A landmark trial in the blockchain space is about to kick off in the U.K. high court, where a collective of U.S. big tech interests has taken action against a British-Australian computer scientist and entrepreneur to get a court to declare that he is not Satoshi Nakamoto, the pseudonymous creator of Bitcoin.

That collective is the Crypto Open Patent Alliance (COPA)—started by Twitter co-founder Jack Dorsey and counting amongst its members the likes of Kraken and Coinbase (NASDAQ: COIN).

Putting aside the merits of the case and any predictions on the outcome—on which there is already plenty of speculation and debate on both sides—the aesthetics of a group of U.S. tech giants taking a U.K. entrepreneur to court to attempt to destroy his reputation are highly questionable, particularly at a time when European skepticism of the pervasive influence of U.S. tech has never been higher.

However, the days of big U.S. tech bullying the ‘little guys’ around the globe may be numbered, at least in the EU and U.K., where local market protectionism is the flavor of the month and new laws are being introduced to prevent U.S. giants from abusing their dominant positions.

The EU and Digital Markets Act go after ‘gatekeepers’

Over the past few years, the European Union has been particularly proactive in attempting to curb the influence of U.S. firms on local markets. Current competition law in the bloc focuses on curbing the abuse of dominant position, unfair competition practices, collusion and concerted practices, and predatory conduct.

Anti-competition is such a priority that it is the subject of one of the European Union’s foundational treaties. Article 102 of the Treaty on the Functioning of the European Union (TFEU) prohibits the abuse of a dominant position that may affect trade between member states, while Article 101 of the TFEU prohibits anti-competitive agreements, including collusion and concerted practices among competitors—litigious collectives such as COPA should take note if legal actions were part of a broader anti-competitive strategy it could be considered a violation.

Unfair competition practices are also addressed under various other regulations, including the EU Directive on Unfair Commercial Practices, which aims to “make it easier for businesses, especially small and medium-sized enterprises, to trade across borders.”

However, a law that came into effect last year goes even further towards preventing big U.S. tech from throwing its substantial weight around in EU markets.

On May 3, 2023, the EU’s Digital Markets Act (DMA) came into effect, establishing a new category of large online platforms called “gatekeeper.” A company is considered a gatekeeper when it achieves a certain annual turnover in the European Economic Area and provides a core platform service—such as online search engines, app stores, or messenger services—in at least three EU Member States. A gatekeeper must have also provided service to more than 45 million monthly active end users in the EU and more than 10,000 yearly active business users in the EU during the last three years.

Under the DMA, companies identified as gatekeepers must refrain from unfair behavior and are subject to a number of extra obligations.

“The Digital Markets Act aims at preventing gatekeepers from imposing unfair conditions on businesses and end users and at ensuring the openness of important digital services,” stated the European Commission in a September 2023 Q&A on the policy.

Examples of the additional obligations imposed on gatekeepers include: allowing end users to easily un-install pre-installed apps or change default settings on operating systems; virtual assistants or web browsers that steer them to the products and services of the gatekeeper; allowing end users to unsubscribe from core platform services of the gatekeeper as easily as they subscribe to them; and enabling business users to promote their offers and conclude contracts with their customers outside the gatekeeper’s platform.

Gatekeepers are also prohibited from certain activities and practices, including a ban on ranking the gatekeeper’s own products or services in a more favorable manner compared to those of third parties, and a ban on requiring app developers to use certain of the gatekeeper’s services (such as payment systems or identity providers) in order to appear in the gatekeeper’s app stores.

On September 6, 2023, the European Commission designated Alphabet (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), ByteDance, Meta (NASDAQ: META), and Microsoft (NASDAQ: MSFT) as gatekeepers—the first six firms to receive the dubious new honorific title.

Following their designation, they were given six months to comply (until March 2024) with the complete set of obligations under the DMA, as well as to provide a compliance report in which they detail what solutions they have put into place, with the Commission committing to monitoring the compliance with obligations.

“We know that some tech giants have used their market power to give their own products and services an unfair advantage and hold back competitors from doing business and creating added value and jobs,” said Thierry Breton, the European Commissioner for Internal Market, when the gatekeeper list was announced.

“These practices distort competition, undermine free consumer choice and hold back SMEs’ innovation potential notably arising from Web 4.0 and virtual worlds.”

Breton is a champion of fair competition in the bloc and was one of the driving forces behind the DMA.

“It was high time that Europe sets its rules of the game upfront, providing a clear enforceable legal framework to foster innovation, competitiveness and the resilience of the Single Market, rather than having to rely on lengthy and not always effective antitrust investigations,” said Breton, who praised the DMA for “bringing fairness, choice and safety into our digital environment.”

Commenting on Apple’s recent attempts to get itself compliant before the March deadline, Breton told Reuters: “The DMA will open the gates of the internet to competition so that digital markets are fair and open. Change is already happening. As from 7 March we will assess companies’ proposals, with the feedback of third parties… If the proposed solutions are not good enough, we will not hesitate to take strong action.”

Suppose a gatekeeper does not comply with the new DMA obligation, the Commission can impose fines of up to 10% of the company’s total worldwide turnover, which can go up to 20% in case of repeated infringement. In case of systematic infringements, additional remedies could be imposed, such as obliging a gatekeeper to sell a business, or parts of it, and banning the gatekeeper from acquiring additional services related to the systemic non-compliance.

Another vocal critic of U.S. big tech’s seeming aversion to fair and healthy competition is Margrethe Vestager, European Commissioner for Competition and former Executive Vice President of the European Commission for ‘A Europe Fit for the Digital Age.’

Vestager is known for holding big tech to account, having pursued antitrust cases against Apple, Google, Meta, and Amazon during her tenure.

In June 2023, the European Commission, under Vestager, informed Google of its view that the company had breached EU antitrust rules by distorting competition in the advertising technology industry.

Vestager said at the time: “Our preliminary concern is that Google may have used its market position to favour its own intermediation services. Not only did this possibly harm Google’s competitors but also publishers’ interests, while also increasing advertisers’ costs. If confirmed, Google’s practices would be illegal under our competition rules.”

But it’s not just the EU that’s been active and vocal in its opposition to U.S. big tech dominance. In the U.K.—where Dr. Craig Wright is facing off against an ‘Alliance’ of U.S. tech giants—lawmakers have also been taking steps to prevent abuse of dominant position.

UK bill takes aim at big tech

Across the channel, the U.K. is similarly in the process of enhancing its competition laws to account for the pervasive influence of U.S. firms who don’t know how to share.

The Digital Markets, Competition and Consumers Bill (DMCC Bill), introduced to Parliament on April 25, 2023, will regulate the biggest technology businesses’ conduct and practices whilst at the same time strengthening the enforcement arm of the Competition and Markets Authority (CMA), the U.K.’s principal competition regulator.

The DMCC builds on the Competition Act 1998 and the Enterprise Act 2002, which together establish the current rules in the U.K. to prohibit anti-competitive behavior, prevent the abuse of dominant market positions, and regulate mergers to ensure they do not substantially lessen competition—similar in scope to the EU’s TFEU. They also empower the CMA to investigate and take enforcement actions, including imposing penalties.

In terms of abuse of dominant market position, the Competition Act 1998 Section 18 outlines that a business is considered to be in a dominant position if it has a substantial degree of power in a particular market, and Section 19 specifies the types of conduct that may constitute an abuse of a dominant position, including unfair pricing, limiting production or markets, and applying dissimilar conditions to equivalent transactions. Meanwhile, the Enterprise Act 2002 Section 18A gives the CMA additional powers to make market investigation references and impose remedies. Section 18B allows the CMA to accept binding commitments from a business under investigation for abusing its dominant position instead of pursuing formal proceedings.

The DMCC Bill, if and when passed, will further empower the CMA to designate the biggest technology businesses—such as Meta, Apple, and Amazon—as firms of “strategic market significance,” having substantial and entrenched market power in conducting digital activities.

Much like the EU’s “gatekeeper” designation and resulting obligations, firms deemed of “strategic market significance” in the U.K. would become subject to additional conduct rules requiring them to trade fairly and reasonably, preventing them from using their power to limit digital innovation or market access. The CMA will be able to impose conduct requirements or so-called ‘pro-competition interventions,’ including ‘pro-competition orders.’

Conduct requirements will regulate how a firm behaves about particular digital activities to achieve ‘fair dealing,’ ‘open choices,’ and ‘trust and transparency.’ Notable are requirements that prevent firms from, for example ‘using data unfairly,’ using its position in a digital activity to treat its own products more favourably than those of other firms, and behaving in other areas so as to increase its market power in the activity where it has ‘strategic market significance.’

Since its first reading in April 2023, the DMCC Bill has passed through the House of Commons and is currently at the “Committee stage” in the House of Lords. It is expected to come into force in autumn/winter 2024.

The CMA, the bill’s enforcing body, welcomed its potential to reign in big tech.

“This has the potential to be a watershed moment in the way we protect consumers in the UK and the way we ensure digital markets work for the UK economy, supporting economic growth, investment and innovation,” said Sarah Cardell, Chief Executive of the CMA.

She added that the DMCC is “a legal framework fit for the digital age. It will establish a tailored, evidenced-based and proportionate approach to regulating the largest and most powerful digital firms to ensure effective competition that benefits everyone.”

The CMA is expected to administer the regime through its Digital Markets Unit (DMU), which will be able to fine businesses up to £300,000 ($382,857) or 10% of a business’s annual global turnover (whichever is higher) for breaching the rules.

The bottom line for big tech in Europe

With such laws as the DMCC in the U.K. and DMA in the EU, big tech is already having to take notice and reassess its practices, and policymakers and regulators across Europe are increasingly signaling that the end is nigh for U.S. firms running rough-shod over global competition and small business.

This should give the likes of Coinbase, and Kraken—key names amongst the COPA membership—pause for thought when dipping their toes into the U.K. court via the Satoshi Identity lawsuit.

Do such firms really want to put themselves further under the spotlight of skeptical regulators?

Apparently, the answer for Meta was ‘no.’ The U.S. tech behemoth mysteriously dropped out of the COPA cabal a few days before the trial was due to start, its name vanishing from the COPA website without comment (up until January 31 Meta was a so-called “platinum member” of the alliance).

As the COPA v Wright trial takes center stage, it could also be viewed as just the latest chapter in a broader narrative of the EU and U.K.’s evolving regulatory landscape for big U.S. tech firms. If so, it may serve as a revealing microcosm of the increasing scrutiny faced by major technology players in the European market; not merely as a dispute over the identity of Bitcoin’s creator, but as a flare-up of a larger struggle to curb the influence of U.S. tech giants in European markets.

While taking a local computer scientist and entrepreneur to court in an attempt to discredit him might not directly be an anti-competitive act, in an era where both the EU and U.K. are fortifying their competition laws to prevent anti-competitive practices, it will hardly endear the big tech collective to be ever more hostile and protectionist regulators. Regulators who are already, or soon to be, armed with more comprehensive competition laws and enforcement powers to combat anti-competitive big U.S tech.

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