Competition law versus big tech

Answer

This article explores the concept and evolving competition regulatory landscape surrounding ‘gatekeepers’ and ‘big tech’ (referred to collectively as ‘GBTs’ in this article). It examines how global jurisdictions, particularly the EU, the UK and the US, are addressing the influence and practices of dominant digital platforms in response to growing antitrust concerns.

The article aims to establish a nuanced understanding of the legislative, enforcement and competitive dynamics that shape GBTs regulation, with an emphasis on the EU’s Digital Markets Act (DMA), the UK's Digital Markets, Competition and Consumer Bill (DMCC) and the US's antitrust actions. In addition, it highlights how these frameworks compare in their approaches to tackling anti-competitive behaviours, the integration of consumer protection and the implications for innovation and market fairness.

By examining sector-specific challenges, such as generative AI, the article underscores the global significance of regulating GBTs. It also considers the broader geopolitical and collaborative dimensions of competition policy, offering insights into how these regulatory strategies might reshape the digital economy and set precedents for other jurisdictions.

Gatekeepers/big tech

The term ‘gatekeeper’ has become central to global antitrust discourse, especially after the EU’s DMA designated six companies – Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft – as gatekeepers in 2023. These firms, managing 22 designated core platform services, now face stringent obligations in the EU aimed at curbing anti-competitive practices.

Although the term ‘gatekeeper’ isn't formally enshrined in US law, it features prominently in the Federal Trade Commission (FTC) and Department of Justice (DOJ) discussions alongside the more commonly used phrase ‘big tech’, which typically refers to the big five US tech companies: Alphabet, Amazon, Apple, Meta and Microsoft.

Similarly, the UK's DMCC, primarily effective 1 January 2025, establishes a framework for firms with strategic market status (SMS) in digital activities, likely encompassing most gatekeepers. This framework is effectively equivalent to the EU's gatekeeper concept.

Current climate

Competition regulators are closely examining the activities of GBTs, often perceiving these corporations as potentially hindering competition in digital markets. Regulators are particularly focused on practices such as pricing out smaller companies, imposing strict terms on developers, creating barriers to switching, self-preferencing, and securing exclusive deals with suppliers. Regulators perceive these corporations as entities with substantial influence over the success of other companies within the industry.

The current antitrust landscape for GBTs varies across the EU, UK and US.

EU

Since the introduction of the DMA in 2023, the designated GBTs have faced heightened scrutiny, and many big fines have been imposed. The DMA mandates several requirements for those designated:

• They must allow interoperability with third-party services.
• They must provide access to data from their core platform services.
• They must permit third-party app stores.
• They mustn’t restrict app developers from promoting products outside the platform.
• They mustn’t prevent users from uninstalling preinstalled software.
• They can’t combine personal data without user consent.
• They can’t favour their own products in rankings.
• They can’t impose most-favoured-nation clauses.

In line with the DMA, the European Commission (EU Commission) has been at the forefront of aggressive enforcement against the designated GBTs. Recent fines highlight the bloc's determination:

• Meta has been fined €797.72 million in November 2024 for tying its Facebook Marketplace to Facebook, harming competitors in the classified ads market.
• Apple has been fined €1.8 billion in March 2024 for exploiting its dominant position through anti-steering practices in the market for distributing music streaming apps to iPhone and iPad users via its App Store, thereby preventing app developers from promoting cheaper alternative subscription services.
• Apple could face a penalty of up to 10% of its global annual revenue, potentially exceeding $30 billion, for failing to allow app developers to 'steer' consumers to offers outside the app store free of charge. Apple has until March 2025 to comply in order to avoid the fine.
• Microsoft could face a fine of up to 10% of its global annual revenue for failing to satisfy the EU Commission over insufficient changes following the competition breach relating to bundling Teams with Office 365 (commenced July 2023). The EU Commission's investigation is ongoing.

In addition, the EU has imposed record fines on the designated GBTs for GDPR violations, such as Meta’s €1.2 billion penalty in 2023 for improper data transfers, underscoring the broad scope of EU regulation and the general regulatory crackdown on GBTs.

In the near future, the EU is expected to continue its rigorous oversight, imposing substantial fines on the designated GBTs that fail to comply with these regulations.

UK

The DMCC Act gives the UK's Digital Markets Unit (DMU), part of the Competition and Markets Authority (CMA), the power to designate undertakings as having Strategic Market Status (SMS) in respect of a digital activity and to impose conduct requirements on designated undertakings. The act designates firms with SMS if they have substantial and entrenched market power, strategic significance in digital activities and either a UK turnover of more than £1 billion or a global turnover of more than £25 billion. This’ll likely catch most of the GBTs. It’ll introduce tailored rules for SMS undertakings, including:

• conduct requirements: ensuring fair dealing, transparency and open choices;
• merger oversight: enhanced reporting to prevent anti-competitive consolidation; and
• flexible obligations: bespoke regulations tailored to each SMS undertaking.

Building on previous scrutiny

When fully implemented, the DMCC will enhance the focus on GBTs, continuing the scrutiny of the past few years that began when the CMA blocked the Meta/Giphy merger in 2022, a decision upheld by the Competition Appeals Tribunal (CAT). The CMA ordered Meta to divest Giphy due to concerns that the merger would reduce competition in social media and display advertising markets and stifle innovation. Similarly, the CMA blocked Microsoft's acquisition of Activision Blizzard in 2022 until a revised deal addressed its concerns, eventually clearing the acquisition in October 2023.

Why was the DMCC introduced?

Despite movement against GBTs before the DMCC, the act was introduced in the UK to address key shortcomings in traditional competition law. Traditional UK competition law, primarily focused on ex-post regulation, struggled to prevent anti-competitive practices in rapidly evolving digital markets, where harm to competition is often subtle and entrenched before regulators can act. The DMCC introduces ex-ante regulation, empowering the CMA to impose proactive measures on designated GBTs before they engage in harmful conduct, such as self-preferencing or data monopolisation.

Additionally, traditional UK competition law lacked sufficient consumer protection provisions for the digital environment, failing to address issues misleading advertising or subscription traps. The DMCC integrates these protections, allowing the DMU, as part of the CMA, to tackle digital consumer harms alongside competition concerns.

Furthermore, the fragmented enforcement under previous law limited the ability to regulate the dominant position of tech platforms effectively. The DMCC centralises enforcement through the DMU, providing a more focused and consistent approach to GBTs. It also promotes market contestability, addressing barriers to competition created by network effects and data aggregation that traditional competition law failed to tackle.

The DMCC represents a continuation of this heightened regulatory outlook on GBTs.

Differences between DMA and DMCC

The DMA and DMCC represent key legislative responses to concerns over GBTs strong market presence, but their legal structures, enforcement mechanisms and regulatory objectives diverge significantly, reflecting differing regional priorities and consequently have differing effects on GBTs.

Legal structure and scope

The DMA, an EU regulation, applies uniformly across all member states without requiring national implementation. It imposes ex-ante obligations on large digital platforms that meet clear, quantitative thresholds, such as €7.5 billion in EU revenue and 45 million monthly active users. This approach is rooted in the principle of preventive regulation, targeting anti-competitive behaviours before they occur. Designated GBTs are prohibited from engaging in practices such as self-preferencing, exclusive tying of services and restricting data portability. The DMA's uniform nature provides legal clarity but offers little flexibility to adapt to local market nuances.

In contrast, the DMCC, as UK national legislation, reflects a post-Brexit regulatory framework that combines competition law reforms with robust consumer protection provisions. It grants the DMU, within the CMA, the authority to enforce rules not only against GBTs, but also designated digital activities that may fall short of the EU's thresholds. This dual focus enables the DMCC to address systemic competition issues alongside specific consumer harms, such as subscription traps, misleading advertising and fake reviews, offering broader applicability.

Enforcement mechanisms

The DMA centralises enforcement under the EU Commission, which investigates, monitors compliance and imposes penalties. Non-compliance by GBTs can result in fines of up to 10% of global turnover, rising to 20% for repeat offenders and behavioural remedies to ensure compliance. By centralising enforcement, the DMA reduces the risk of fragmented regulatory application but limits the involvement of national competition authorities.

The DMCC takes a more localised and adaptive approach. It grants the CMA discretion to designate specific digital activities for regulation, tailoring remedies and obligations to market realities in the UK. The CMA’s toolkit includes civil penalties up to 10% of global turnover against GBTs, alongside specific fines for breaches of consumer law, such as failing to offer clear cancellation options for subscriptions. This structure enables the CMA to intervene dynamically, addressing evolving digital market challenges with both ex-ante and ex-post mechanisms.

Implications for GBTs

The DMA emphasises clarity and harmonisation but imposes rigid compliance obligations that could stifle innovation. Its categorical prohibitions – such as bans on data combination across services without user consent – create bright-line rules but may lead to overregulation in edge cases, limiting platform flexibility in product development. Additionally, the high thresholds for GBTs designation mean smaller platforms with emerging dominance may evade scrutiny until their practices have already harmed competition.

The DMCC, with its flexible framework, addresses these gaps by allowing the CMA to proactively regulate harmful practices regardless of platform size. However, this flexibility also introduces legal uncertainty, as businesses may struggle to predict when and how the CMA will act. The integration of consumer protection law into the framework further broadens the regulatory net, potentially creating a heavier compliance burden for platforms operating in the UK.

Comparative enforcement challenges

For GBTs operating globally, the coexistence of these frameworks presents challenges. Under the DMA, compliance efforts are centralised but extensive, requiring significant operational changes across the EU market. The DMCC necessitates additional compliance strategies tailored to UK-specific regulations, particularly in areas such as subscription management and advertising practices, which are less emphasised in the DMA. These differing approaches risk regulatory fragmentation, which could increase costs for multinational firms and potentially disincentivise investment in regulated regions. This is particularly relevant to GBTs due to their size.

Moreover, the appeals process under each framework highlights divergent legal cultures. Disputes under the DMA are adjudicated through the EU judicial system, primarily the European Court of Justice, with often lengthy and complex litigation. By contrast, the DMCC provides a localised redress mechanism within the UK courts, potentially leading to faster, more context-sensitive resolutions.

Both have significantly altered the competitive landscape around GBTs, but it’s clear that there are notable differences between their respective legislation and their impacts on GBTs.

US

Although the US doesn’t have the same stringent legislation on GBTs, there are significant ongoing investigations that underscore the country's intensified efforts to address GBTs practices through major cases and proposed structural reforms:

• Google: the DOJ has proposed measures to break up Google's monopoly on search. These measures include selling the Chrome browser; a five-year ban from the browser market; blocking payments to make Google the default search engine; and potentially divesting the Android operating system. Additionally, Google would need to allow publishers to block their data from being used to train its AI models and make its search index available to competitors. These actions follow a court ruling that found Google maintained an illegal monopoly over search services.

The proposed measures to dismantle Google’s search monopoly could significantly reshape the US tech landscape. If enacted, they may weaken Google's dominance in traditional search, promote consumer choice and set a powerful precedent for regulating GBTs, particularly in the realms of antitrust enforcement and AI data usage.

• Amazon: the FTC, supported by 17 (and now 19) state attorneys general, filed a lawsuit in 2023 alleging Amazon’s anti-competitive practices harm both sellers and consumers. The complaint alleges that Amazon unlawfully monopolised the online superstore and online seller services markets by using two pricing algorithms and tying Prime customers to its fulfilment service. Additionally, Amazon is accused of using a secret pricing algorithm called ‘Project Nessie’ to further harm competitors. On 7 October 2024, the district court denied Amazon's motion to dismiss the federal antitrust claims, although some state claims were dismissed without prejudice.

The FTC's lawsuit against Amazon, bolstered by widespread state support, could set a transformative precedent in US antitrust law, targeting digital marketplace practices. The case's progress, especially the court's refusal to dismiss key federal claims, signals a heightened scrutiny of tech giants and may lead to structural reforms that reshape the online retail ecosystem.

US political landscape

While some foresee changes in the intensity of regulatory scrutiny under new political leadership, bipartisan momentum to rein in GBTs remains strong. The Biden administration’s assertive antitrust agenda may shift in some capacity under Trump’s administration, as many anticipate that the proactive FTC Chair Lina Khan, who embraces neo-Brandeisian principles, will be replaced by a more centrist Republican with a less aggressive stance. Khan's approach has focused on reinvigorating antitrust enforcement by targeting 'killer acquisitions' that reduce potential competition and vertical transactions that exclude rivals, emphasising a presumption of anticompetitive harm based on combined market shares. This approach targets the broader economic and social harms of market concentration, such as reduced innovation, harm to small businesses and excessive corporate power. In the past, the Republicans have generally adopted a more permissive antitrust stance.

Consequently, there’s widespread speculation that the merger guidelines introduced by the FTC and DOJ in 2023, which emphasise stricter thresholds for identifying anti-competitive mergers, could be rescinded in favour of a more lenient, non-interventionist approach.

Nevertheless, Donald Trump has made his intentions clear regarding GBTs by appointing Gail Slater to lead the DOJ’s antitrust division. Slater was a special assistant to President Trump for technology, telecommunications and cybersecurity during his first administration. Slater will take over the Google lawsuit concerning the Chrome browser, as well as the case against Apple’s business model. Trump reiterated his stance against GBTs on Truth Social: "Big Tech has run wild for years, stifling competition in our most innovative sector and, as we all know, using its market power to crack down on the rights of so many Americans, as well as those of Little Tech!" He further added: "I was proud to fight these abuses in my First Term, and our Department of Justice’s antitrust team will continue that work under Gail’s leadership." Trump’s first term witnessed significant antitrust actions against Google and Meta – efforts that continued into the Biden administration. His administration actively scrutinised major tech deals and, in February 2020, he directed the FTC to investigate acquisitions by five leading tech firms that bypassed premerger notifications under the Hart-Scott-Rodino Antitrust Improvements Act, aiming to uncover anti-competitive practices.

The extent to which a Trump-led administration might ease the US’s overall antitrust stance remains uncertain, but it appears clear that the aggressive stance against GBTs will continue.

US approach against GBTs versus EU and UK

Despite the US’s growing litigious presence against the GBTs, the EU’s DMA and the UK’s incoming DMCC provide more proactive and comprehensive frameworks for regulating GBTs compared to the US approach, which remains reactive and more narrowly focused.

The EU and UK take a more proactive role in regulating GBTs than the US due to several key factors. The DMA and incoming DMCC establish clear and quantitative thresholds, such as revenue and user metrics, to identify GBTs, ensuring a proactive approach against GBTs winner-takes-all approach. In contrast, US regulators often face challenges defining ‘dominance’ in a rapidly evolving tech landscape. The EU and UK emphasise structural solutions, such as breaking up integrated operations or mandating interoperability, which go beyond the monetary fines and settlements typical in US enforcement. The UK’s DMU within the CMA operates with a specific mandate for digital markets, while in the US, broader antitrust bodies like the FTC and DOJ share responsibilities, diluting focus and resources. Additionally, the EU and UK systems streamline enforcement timelines, whereas the US reliance on court-driven outcomes often results in drawn-out battles, delaying remedies for anti-competitive behaviours.

EU and UK frameworks also consider the broader economic impacts on innovation, SME participation and cross-border trade, aiming to create fairer and more competitive markets. US enforcement typically centres on consumer prices and market power, overlooking these broader impacts. The DMA and DMCC are tailored to address challenges unique to the tech sector, such as data portability, platform neutrality and self-preferencing, whereas US antitrust laws, rooted in traditional markets, often struggle to adapt to digital economy complexities. Lastly, the EU and UK regulatory models often inspire or pressure other jurisdictions to adopt similar frameworks as this article will show later in Australia and India for example, while the US approach, although influential, has been slower to set global precedents in the fast-evolving digital market.

Sector insight

AI and GBTs

Alongside key sectors being scrutinised by competition authorities, such as app stores, cloud computing, online advertising and e-commerce, generative AI has emerged as the latest market where GBTs are engaged in a tug of war with regulators.

Generative AI has become a focal point for regulation. On 23 July 2024, Margrethe Vestager, Executive Vice-President and Competition Commissioner of the EU Commission; Sarah Cardell, Chief Executive Officer of the CMA; Jonathan Kanter, Assistant Attorney General of the DOJ; and Lina Khan, chair of the FTC, issued a joint statement expressing concerns about the practices of GBTs in this emerging market, including:

• concentrated control: dominance over foundational AI models and infrastructure;
• market entrenchment: using AI investments to solidify existing power; and
• exclusivity clauses: restricting competition via partnerships or acquisitions.

GBTs AI shopping spree

GBTs investment in AI startups has become a significant trend, reflecting a strategic move to dominate the AI landscape. The scale of these investments is remarkable. Microsoft has led the way with a $13 billion investment into OpenAI and an additional $1.3 billion in Inflection AI. Amazon has committed $4 billion to Anthropic, a competitor founded by OpenAI alumni, while Google has invested $500 million with a promise of $1.5 billion more. Other emerging AI firms such as Hugging Face and Mistral have also attracted substantial funding from these tech giants.

Regulatory backlash

In the US, antitrust authorities like the FTC and DOJ are examining mergers, data exclusivity and self-preferencing practices, considering broader impacts on innovation and competition. The UK’s CMA is investigating AI markets to ensure transparency and fair access, particularly in relation to data control and algorithmic practices.

The EU, however, is leading with regulatory frameworks such as the AI Act. The EU AI Act regulates AI to ensure safety, transparency and accountability, particularly for high-risk applications, including facial recognition and critical infrastructure. It classifies AI systems by risk level, imposing stricter rules for high-risk technologies and requiring transparency, human oversight and robust data protection to safeguard fundamental rights. The AI Act alongside the DMA provides a comprehensive approach to managing AI risks, emphasising transparency, fairness and accountability, while addressing concerns over monopolistic behaviour.

Consequently, these regulatory bodies are closely monitoring practices such as 'reverse acqui-hires,' where GBTs acquires talent or licenses technology without fully purchasing startups. For instance, Microsoft has faced scrutiny from the CMA for hiring Inflection AI employees, and Amazon has been examined by the FTC for similar dealings with Adept. Additionally, Microsoft's $13 billion investment in OpenAI is under investigation for potential exclusivity clauses that could harm competitors, with the FTC, CMA and EU Commission involved (although the EU Commission later decided not to review the partnership, it submitted follow-up requests in June). Another significant issue being monitored is vertical integration in which companies that own both foundational AI models and their implementation platforms could engage in self-preferencing, prioritising their AI solutions over competitors’ offerings. This is analogous to issues in other tech sectors, such as app stores or search engines. Regulators are concerned that such arrangements may allow GBTs to dominate AI development, stifling innovation and suppressing competitive threats, even if many partnerships are harmful.

For GBTs, it’s a clear warning: the era of unchecked dominance is being challenged, one AI investment at a time.

Future implications for GBTs

The regulatory crackdown on GBTs shows no signs of slowing, with competition authorities worldwide ramping up efforts to address monopolistic practices in the digital economy.

The EU’s DMA sets the benchmark for pre-emptive regulation, imposing stringent rules on digital GBTs and threatening severe penalties, including fines and potential structural remedies. This shift from reactive to proactive regulation reflects the EU's leadership in shaping the future of digital markets.

In contrast, the US continues to focus on litigation over legislation. Agencies such as the DOJ and FTC have initiated high-profile lawsuits against companies such as Google and Amazon, accusing them of abuse of dominance in search, e-commerce and digital advertising. However, the lack of a comprehensive law equivalent to the EU’s DMA or the UK’s DMCC highlights a gap in the US regulatory landscape. While bills such as the proposed American Innovation and Choice Online Act aim to curb self-preferencing and other anti-competitive practices, they face political and procedural hurdles, leaving their future uncertain.

Post-Brexit, the UK has adopted a more agile framework. The DMU and the incoming DMCC enable swift adaptation to market changes, with a focus on dominant platforms in online advertising and app ecosystems. This approach complements the broader international trend of addressing gatekeeping through specialised tools tailored to evolving digital markets.

International awareness

Globally, collaboration is becoming a crucial strategy. Initiatives such as the G7 Digital Competition Network, which brings together G7 competition authorities and policymakers to address competition issues in digital markets, are promoting regulatory alignment to effectively manage the cross-border operations of tech giants. For example, they recently met in Rome on 3 and 4 October, 2024 to discuss the rapid development and deployment of technologies based on AI , including generative AI foundation models and algorithms.

Brazil’s recent actions against Apple illustrate this momentum: its antitrust regulator, the Conselho Administrativo de Defesa Econômica, has ordered Apple to remove restrictions on in-app payment methods or face daily fines of $43,000 per day.

Countries such as South Korea, India and Australia are also tightening regulatory scrutiny on GBTs, each with unique approaches. The Korea Fair Trade Commission is aiming to revise the Monopoly Regulation and Fair Trade Act to curb anticompetitive practices in the online platform market. India's Draft Digital Competition Bill 2024 aims to regulate large digital entities, classified as Systemically Significant Digital Enterprises, and strengthen the Competition Commission of India’s enforcement powers. Australia has published its framework for a new digital markets regime, amending the Competition and Consumer Act 2010 to introduce key features and allow the Australian Competition and Consumer Commission to impose detailed obligations on designated digital platform services.

This highlights the global trend of competition law targeting GBTs beyond the EU, UK and US, as well as the adoption of the EU and UK-designated GBTs method as a template for other jurisdictions.

Conclusion

As regulatory frameworks evolve, GBTs face mounting compliance challenges and pressure to adapt their business models. The EU’s DMA could inspire similar measures globally, with proposed legislative changes in Australia and India reflecting this trend. Meanwhile, ongoing litigation in the US and the UK’s adaptable regulatory approach further intensify scrutiny of the digital sector.

These converging efforts herald a transformative era for the digital economy, as authorities seek to rebalance power, safeguard innovation and promote fair competition. Landmark fines, structural reforms, evolving legislation and international collaboration are reshaping the competitive landscape. As AI and digital markets expand, regulators believe that sustained oversight will be crucial for fostering an equitable and dynamic economy. There’s no indication that the competition law crackdown on GBTs will slow anytime soon.

Joshua Bisdée is a trainee solicitor at Shoosmiths.