Maintaining a Level Playing Field When Big Tech Disrupts the Financial Services Sector

Abstract

Google, Apple, Facebook and Amazon (the “GAFAs”) have been slow to disrupt the financial services sector, but they are likely to do so in the coming years. The precise nature of the disruption and the appropriate regulatory response is not clear-cut, but the GAFAs’ advantages will stem from their control of the main customer access points, such as mobile operating systems, search engine results pages, app stores, and marketplaces. This paper discusses the GAFAs’ anticipated disruption in the financial services sector in the context of competition law enforcement and the emerging regulatory regimes in the EU and UK that seek to curb the GAFAs' market power. If the new rules are drafted carefully, consumers can benefit from the innovations of the GAFAs and others without suffering the long-run effects of their further accumulation of market power. The new rules should ensure that the GAFAs do not benefit from an asymmetry of regulatory obligations whereby they are not subject to the same rules as their financial services competitors. The GAFAs’ should not be able to leverage their market power from core activities into financial services such that their financial services competitors are hindered in reacting to the GAFAs’ competitive threat.

Keywords: Banking, Financial Services, Big Tech, Fintech, GAFA, DMA, DMU

JEL Classification: G18, G20, K21, L40, L51