France, Germany and the Netherlands want more control over mergers

The logos of Google, Apple, Facebook, Amazon and Microsoft are displayed on a mobile phone with an EU flag in the background.

Justin Tallis | AFP via Getty Images

LONDON – The European Union must be more ambitious in its control of big technologies and smaller acquisitions that often go unnoticed, say Germany, France and the Netherlands.

The 27-member bloc is currently discussing new legislation that could ultimately force big tech to change the way they operate. The Digital Markets Law, a proposal presented last December, aims to level the playing field in the EU market and could be implemented as early as 2022. In this context, Berlin, Paris and The Hague are calling for a stricter stance about mergers.

“We need to strengthen and accelerate merger control, in particular against certain control platforms to address the strategies of platform companies that consist of systematically buying up start-ups to stifle competition,” the countries said in a joint statement.

It has long been a concern for European capitals that some of the world’s largest tech companies have bought up startups, including in the EU, in deals that have escaped scrutiny because they did not reach a certain turnover threshold.

Whereas high-profile purchases, such as Microsoft’s acquisition of Skype in 2011, are making headlines; smaller offers often go unnoticed. In 2019, Apple bought an artificial intelligence company in the UK (now no longer an EU nation) for an undisclosed sum, for example.

Speaking to CNBC in 2019, EU competition chief Margrethe Vestager spoke about how there has been a “shopping spree” in Europe.

Marietje Schaake, president of the CyberPeace Institute, told CNBC’s “Street Signs” on Thursday that the position of Germany, France and the Netherlands illustrates “a growing concern about how existing competition or antitrust rules may be applied in a digital world”.

“Mergers and acquisitions in particular have come under scrutiny when we saw, for example, Facebook buying WhatsApp and Instagram at excessively high prices and that led to allegations that they were basically buying potential competitors before they had the chance,” he added.

In their statement on Wednesday, the three nations said the EU should set “clear and legally determined thresholds for acquisitions by gatekeepers of relatively low-turnover but high-value targets.”

Furthermore, they asked the EU to adapt “the substantive test to effectively address potentially predatory procurement cases.”

The 27 EU member states are currently discussing the proposed Digital Markets Law made by the European Commission in December together with European lawmakers. Speaking to CNBC on Tuesday at the Digital ReThink Summit, European lawmaker Stephanie Yon-Courtin said the plan is to have “something ready” by the end of the first half of 2022.

The EU is already a leading regulator on the tech front, but the bloc feels its rule book needs to be updated in order to better cope with the growing power of big tech.

Tommaso Valletti, an economics professor at Imperial College Business School, said the EU has not been prepared to deal with the many mergers that have taken place over the years.

“We’re still a bit behind on mergers,” he told CNBC at the same conference, adding that over the past 20 years, Google, Amazon, Facebook, Microsoft and Apple have acquired 1,000 firms and none of these deals have been banned.

“This has been a global problem,” he said.

Add Comment