This article is part of the series — What to Expect from 2021.
With the advent of the COVID-19 vaccine, 2020 will end on an optimistic note. Yet, many challenges lie ahead, from unfolding a global vaccination strategy effectively to making sure governments and central banks support countries’ economies during what will be a bumpy 2021 start.
Policy discussions and initiatives related to the economy’s digitalisation will also come back to the front line. Big Tech companies have gained a lot of attention from regulators and legislators on data privacy, antitrust, cybersecurity and financial stability issues. The recent pandemic highlighted other tech-related issues, such as digital divide, racial equity, freedom of speech and the need for international technology governance.
These issues are not new. European Union (EU) regulators have been focusing on some of them for quite some time. The European Commission has
announced a major overhaul of the current EU’s legal framework, the Digital Services Act, which will include imposing rules on platforms indispensable for companies to reach consumers and access online markets. The novelty for 2021 is that the US and China will enter the regulatory arena too. It matters as both countries are home to most of the Big Tech companies.
<1>
The novelty for 2021 is that the US and China will enter the regulatory arena too.
The regulatory shift from the US and China has become apparent in the past few months. In October, the US House Judiciary Committee’s antitrust panel completed a 16-month investigation on Amazon, Apple, Google, and Facebook.
It found that “BigTech” has "monopoly power” in key business segments and that these companies have “abused” their dominance in the marketplace. In China, Ant Group’s IPO cancellation and the fines to Alibaba and Tencent-backed online bookstore, among others,
confirmed the regulatory push announced in November with the draft of antitrust regulation.
The legal, regulatory and political momentum to take action is there. Yet regulations remain mostly globally uncoordinated, ignoring that these platforms challenge existing legal and regulatory jurisdictions — both geographic and sectoral. Such a segmented approach to regulation may lead to costly, sometimes unnecessary regulation and arbitrage across regulatory jurisdictions in search for the friendliest clime. The world needs a global monitoring and regulatory framework that will accommodate the different priorities of countries, support inter-jurisdictional coordination and minimise regulatory fragmentation risk.
The competitive edge of digital platforms lies, partly, in the data they collect on their network. Part of the solution is, then, to share access to that data. Few initiatives already exist, mostly in the banking world, that could provide a starting point. The UK’s open banking regulation allows customers to migrate their information between platforms when not satisfied with their service, increasing competition among platforms.
The world needs a global monitoring and regulatory framework that will accommodate the different priorities of countries, support inter-jurisdictional coordination and minimise regulatory fragmentation risk.
When it comes to Big Tech, interoperability across platforms must go hand in hand with data portability, so data migration is convenient and safe. Facebook, Twitter, Apple, Google and Microsoft have been working on this since 2018 with the
Data Transfer Project, the goal of which is to “create an open-source, service-to-service data portability platform so that all individuals across the web could easily move their data between online service providers whenever they want.” But it is still a work in progress.
Data portability should also ensure reciprocity, a concept introduced in Australia Open Banking, forcing any accredited data recipient to provide equivalent data. Extending this concept to other sectors beyond banking and utilities will require defining what
equivalent data is. Ultimately, this symmetric access to customer data, with the customer’s permission, will facilitate the emergence of competitors.
Lawmakers and regulators cycles across several major countries appear to be in sync in 2021 regarding tech and Big Tech oversight. This is a one-time opportunity to design an innovative oversight framework that could accommodate financial inclusion and financial stability, market efficiency gain and antitrust issues, and consumer welfare and data usage. They may even have enough leverage to convince Big Tech to join the effort willingly.
<1> Google (Alphabet), Amazon, Facebook, Alibaba and Tencent are commonly referred as Big Tech companies.
Claude Lopez is Head of Research Department at the Milken Institute.
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