EU Competition Report Recommendations Would Harm Innovation, Says Leading Tech Policy Think Tank

April 5, 2019

WASHINGTON—In response to the report on competition policy and digitization commissioned by the EU antitrust authorities, which recommends new obligations for technology companies, increased scrutiny, and speedier enforcement of competition rules, the Information Technology and Innovation Foundation (ITIF), the world’s leading think tank for science and technology policy, released the following statement from its president, Rob Atkinson:

This report offers some encouraging signs for Europe’s digital economy. It rightly calls for regulatory humility, recognizing the limits to anticipating future effects of economic actors on markets. It acknowledges the value of network effects and economies of scale for digital businesses. And it rejects misguided calls to break up existing companies.

However, a number of the report’s proposals would likely harm innovation and consumer welfare if applied without taking into account possible effects on competitiveness and efficiency.

First, the report recommends shifting the burden of proof on companies that own a dominant position in platform markets to show that any action that has a negative effect on competition is outweighed by efficiency gains. But requiring companies to prove the absence of potential long-term innovation harms is unreasonable, as it would be difficult to measure those effects with certainty.

Second, the report suggests using a data access and sharing obligation as a remedy to anti-competitive conduct. But the case for data monopoly is overstated, and moreover, any data sharing requirements should be rare and done only in exceptional circumstances. 

The report also recommends shifting the burden of proof when a dominant platform with a large ecosystem acquires a small company. In fact, the promise of being acquired can spur innovation. As a result, while this requirement may make sense in certain circumstances, the burden should remain on the regulator to show that the merger would harm competition within at least one market of the ecosystem.