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EU's Vestager Hints Big Tech Will Have to End ‘Self-Preferencing' Under New Competition Rules

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  • The European Union is due to announce an overhaul of digital regulation later this month, which could hurt the business models of Big Tech.
  • Often tech giants show their products at the top of online search engines, which increases the chances that customers will opt for their services and is known as self-preferencing.
  • Margrethe Vestager, the head of competition policy in the EU, told CNBC that "you don't promote yourself when your services (are) in competition with other services."

LONDON — The EU's competition chief has suggested that tech giants will have to change how they promote themselves as the bloc prepares to revise its competition rulebook. 

The European Union is due to announce an overhaul of digital regulation later this month, which could hurt the business models of Big Tech. The new rules will seek to have stronger oversight over illegal and harmful content, but also ensure that smaller firms can compete against major multinationals operating in Europe. 

"With power, with strength comes responsibility and part of that is, for instance, that you don't promote yourself when your services (are) in competition with other services," Margrethe Vestager, the head of competition policy in the EU, told CNBC on Friday. 

Often tech giants show their products at the top of online search engines, which increases the chances that customers will opt for their services. This is known as self-preferencing and was the reason why Spotify brought up a complaint against Apple in 2019. 

The Swedish digital music service complained that Apple had abused its AppStore dominance to favor its own music service and thus distorting the level playing field. This is one of the issues that the European Commission, the executive arm of the EU, wants to address by upgrading its rulebook. 

Speaking to CNBC, Vestager explained that "the point is not so much the size" of companies but to ensure fair competition in the EU's market. 

"That is the point, that if you have grown into this size that you actually do exercise control on yourself and that you enable other people to do their business in a way that is fair and square," she said. 

Practical changes

European policymakers have often asked for a revision of competition rules, arguing they were not designed for a digital economy.

In addition, Vestager has led many investigations against Big Tech since 2015, but there is some frustration among policymakers that they have not yielded practical changes.

For instance, in 2017, the European Commission fined Google 2.4 billion euros ($2.81 billion) for promoting its own shopping comparison service rather than allowing similar access to rival companies. Google made some changes in the wake of that case, but a study by Lademann & Associates showed in September that not much has changed. According to the study, less than 1% of traffic through Google Shopping was transferring users to rival shopping websites.

Vestager also told CNBC that sanctions against companies disrespecting market rules need to have a more "restorative" role going forward.

"The fine only has the role to punish past illegal behavior, the second part is of course that you stop what you're doing because it is illegal, and the third element is where we are pushing things… because we see how business, they suffer from illegal behavior in the marketplace," she said.

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