Regulating Big Tech in Europe: Why, so what, and how understanding their business models and ecosystems can make a difference

42 Pages Posted: 18 Feb 2021

Date Written: december 21, 2020

Abstract

Europe is currently undertaking a frenzy of regulatory action against Big Tech. But the question arises: what will be the actual impact on Big Tech, and how will it actually improve the tech ecosystem in Europe? On the one hand, it is clear that the rise of very large digital platforms and their ecosystems raises new regulatory challenges, as existing tools are unfit to grapple with true power in the digital economy. On the other hand, it also is clear that geopolitics is driving much of the debate, with the EU reacting with profound scepticism to firms based in the USA, which also engage in unfair practices. How do these two driving forces combine to drive regulatory action? What are the key issues raised, and where do we see the power of Big Tech (and in particular, GAF – Google, Apple and Facebook) manifest in Europe? What are the current regulations likely to achieve, and how much might GAF be affected? While other BigTech firms like Amazon surely deserve a closer look, we focused on firms with a disproportionate impact on media- and focus on information. This white paper draws on an extensive project that engaged senior leaders in policy, politics, tech, industry, regulation, consultancies and academia, and also involved deep dives into how the current regulatory fervour might affect GAF, focusing on their business models and their ecosystems of complementors. We report on our expectation for the impact of regulations on GAF: limited, yet not trivial. We argue that the current regulatory discussion is missing two vital elements: an understanding of Big Tech business models, and an appreciation of how regulation will affect the broader ecosystem, both of which we review. We then consider what principles should underpin regulation, stressing the role of business models, monetization and the use of data. We argue that Europe’s best interests lie in a level playing field on the regulatory side, which allows fair competition between participants from Europe, as well as the US and China, coupled with a solid set of principles on business models. Finally, we suggest that neither competition policy nor geopolitically motivated restrictions will suffice to address the real malaise underlying European tech: proactive strategies from industrial leaders alongside a thriving and open ecosystem of tech participants will be equally important in building the foundations for future success.

Keywords: Big Tech, regulation, competition, digital, EU, DMA, DSA

Suggested Citation

Jacobides, Michael G., Regulating Big Tech in Europe: Why, so what, and how understanding their business models and ecosystems can make a difference (december 21, 2020). Available at SSRN: https://ssrn.com/abstract=3765324 or http://dx.doi.org/10.2139/ssrn.3765324

Michael G. Jacobides (Contact Author)

London Business School ( email )

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HOME PAGE: http://faculty.london.edu/mjacobides/

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