Yesterday, Handelsblatt (Germany's leading financial newspaper) reported on something that Politico already covered on August 10: law firms are preparing what could be an avalanche of lawsuits challenging the European Union's Digital Markets Act (DMA) and Digital Services Act (DSA) in court.
Six weeks apart, the two media reports corroborate each other. A common element is that both articles quote Gerard de Graaf, who runs the EU's liaison office in San Francisco and told reporters that the European Commission sometimes faces 15, 20 or 25 lawyers when it meets the major digital gatekeepers that the new legislation is intended to keep in check.
Handelsblatt quotes an unnamed Big Tech lawyer--it is not 100% clear but sounds like the source is outside counsel to Apple or Google--as saying that "everything's ready to go, we just need board approval."
The designation of what platforms confer gatekeeper power upon their operators is going to be the first obvious opportunity for Big Tech to challenge the law. Companies can't sue over the mere fact that the law is passed. In some countries it would be possible to have courts review the constitutionality of new legislation (and I wouldn't rule out that some companies may challenge the DMA and DSA in the constitutional courts of key EU member states, or that they would challenge national implementation rules, which could be draconian in some places). At the EU level, companies can only challenge specific Commission decisions affecting them. The initial designation decisions will be critical. Andreas Schwab MEP, the European Parliament's rapporteur on the DMA, told this blog that map services should be treated like other search engines, and I agree, but Google presumably won't. That's just one example of a Commission decision that might be appealed.
The term ex ante regulation is often used to set the DMA's approach to gatekeepers apart from traditional antitrust enforcement. This should not be misunderstood as meaning that the new legislation would prevent gatekeepers from emerging in the first place. It's just about a streamlined process. Traditional antitrust law is slow, and the burden on enforcers weighs heavy. If it takes years to make and defend a decision against a certain form of abusive conduct, but the defendant can then modify its business model and implement a new approach within a matter of weeks or months, the whole process may have to start all over again, while market realities (such as competitors being driven out of a market) are created and may become irreversible.
Compared to its U.S. counterparts (FTC and DOJ-ATR), the European Commission's Directorate-General for Competition (DG COMP) already has two major advantages even prior to the DMA and DSA entering into force:
EU antitrust law tends to be stricter.
While the FTC and the DOJ have to sue an infringer and prove everything in court (almost) like a private plaintiff, European Commission decisions are like a first-instance decision and do get some degree of deference. The standard of review is more like whether the Commission followed proper procedures (due-process rights were particularly important in the Qualcomm case, and the Commission didn't appeal further, which I also felt wouldn't have been a good use of resources) and had a reasonable basis for reaching its findings of fact. One could have a lengthy debate over what standard of review in the U.S. would be comparable to that applied in an EU General Court review of a DG COMP ruling, but it's probably somewhere between the "arbitrary and capricious" and "substantial evidence" standards. And once the EUGC has spoken, there is no more opportunity to challenge factual findings--which is going to complicate a Google appeal of last week's Google Android judgment.
One problem I see in the U.S. is that extremely complex, high-stakes antitrust cases are decided at the district court level by a single judge (with or without a jury). Those judges are extremely busy as they preside over a wide range of cases (even criminal cases)--so busy that, for example, there are almost 300 typos and similar errors in the Epic Games v. Apple judgment. They sometimes make mistakes that I believe would be much less likely to happen if big cases were put before panels of three judges, simply because six eyes see more than two. Again, Epic v. Apple serves as an example. It may be a bit of an outlier because that judge, despite understanding some of the issues (such as Appel not caring about developers and Apple's currency conversion dictate being too inflexible) very well, got other parts terribly wrong, even saying absurd things such as that Apple would have a different market share in smartphone operating systems than in smartphones, and unfairly accused Epic of wanting a free ride when the opposite is demonstrably true. In that case, it benefited an antitrust defendant, though I expect at least a partial reversal and remand. In other cases, it resulted in district court judgments holding defendants liable for something that wasn't go to withstand review.
The Commission is bracing for those court challenges, and we may all have to live with the delays they may cause. Of course, we all want the rule of law, and that's why we have to await and see what issues those lawsuits raise. The Commission is, of course, confident that despite its lawyers being outnumbered, they can win. And indeed, government lawyers are virtually always at a resource disadvantage when going after large enterprises. It's the same in the U.S., and nevertheless governments win very often.
For the avoidance of doubt, I want the DMA to open up certain markets such as iOS and Android app distribution as soon as possible. And when Apple's and Google's lawsuits over DMA-related decisions are finally filed and their legal theories become known, they may very well be meritless, which would raise the question of whether all they want to achieve is delay. But for now we don't know, and that's why we have to wait.
The Handelsblatt article I linked to at the start of this post also mentions that Apple and Google are scaling up their EU lobbying efforts, with Apple almost doubling its spend last year over the year before. Apple deservedly got bad press this week for its astroturfing in Washington and Brussels.
