In this insight, we take closer look at the subject of tech companies getting into trouble over antitrust issues, why it happens, what can be done, and what part organisations like the UK ‘Monopoly Commission’ plays.

The Monopoly Commission

The Monopoly Commission dates back to a previous incarnation of a regulator and is often used and accepted as a broad term to describe the regulatory body that is tasked with overseeing and controlling monopolistic and anti-competitive behaviour in markets. Each country has a different one, each with different titles and different powers. Technically, therefore, there’s only one in the UK, but many different ones of varying names around the world.

Role 

The role of such commissions is to enforce ‘antitrust’ laws to help ensure competition and regulate mergers and acquisitions to prevent any one company from having too much market power.

In The UK & US 

In the UK, for example, what was the Monopolies and Mergers Commission regulatory authority was replaced by the Competition Commission, which in turn was superseded by the Competition and Markets Authority (CMA) in 2014. These organisations have had the mandate to ensure that competition is fair, and consumers are protected.

In the United States, the role of regulating monopolistic behaviour is mostly undertaken by the Federal Trade Commission (FTC) and the Antitrust Division of the U.S. Department of Justice.

In Europe 

In Europe, as part of the European Commission, The Directorate-General for Competition (DG COMP) essentially does a similar job to the UK’s FTC.

What Powers Does The UK’s CMA Have? 

The UK’s CMA has the power to impose a range of penalties and take various actions against companies for antitrust violations. These include:

– Fines. The CMA can impose fines up to 10% of a company’s global turnover for breaches of competition law.

– Disqualification. Directors can be disqualified from holding company directorships for up to 15 years if they are found to have infringed competition law.

– Enforcement Orders. The CMA can issue orders to cease and desist from anti-competitive behaviour, as well as require companies to take specific actions to restore competition.

– Criminal Sanctions. In some cases, individuals can face criminal charges for cartel activity, including imprisonment.

– Market Investigations. The CMA has the authority to carry out market investigations and recommend or enforce changes to market structure or business practices.

– Mergers and Acquisitions. The CMA has the power to block or require modifications to mergers, acquisitions, and joint ventures that are likely to reduce competition.

Who And What Gets Hurt By Monopolies? 

If a company has too much market power and dominance, there are many entities and factors can be negatively impacted. For example:

– Consumers can suffer through reduced choice, higher prices, and potentially lower quality products or services.

– Competitors can be hurt, e.g. smaller firms may be driven out of business or prevented from entering the market, thereby stifling competition.

– Suppliers can find themselves squeezed on prices or terms, potentially causing smaller suppliers to go out of business.

– Innovation suffers because with less competition, the dominant firm has fewer incentives to innovate and improve.

– Market distortions can lead to resource allocation that is not optimal, wasting societal resources, i.e., economic efficiency can suffer.

– Reduced competition may result in fewer jobs and reduced salaries (the job market can be affected).

– The dominance of one company can lead to market complacency (a lack of urgency to prepare for risks), reduced consumer choice, and a lack of disruptive technologies.

– Fair trade can suffer because excessive market power can create imbalances in trade negotiations and economic partnerships, both domestically and internationally – leading to unfair/excessive pricing.

Trouble For Tech Companies 

With the tech market being essentially dominated by a relatively small number of very large and powerful tech companies, it’s not surprising that many of them have got on the wrong side of the antitrust regulators. Some high-profile examples involving some familiar tech names include:

Amazon

Back in November 2021, the European Commission fined Amazon approximately €2.42 billion for using non-public data from independent sellers on its platform to benefit its own retail business, which the Commission considered to be an abuse of a dominant market position.

Also, in the same year, Italy’s competition authority fined Amazon over €1 billion for abuse of market dominance related to its logistics platform, Fulfillment by Amazon (FBA). The authority argued that the terms and conditions for third-party sellers using FBA restricted competition.

Currently, but in a case dating back four years the EC is investigating Apple over so-called “anti-steering” practices, i.e. where developers are prevented from informing users about alternative payment options (which would constitute unfair trading practices).

Microsoft 

Famously, way back in 1998, the U.S. Department of Justice and 20 state attorneys general filed an antitrust lawsuit against Microsoft, alleging that the company had abused its market dominance to stifle competition, particularly by bundling its Internet Explorer web browser with its Windows operating system. The case led to a prolonged legal battle, and eventually, Microsoft was found to have violated antitrust laws. However, a proposed breakup of the company was rejected, and Microsoft instead settled the case by agreeing to make it easier for competitors’ software to operate with Windows.

This month, following a 2020 complaint made by Slack, an EC investigation over a possible breach of competition rules, has led to Microsoft announcing that it will begin unbundling Teams from Office 365 and Microsoft 365 in the European Economic Area and Switzerland. Microsoft was facing a potentially massive fine, e.g. 10 per cent of its turnover and opted to take the ‘proactive’ unbundling decision.

Apple

Apple is also no stranger to getting into hot water over antitrust issues. For example, back in March 2020, Apple was fined €1.1 billion by France’s competition authority for anti-competitive practices with its distribution and retail network. The authority alleged that Apple and two of its wholesale distribution partners had agreed not to compete against each other and also prevented premium resellers from lowering prices, which resulted in an unfair advantage for Apple’s own stores.

Dating from back in 2021, and still ongoing (the EC released a rare revision and clarification of the issues earlier this year), Apple has been under investigation by the European Commission regarding its App Store practices, specifically surrounding the 30 per cent commission it takes from in-app purchases. Spotify and other companies have claimed this is anti-competitive, as Apple’s own services don’t have to pay the commission. Apple could still face a hefty fine, e.g. up to 10 per cent of its global annual revenue if things don’t go its way.

Google  

Currently, in what is the biggest antitrust trial in 20 years, following a lawsuit (three years ago) by the US Justice Department and a group of states, Google is accused of having a monopoly in online search and related advertising markets and being the default search engine on most U.S. phones. The accusations relate to the fact that Google has around a 90 per cent share in search, aided by restrictive agreements with browser and phone partners (e.g. Apple, Mozilla, Samsung, and Verizon) that give it dominance. The trial will also focus on Google’s agreements with Android-based mobile-device manufacturers which forbid the pre-installing or promoting of rival search engines if they opt to take some of Google’s search revenue.

Back in 2019, the European Commission imposed a €1.49 billion fine on Google for abusing its market dominance in the online advertising sector. The Commission found that Google had imposed restrictive clauses in contracts with websites using its AdSense service, effectively stifling competition.

In 2018, Google was fined £3.8 billion for pre-installing its search engine and browser on Android devices, which was seen as an abuse of its dominant position

What Does This Mean For Your Business? 

In our digital society where tech companies have grown to occupy serious positions of power, the tech sector has become a focal point for recent antitrust scrutiny. This is perhaps not surprising due to issues like market dominance by a few big tech companies (Microsoft, Google, Amazon, Apple, Meta), and the network effects of technology platforms, e.g. the value of the services increasing as more people use them creating a tendency toward market concentration.

The control the big tech companies have over data (which market-newcomers find hard to match) and the whole product eco-systems created by big companies effectively making it hard for consumers to switch have increased the level of scrutiny. Arguably, companies of this size and dominance with their significant profits need outside regulation to ensure fair play for all.

That said, the tech sector is not the only one where antitrust issues regularly crop up. For example, dominant companies within the financial, energy, telecoms, and pharmaceutical industries also see their fair share of complaints and penalties. This article highlights why outside regulation is needed, what challenges companies and regulators face, and how each country has its own ‘monopoly commission’ authority with different powers and rules that are constantly changing as new issues arise.

Video-focused social media platform TikTok has been fined €345m by Ireland’s Data Protection Commission (DPC) over the privacy of child users.

The Processing of Personal Data 

The fine, as well as a reprimand (and an order requiring them to bring its data processing into compliance within three months) were issued in relation to how the company processed personal data relating to child users in terms of:

– Some of the TikTok platform settings, such as public-by-default settings as well as the settings associated with the ‘Family Pairing’ feature.

– Age verification in the registration process.

During its investigation into TikTok, The DPC also looked at transparency information for children. The DPC’s investigation focused on the period from 31 July 2020 and 31 December 2020.

Explained 

Explained in basic terms, TikTok was fined because (according to the DPC’s findings) :

– The profile settings for child users accounts being set to public-by-default meant that anyone (on or off TikTok) could view the content posted by the child user. The DPC said this also posed risks to children under 13 who had gained access TikTok.

– The ‘Family Pairing’ setting allowed a non-child user (who couldn’t be verified as the parent or guardian) to pair their account to the child user’s account. The DPC says this enabled non-child users to enable Direct Messages for child users over 16, thereby posing a risk to child users.

– Child users hadn’t been provided with sufficient information transparency.

– The DPC said that TikTok had implemented “dark patterns” by “nudging users towards choosing more privacy-intrusive options during the registration process, and when posting videos.” 

TikTok Says…

TikTok has been reported as saying that it disagrees with the findings and the level of the fine. TikTok also said: “The criticisms are focused on features and settings that were in place three years ago, and that we made changes to well before the investigation even began, such as setting all under 16 accounts to private by default”.

Fines

This isn’t the first fine for TikTok in relation to this subject. For example, in July 2020, the company was fined $5.7 million by the U.S. Federal Trade Commission (FTC) for collecting data from minors without parental consent. Also, in April this year, TikTok was fined £12.7m by the ICO for allowing children under 13 to use the platform (in 2020).

The level of TikTok’s most recent fine, however, is not as much as the £1bn fine issued to Meta in May for mishandling people’s data in transfer between Europe and the US.

Banned In Many Countries

In addition to fines in the some of the countries where the TikTok app is allowed, for a mixture of reasons including worries about data privacy for young users, possible links to the Chinese state, incompatibility with some religious laws and some political situation(s) have resulted in TikTok being banned in Somalia, Norway, New Zealand, The Netherlands, India, Denmark, Canada, Belgium, Australia, and Afghanistan.

What Does This Mean For Your Business?

Back in 2020, TikTok was experiencing massive growth as the most downloaded app in the world. It was also the year when former U.S. President Donald Trump issued an executive order aiming to ban TikTok in the United States, plus the year when the platform picked up its first big fine ($5.7 million) from the FTC (in the US) over collecting data from minors without parental consent.

As pointed out by TikTok, this latest, much larger European fine dates back to issues from around the same time, which TikTok argues it had already addressed before the DPC’s investigation began. This story highlights how important it is to create a safe environment in this digital society for children and young people who are frequent users of the web and particularly social media platforms. This story also highlights how important it is for businesses to pay particular attention to data regulations relating to children and young users and to review systems and processes with this mind to ensure maximum efforts are made maintain privacy and safety.

Furthermore, it is also an example of the importance of having regulators with ‘teeth’ that can impose substantial fines and generate bad publicity for non-compliance which can help provide the motivation for the big tech companies to take privacy matters more seriously. TikTok’s worries, however, aren’t just related to data privacy issues. Ongoing frosty political relations between China and the west mean that its relationship with the Chinese government is still in question and this, together with the bans of the app in many countries means it remains under scrutiny, perhaps more than other (US based) social media platforms.

A study by the University of Copenhagen and Roskilde University has revealed that computer problems are responsible for us wasting between 11 and 20 per cent of our time.

How The Study Worked 

The study involved 234 participants, in varying jobs (and education) including students, accountants, consultants and IT workers who spent between six and eight hours in front of a computer in their day-to-day work. The researchers told them to report the situations in which the computer would not work properly, or where they were frustrated about not being able to perform the task they wanted.

The Results 

The results showed that on average, we waste between 11 and 20 per cent of our time in front of our computers on systems that do not work or that are so difficult to understand that we simply cannot perform the task we want to.

Some of the problems most often reported by participants included: “the system was slow,” “the system froze temporarily,” “the system crashed,” “it is difficult to find things.”

The two biggest categories of problems revealed by the study were insufficient performance and lack of user-friendliness. Also, the participants in the survey said that 84 per cent of the episodes had occurred before and that 87 per cent of the episodes could happen again.

The Reasons? 

According to Professor Kasper Hornbæk, one of the researchers, one the main reasons they still malfunction so much (even though computers are now better than 15 years ago), is “ordinary people aren’t involved enough when the systems are developed”. 

Professor Morten Hertzum, the other researcher behind the study, also highlights that some issues seem to keep occurring, saying: “The frustrations are not due to people using their computers for something highly advanced, but because they experience problems in their performance of everyday tasks. This makes it easier to involve users in identifying problems. But it also means that problems that are not identified and solved will probably frustrate a large number of users.” 

Also, the Professor points out, user-expectations play a part in their experience of computer issues. For example, the professor says that although “Our technology can do more today, and it has also become better” it seems that “at the same time, we expect more from it”. He cites the example that, “Even though downloads are faster now, they are often still experienced as frustratingly slow. ” 

Lost Productivity 

With 88 per cent of Danes using computers, laptops, smartphones, tablets, or other mobile devices at work (2018), the results of the study show that computer problems could be having a massive impact on productivity, perhaps a half to an entire day of a normal working week may be wasted on computer problems.

Also, as Professor Hornbæk points out, daily computer problems cause “a lot of frustrations for the individual user.”  

What Does This Mean For Your Business? 

If the UK businesses experience similar levels of computer problems as those suggested by this study, many may be losing money daily from the negative effects on productivity. There’s clearly room for improvement and, as highlighted by the researchers suggest, “there are no poor IT users, only poor systems” and that IT developers involving users more when designing the systems to make them as easy to use and understand may go some way towards reducing time lost through computer problems.

As the researchers highlighted, making users look at an incomprehensible box with commands or a frozen computer screen when problems occur may likely cause frustration and stress. Instead, if the computer could solve the problems without displaying commands/boxes while providing a back-up version of the system for users, this could help by enabling users to continue their work. Those designing computer systems / operating systems therefore need to take account not just of modern demands and expectations of computers, but should also focus on maximising user-friendliness, addressing common problems, and providing simple backup / workaround routes that could keep work and productivity flowing and save businesses money.

This may be an area of opportunity where AI could help in designing systems, monitoring, and diagnosing problems, ironing-out faults as they occur, and in providing help and directions to users.

FORTRAN Developed : 20th September

Q. Why Do Python Programmers Wear Specs?

A – Because they don’t see sharp!

That’s a programming humour for you. And talking of programming, there’s currently an explosion of code being auto-generated by AI and before long, human-coders may go the way of the early switchboard operators. Hmm, possibly!

Yet can you imagine painstakingly programming computers, line-by-line with assembly language, punched-cards and needing almost infinite patience? Yet that’s what life was like before “High-Level” languages came along and compiled the assembly language to make life easier.

69 Years Old This Week

One such language was reportedly first run this week in September, 1954 – 69 years ago. It was called “FORTRAN”, short for Formula Translating (depending on whom you ask) and developed for an early IBM machine (which still used vacuum tubes). The contemporary coding community were sceptical it would actually be any good, yet it quickly took off like wildfire. So if you’ve ever programmed in a language like BASIC or PASCAL at school (i.e. before all the web languages came along), you can thank FORTRAN as an early pioneer.

It was adopted enthusiastically largely because 20 lines of code in assembly language could be accomplished in just one line with Fortran. In fact, John Backus, the inventor of it reportedly said “Much of my work has come from being lazy“, during a interview with IBM’s ‘Think’ magazine.

He went on to say “I didn’t like writing programs, and so, when I was working on the IBM 701, writing programs for computing missile trajectories, I started work on a programming system to make it easier to write programs.”

Still In Use Today

And while it’s relatively ancient, it’s still in use today! Primarily crafted for engineers and scientists, it continues to be employed in areas such as fluid dynamics calculations, economic modelling, computational physics, climate simulations, computational chemistry and astronomy.

The next time you’re having to shout due to a poor signal on your mobile-phone, spare a thought for lonely NASA probes Voyager 1 and Voyager 2. The first one is now around 15 billion miles away and the signal takes over 22 hours to reach back to earth, yet it still functions after approaching fifty years in space and it was originally programmed in FORTRAN.

Not bad for something originally created by a “lazy” programmer!