The Competition to Regulate Competition

Global regulators are in a race, and developers may very well be the losers.

This is a post about monopolies and big tech. Unfortunately, that also makes it a post on competition law and economic theory. For the impatient, the take-away is that officials the world over are substituting local politics for facts and data, and as a result have decided to replace economic incentives to compete with legal obligations to pursue the current government’s social goals. I am not a fan, and you shouldn’t be either. The end of the third party developer is one predictable outcome of this bureaucratic revolution.

Over the last two years, global policy makers have taken turns researching, analyzing, and ultimately issuing laws and regulations designed to rebalance the tech ecosystem. The complaint is that the large tech companies wield market power that harms competition, despite ample evidence that consumers see tremendous benefits from the wide range of low cost apps and services these companies produce. The world over, governments and bureaucrats are abandoning the “consumer welfare standard” (whether consumers enjoy low prices, ample choice and ongoing innovation) as a measure of healthy markets. Instead, they are turning to arbitrary measures of market power (the usual proxy is the number of competitors) along with even more arbitrary measures of market boundaries to justify their intervention. Worse still, the overall goal of every regulator is rapidly devolving to a race to define the global regulatory model for everyone else.

This month,  Japan offered a curated overview of the various national regulatory proposals from across the globe. As we have in the U.S. before the National Telecommunications and Information Administration (NTIA), in the EU before the European Commission (EC), in the U.K. before the Competition and Markets Authority (CMA) and in Australia before the Australian Competition and Consumer Commission (ACCC), we filed comments with Japan’s Headquarters for Digital Market Competition (DMCH). In general, our advice was in keeping with that of our broader community; to use fact-based analysis on a case-by-case basis when evaluating competitive markets, and to avoid arbitrary intervention.

Our comments to the DMCH are consistent with all of our filings around the world. The developer community is universal in their support of transparent tech platform policies and practices. They are united in their focus on promoting consumer trust in their apps and services. Most are strong proponents of industry-led codes of conduct and collaboration in extending best practices across the ecosystem. They are unified in their support for strong cybersecurity and encryption. Above all, developers want a global digital economy with harmonized rules so that they can reach the largest market possible. They are not victims of the platform economy, but willing participants and champions of a system which they helped to build and shape. Developers are not without their own economic and social power, and prefer a model where they are free to innovate and grow free from government restraint. Where they see market failures, they have demonstrated the capacity and willingness to take on big tech in the courts or the public square to force course correction (including attempts to use regulators to do their competitive dirty work).

The global war on big tech platforms has unavoidable and negative consequences for developers and startups. Emerging legal frameworks that remove tech’s ability to profit from their platforms, while simultaneously mandating they be the government’s speech police and conduct mass surveillance, will never deliver the intended outcomes. Business models will morph to avoid their reach, services will disappear, costs and burdens will shift, and ecosystems will simply close their now unsupportable markets to focus on other opportunities. Consumers will suffer, businesses will suffer, but most of all developers will suffer as they are suddenly left without a market or platforms to build on. Devs need only look to the fact that all the major platforms have urgently filled the gaps in their not-yet-completely-integrated hardware/OS/app/service suite of capabilities to see that ecosystems may soon be an artifact of economic history. If platforms integrate and disappear, so do third party app developers. Without devices, operating systems, services and apps from Apple, Google, Meta, Microsoft and Amazon, there’s just no business case for devs either.

There may be no way to change the regulatory course that global policy makers are charting. It’s ironic, but the organizations that police market competition are monopolies themselves, and by the time their work is done it will be too late to reign them in. I’m not naive, and I know that something new will rise from the ashes; that skilled developers will find new ways, in time, to apply their skills. But the digital dark ages will claim many, and there’s no certainty that something better will arise on the other side. Regulators must know that they can’t force companies into being not-for-profits doing the government’s bidding. Our best hope is that an enlightened regulator will emerge with a realistic vision of industry change from within, and that others will follow.

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By Bruce Gustafson

Bruce is the President and CEO of the Developers Alliance, the leading advocate for the global developer workforce and the companies that depend on them. Bruce is also the founder of the Loquitur Group, a DC consulting firm, and the former VP and head of the DC Policy office of Ericsson, a global information and communications technology company, focusing on IPR, privacy, IoT, spectrum, cybersecurity and the impact of technology and the digital economy. He has previously held senior leadership positions in marketing and communications at both Ericsson and Nortel, as well as senior roles in strategy and product management across wireless, optical and enterprise communication product portfolios.

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