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~ Spotlight on ~

Vestager & Co. aim to achieve their goals, which have only issues. The recent ECJ General Court ruling in the Apple
intensified now that the pandemic has meant even bigger case, even if it only dealt with state aid and taxation, was an
profits for the FANGS via new multi-pronged legislation to embarrassing blow and a warning shot for Vestager and the
be unveiled as early as December. Commission.

Titled the Digital Service Act (DSA), it will call for new Other pending legal cases, including one against Google
Commission antitrust powers to break the stranglehold over fines imposed for “self-preferencing” its shopping
of “gatekeepers” such as Facebook and Google. Taking a search services or its terms for the use of the Android
page out of the U.S. Department of Justice’s attempt in the operating system in mobile phones, will be critical
1990s to dismantle Microsoft, the Commission wants “ex landmarks.
ante” powers to break up companies. It also wants powers
to force the Big Tech companies to share data with their Then there is the issue of transatlantic relations on the tax
competitors. front. If the EU is simultaneously trying to break up U.S.
tech companies, it will certainly further complicate the
The DSA will also call for the revamp of the 20-year-old already difficult task of finalising a new international digital
EU Electronic Commerce legislation, including changes to tax regime for multinational companies under negotiation in
regulate social media and hate speech. the OECD.

And the Commission is not alone in its determination to And even if there is mounting pressure within the U.S.
challenge Silicon Valley’s dominance in Europe. Germany to challenge the dominance of the Big Tech companies,
is also planning its own enhanced antitrust powers to tackle they have powerful sway within American political circles.
the FANGS. As was on display during a hearing in the U.S. House of
Representatives, there are political forces that support a
Despite the Brexit negotiation acrimony that continues break-up approach that the EU is considering. As for the
to flare, the U.K. Government shares the EU belief that EU, will the story of Internet 3.0 be any different than
it is time to impose structural changes on the Big Tech Internet 1.0 and 2.0? Stay tuned. ••
companies. In June, the U.K. Competition and Markets
Authority proposed that Google should be forced to share
its algorithms with competitors. Parallel to that effort are
U.K. plans to impose digital turnover taxes on the Big Tech
giants, similar to those pending or planned in France, Spain,
Italy and other EU countries.

Just how the U.K. expects to agree on a free trade agreement
with the U.S. while forcing the likes of Google to hand over
its company secrets and imposing turnover taxes on all large
U.S. tech revenues companies…is a story for another day.

Regardless of whether or not it makes sense for the
European Commission or other European governments to
dedicate massive resources to challenge U.S. tech company
dominance in such a fast-moving market, Vestager and
Company and EU member states face a significant legal and
political conundrum. While they want to use current and
possibly new EU competition laws to break up U.S. tech
companies – and Germany, France, Italy and Poland said
as much in a recent letter sent to the Vestager in February
– the same four countries are also insisting she loosens EU
competition law is loosened to allow them to build EU
digital and industrial champions.

How successful this seemingly contradictory, heavy-handed
approach targeting the FANGS will play out will ultimately
hinge on where the European Court of Justice falls on these

Alan Rhode is a co-founder at Taxmen, the one-stop-shop for legal and tax services to the e-commerce industry.

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