entrepreneurs in Germany slowed down so far?
We regulate new business ideas regularly about the legal framework that has been developed for the old business models. That’s why new business models can become harder to enforce. For example, the US driver service Uber, which was banned in Germany, because for him the laws of the long-established taxi industry should apply. Certainly there is a need for regulation at Uber. But this must be tailored to the new market conditions. This often happens faster in the US than in Germany. Therefore, it would make sense to set up a deregulation commission in Germany.
What should this commission do for deregulation?
It would have to work sector specific. Take a look at whether the regulation is still adequate for the area of transport or the rental market, for example, or if innovations are being prevented. But you need more time than almost nine months, as we now have for working with the Commission Competition Law 4.0.
Is the government ready to set up such a commission?
I see a great willingness to handle digital topics in all ministries. In my opinion, everything that promises to foster innovation is listened to with much benevolence. Therefore, I can imagine that we will get such a commission for deregulation.
Is it even problematic that Germany does not have big platforms like Google and Facebook?
I think we are focusing too much on the big GAFA platforms in the current debate. It would be bad if we missed the whole digital economy or the new developments in data economy. Or if there were no successful platforms in Germany and Europe. That’s not the case. Germany has been a leader in many industrial sectors so far, and these strengths are now combined with new technologies such as Artificial Intelligence. I am confident that German companies in this field can become competitive players.
However, services like Amazon are not only growing rapidly in breadth, but also in depth: The online retailer also offers music and video services for Prime customers.
The fact that different industries merge and companies enter other markets is part of the normal competitive process. However, it is problematic if a dominant company, especially a platform operator, creates incentives for customers through coupling strategies not to switch to another platform. Amazon Prime may have negative consequences for the competition from this point of view. Of course, it also has advantages for the customers. Therefore, the competition classification is difficult.
What role does Amazon’s digital voice assistant Alexa play?
Alexa has another problem with the competition. Because Amazon is not only a trading platform, but there also acts as a seller. Amazon could now use Alexa to control customer demand for their own offerings. When we order washing powder on Amazon ourselves, we make an active choice. If we say, “Alexa, order some washing powder!” Then we do not know from which point of view Alexa makes a selection. This can then jeopardize competition on the respective product markets, in this case on the market for washing powders.
How do you want to tackle it?
The problem lies mainly in how Alexa and Co. are constructed. The name of digital butlers alone already shows that they should serve the customer, so he must have a duty of interest to him – and not act as a servant of the interests of Amazon. This is not legally clear so far, so I think it makes sense to legally anchor such a duty of interest to the consumer.
How could you do that?
In principle, this can be developed from contract law – without any regulatory intervention. Civil courts can establish contractual loyalty obligations for digital assistants. The fiduciary duty would be violated if the customer sells a more expensive, inferior or a product that does not meet his preferences.
However, platforms like Amazon not only know which washing powder a customer prefers, but they also collect numerous other data. SPD boss Andrea Nahles now wants to force them to share this data, so that smaller companies have a chance in the competition. Is this a good idea?
Concern about the innovative ability of the German economy is justified. Artificial intelligence will play an increasingly important role and become an important part of the competition. But for AI to work, you need large amounts of data that many small businesses do not have. If you want to be part of this highly innovative market, you need access to such data.
How can this be guaranteed?
We should create incentives for companies to share their data, for example through data pools that actively market large volumes of data. And possibly incentives for individuals should be created to put their data in shared data pools. They would then regularly receive a dividend. Hitherto frequently monopolistic data markets could become so competitive markets.