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Archive for May 18th, 2020

The debate on big tech- We can do better

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we-can-do-better

The debate about the role of technology and technology companies in the economy and in society is inevitable, and largely positive. It is necessary and healthy for experts to discuss the virtues and perils of different ideas and approaches, no matter how creative, conservative, revolutionary. I am not sure, however, that many of the ongoing debates will assist society in reaching sensible solutions. I don’t know where the right balance lies, but I do have a clear idea of how we are not going to attain it. So this is not a post on substance; it is (mostly) a post on process.

An important disclaimer: I do have professional interests in this debate and work for companies at the center of these debates (on the last point I discuss how that affects my personal views and attitude).

1-.The tone. It is perplexing to see how much animosity these debates create, how many personal attacks and high-pitched criticism they trigger, how they make awkward friends and new enemies. But we should all be above that. We probably all think we are on the right side of the debate (which is not necessarily a bad thing). But that doesn’t entitle anyone to be offensive or dismissive of those with different ideas. If anything, we have the responsibility to demonstrate the merits of our ideas, and not let them lose weight because of our tone. Being a lawyer is mostly about empathy, and too often we show too little. Can’t we try to be less controversial and more civilized? [A tip: the ones who insult the least are the ones who tend to be right]. All these are but minor issues in the grand scheme of things. Even within competition law, there are arguably more important ongoing debates eliciting less passions and commentary

2-. The temptation of partisanship and simplicity. Unfortunately, moderate views are often a faithless creed. Pablo wrote some time ago about the “footballization” of competition debates. As he explained, “it would seem it is all about joining a team – becoming a loud, proud member of a camp that supports everything that comes from within and opposes whatever comes from the other side”. That’s sadly true. Life is much more comfortable when you align yourself with one view and know always what line to take. If only things were that easy… Most debates are about trade-offs, and that is certainly the case of debates on big tech. If you refuse to understand the real points others are making, your arguments will be weaker, it not flawed. That’s an easy mistake to make (perhaps I make it all the time), but that’s precisely why we should resist the instinct. More nuance would do much good.  More active listening and constructive engagement with/by the affected stakeholders (companies, consumers, industry associations) would also be desirable.

3-. The lack of neutrality. Last weekend we received a critical comment pointing to alleged conflicts of interests in lawyers/economists participating in these discussions. So take this also as a comment on that comment. There is nothing wrong with people advocating for private interests; that’s the way the system works. Lawyers and consultants do that for a living, and I don’t see how one can criticize us for doing our job. That also includes academics who may choose to do consulting, which I believe it’s absolutely fine. To be sure, we are all for clear disclosures to permit closer scrutiny on the merits by the audience. That said, I can see the point that there is too little neutrality in professional circles and in academia. People like Pablo are all too rare. It’s legitimate and most helpful for academic to voice out their views, no matter whom they benefit. But I do admit there’s a problem when advocacy work is concealed as an academic piece. [A tip: If someone’s research is only dictated by their client base, then you know they are not academics]. We should also hear more from more people, including experts in related areas.

 4-. The theory vs the evidence. Our job, as lawyers or economists, consists in applying established rules and principles to a given set of facts. We are not entitled to our own facts, nor to ad hoc principles that would ensure we always win. The role of evidence is not to support preconceived views, but to challenge and test them in order to verify them. And this is particularly true for public authorities, who have the higher (and more difficult) responsibility to get it right. So we should not exclude the evidence that contradicts our instincts; we should look forward to it, because it may allow us to understand whether our views may be wrong, and how they can be polished. And if it is the case that this evidence is wrong, irrelevant or confirms our views, then we can reason through it and explain why. The EU Courts were right to point out that the only way of avoiding manifest errors is to have all the necessary evidence to avoid a complex situation. By the way, we can all probably agree that this should also apply to legislation and regulation.

5-. The frustration of uncertainty. Even (or particularly) when we look hard into evidence, the right answer is often “we don’t know” or “it depends”. That is frustrating, but it is what it is. This is true in most areas entailing some degree of complexity, also  when it comes to digital markets. The Special Advisers’ Report, for example, was open about it: there are many issues we simply don’t know. Can network effects tip markets? It depends. Can data be the source of competition concerns? It depends. Can self preferencing be anticompetitive? It depends. If there’s anything we know, is that we know very little. Does this suggest that we should never take action? Not at all! It means there should be even closer scrutiny, just not broad brushing. [For a similar message, see para. 80 of the recent Budapest Bank Judgment]. At the end of the day, we might still have doubts. Without recognizing that there might be doubts and shades of gray, instead of just black or white, we are unlikely to make progress.

6-. The alleged blind gap (?). What sets competition law apart from other areas of the law is its wideness and its reliance on vaporous legal concepts. That’s its blessing (it can immediately adapt to new realities and new economic theory), but that’s also its curse (hammer-nail, etc). So I think that it’s unfair on the discipline to dismiss it due to alleged blind gaps. Now, where is that gap? Is there any practice harmful to competition that EU competition authorities are not/ have not been able to effectively pursue? In my mind, the German Facebook case (discussed here) is a perfect example of how we are failing to address, or properly frame, the real challenges for enforcers. Nothing in the Düsseldorf Court’s Order suggests that there is anything wrong with a new theory of harm based on exploitative privacy policies; the reason for the annulment was lack of evidence. In reality, the problem is not that competition law and competition authorities cannot adapt to new theories and realities. If there is evidence of anticompetitive conduct in digital markets (which may very well exist), then competition authorities have the tools to address that. The problem is that we (as plaintiffs, authorities, etc) need to do our homework if we want to establish an infringement on the basis of evidence.

7-.The approaches to uncertainty (on the rule of law). What frustrates some people about competition law might actually not be the fault of competition law, but of Law alone. Legal principles and rules (allocation of burdens, presumptions, etc) articulate ways of dealing with uncertainty. These rules incorporate the lessons of experience and factor the relevant trade-offs. In any sanctioning regime, arguably the most important presumption is the presumption of innocence. When we speak about “Type-2 errors”, etc. we also need to understand that we have to operate within the confines of the rule of law and of that presumption. That might be uncomfortable, but that is what makes us civilized and what protects us from arbitrariness. Let me invoke, again, the words of General Court President Marc van der Woude: “where the contested conduct of the public authorities is repressive in nature, it is hard to conceive, at least in free democratic societies, that citizens and firms can be condemned on the basis of estimates, approximations or guesses, even if they are informed ones. Uncertainty must then be balanced against the requirements of the presumption of innocence […]. [T]his balance is struck by relying on legal concepts, such as the burden of proof”. To the extent that any proposals deviate from these principles, we will not be making progress. 

 8-.The role of the Courts. The trend that worries me the most in these debates is that of “taking antitrust away from Courts”, proclaiming that precedents are but relics that hold progress down. In my view, this is intimately connected with all of the above. We might disagree with Courts (coincidentally, that tends to happen more when we lose), but they are what makes the system work. We should cherish the legitimacy that Courts give to any decision and policy. That is why I resist the proposals to turn to regulation (where there is no judicial review or evidence standards). I never really understood the Furman Report’s point that “appeals systems can contribute to the competition authority’s risk aversion” (to be sure, I get the point; just not why that’s a problem). In addition, the EU case law is remarkably sensible and balanced in its approach to competition law (for more, see here), and we should be proud about that. I’ve said this for many years when people systematically accused EU Courts of being biased in favor of the Commission, and I say the same now that some people criticize the case law as putting limits on enforcement. It’s remarkable that the Courts can be accused of the two things at the same time, which brings me to my next point (almost done!).

 9-.What the near future holds. The Courts will soon have the chance to rule on some of the test cases at the heart of these debates. Regardless of what they do, remember: the system does work. I am personally invested in some of these cases, but I will oppose any suggestion, on any side, invoking an outcome to point to alleged flaws in EU competition law or in our enforcement system. And those will come. Whatever side loses will need to accept it and adjust. In a properly functioning system, cases are won and lost (see here for Pablo’s recent take on that). That is how the law progresses, even if at a cost, and even of not always in a straight line. If test cases work, then that shows the tested hypotheses are correct. If they don’t, then that would show the test-case was flawed or that the evidence was insufficient, but it will say nothing about our discipline (other than that the system works).

 10-.My own bias. Are my views affected my work and background? Of course they are. The fact that I spend a lot of my time on these issues does make me more sensitive to them, and also contributes to shaping my views. Does that mean I might be wrong? Perhaps, yes. I’ve never worked on a case where I didn’t believe on the points we were making, so it’s a matter of probability and common sense that I might have been wrong on a good number of occasions. It is healthy to keep that in mind, and it is a reason to more carefully scrutinize the merits of what we say. Actually, for quite some time I’ve been holding thoughts on many of these issues, avoiding to engage and comment on important issues, simply because I realize my comments may be suspect of bias (and also because of my first observation about the tone of the debates). That might have been a mistake.

My commitment: Together with Pablo, we commit to making this platform a place where people can discuss different ideas openly and respectfully. We will comment on the issues that we believe are important, because there are important things going on in competition law at the moment (even if more important things are happening outside competition law). We will always play the ball, and not the man. We won’t be offensive or dismissive to people with contrary views. And we will continue to like and invite (here and to our conferences) people who think differently from us.

Written by Alfonso Lamadrid

18 May 2020 at 1:52 pm

Posted in Uncategorized