Google has made its pitch to shape the next decades of digital regulation across the European Union, submitting a 135-page response yesterday to the consultation on the forthcoming Digital Services Act (DSA) — which will update the bloc’s long-standing rules around e-commerce.
The package also looks set to introduce specific rules for so-called “gatekeeper platforms,” which wield outsized market power thanks to digital network effects. Hence Mountain View’s dialed-up attention to detail.
The lion’s share of Google’s submission focuses on lobbying against the prospect of ex ante regulation for such platform giants — something the European Commission has nonetheless signaled is front of mind as it looks at how to rein in platform power.
This type of regulation intervention aims to identify competitive problems and shape responses “before the event” via the application of obligations on players who hold significant market power versus after the fact competition enforcement when market harm has been established.
“A blanket approach to ex ante competition regulation could have unintended consequences on user experience as well as multiplying costs for European businesses,” it writes, urging lawmakers to take a long, hard look at existing regulation to see if it’s not able to do the job of ensuring markets are “working properly.”
“Where the evidence shows meaningful gaps, the next step ought to be to consider how one can modernise those existing rules and procedures to address the underlying concerns before turning to consideration of new and distinct regulatory frameworks,” it adds.
If EU lawmakers must go ahead with ex ante regulation of platforms giants, Google — an adtech giant — is especially keen that they do not single out any specific business models. So it definitely wouldn’t be a fan of ex ante regs applied only to surveillance-fueled ad-targeting platforms. Funny that.
“The criteria for identifying ‘gatekeeper power’ should be independent of the particular business model that a platform uses, making no distinction as between platforms that operate business models based on advertising, subscriptions, sales commissions, or sales of hardware,” Google writes.
“Digital platforms often operate using different business and monetization strategies, across multiple markets, geographies, and sectors, with varying degrees of competitive strength in each. Regulators should not favor or discriminate against any business, business model, or technology from the outset,” it goes on.
“In certain sectors, the platform may have market power; in others, it may be a new entrant or marginal player. The digital ecosystem is extremely diverse and evolving rapidly and it would be misguided for gatekeeper designations to be evaluated by reference to the position of an entire company or corporate group.”
Nor should lawmakers opt for what Google dubs “an overly simplistic” assessment of what constitutes a gatekeeper — giving the example of number of users as an inadequate way to determine whether a platform giant has significant market power in a given moment. (Relevant: Google market share of search in Europe exceeds 90%.)
“Recent competition enforcement demonstrates the range of platforms that have been found to have market power (e.g., Microsoft, Google, Facebook, Amazon, and Apple) and other platforms may be found to have market power in the future (borne out, for example, by the UK CMA’s investigation into online auction platform services),” it writes. “The gatekeeper assessment should therefore recognize that a range of platforms — operating a range of different business models (e.g., ad-funded, subscription-based, commission-based, hardware sales) — may hold ‘market power’ in different circumstances and vis-à-vis different platform participants.”
The tech giant can also be seen pushing a familiar talking point when its business is accused of profiting, parasitically, off of others’ content — by suggesting that when regulators are assessing whether a platform is a gatekeeper or not by considering the economic dependence of traditional businesses on a limited number of online platforms they should look favorably on those platforms “through which a materially significant proportion of business (e.g. in the form of highly valuable traffic) is channeled.”
But of course it would say that clicks are just as good as all the ad dollars it’s making.
Google is also pushing for regular review of any gatekeeper designations to ensure any obligations keep pace with fast-moving markets and competition shifts (it points to the recent rise of TikTok by way of example).
It also doesn’t want gatekeeper designations to apply universally across all markets — arguing instead they should only apply in the specific market where a platform is “found to have ‘gatekeeper’ power.”
“Large digital platforms tend to operate across multiple markets and sectors, with varying degrees of competitive strength in each,” Google argues, adding that: “Applying ex ante rules outside these markets would create a risk of deterring pro-competitive market entry through excessive regulation, thereby depriving SMEs and consumers of attractive new products.”
That would stand in contrast to the EU’s modus operandi around competition law enforcement — where a business that’s been judged to be dominant in one market (like Google is in search) has what competition chief Margrethe Vestager likes to refer to as a “special responsibility” not to abuse its market power to leverage that advantage in any other market, not only the one it’s been found to hold most of the market power.
At the same time as Google is lobbying for limits on any gatekeeper designations, the tech giant wants to see certain types of rules applied universally to all players. Here it gives the examples of privacy, transparency (such as for fees) and ranking decisions.
Data portability is another area it’s urging rules to be applied industry-wide.
It also wants to see any online ad rules applied universally, not just to gatekeeper platforms. But it’s also very keen for hard limits on any such rules.
“It will be important that any interventions seeking to achieve more transparency and accountability are carefully designed to avoid inadvertently hampering the ability of online advertising tools to deliver the value that publishers and advertisers have come to expect,” the adtech giant writes, lobbying to reduce the amount of transparency and accountability set down in law by invoking claims of privacy risks to user data; threats to commercial IP; and “bad actors” gaming the system if it’s not allowed to continue being (an ad-fraud-tastic) blackbox.
“Consideration of these measures will therefore require the balancing of factors including protection of users’ personal data and partners’ commercially sensitive information, and potential harm to users and competition through disclosure of data signals that allow ‘bad actors’ to game the system, or rivals to copy innovations. We stand ready to engage with the Commission on these issues,” Google intones.
On updating e-commerce rules and liability — which is a stated aim of the DSA plan — Google is cautiously supportive of regulatory changes to reflect what it describes as “the digital transformation of the last two decades.” While pushing to retain core elements of the current e-Commerce Directive regime, including the country-of-origin principle and freedom to provide cross-border digital services.
For example it wants to see more expansive definitions of digital services, to allow for more specific rules for certain types of businesses — pushing for a move away from the “active” and “passive” hosts distinction for platforms, to enable them to respond more proactively in a content moderation context without inviting liability by doing so, but suggesting hosting services may be better served by retaining the current regime (Article 14 of the e-Commerce Directive).
On liability for illegal content it is lobbying for see clear lines between illegal material and what’s “lawful-but-harmful.”
“Where Member States believe a category of content is sufficiently harmful, their governments may make that content illegal directly, through democratic processes, in a clear and proportionate manner, rather than through back-door regulation of amorphously-defined harms,” it writes.
It also wants the updated law to retain the general prohibition on content monitoring obligations — and downplays the potential of AI to offer any “third way” there.
“While breakthroughs in machine learning and other technology are impressive, the technology is far from perfect, and less accurate on more nuanced or context-dependent content. Their mandated use would be inappropriate, and could lead to restrictions on lawful content and on citizens’ fundamental rights,” Google warns. “The DSA can help prevent risks to fundamental rights by ensuring that companies are not forced to prioritise speed of removal over careful decision-making,” it adds, saying it encounters “many grey-area cases that require appropriate time to evaluate the law and context.”
“We remain concerned about recent laws that enable imposition of large penalties if short, fixed turn-around times are not met,” it goes on, pointing to a recent ruling by the French Constitutional Council which struck down an online hate speech law on freedom of expression grounds.
“Any new standard should safeguard fundamental rights by ensuring an appropriate balance between speed and accuracy of removal,” Google adds.
You can read its full submission — including answers to the Commission’s questionnaire — here.
The Commission’s DSA consultation closes on September 8. EU lawmakers have previously said they will come forward with a draft proposal for the new rules by the end of the year.