Market ‘Fairness’ in Taiwan under the Shadow of Digital Giants|Chiang Ya-chi

2021.05.06
Market Fairness in Taiwan under the Shadow of Digital Giants Chiang Ya chi

On April 12 this year, the U.S. held a summit for the semiconductor industry. The White House invited senior executives from TSMC, Samsung, and Intel to discuss solutions to the global chip shortage. On the same day, Taiwan also had a very important symposium, “The Ecology and Disputes of Digital Platforms, Content Websites, and the Online Advertising Industry,” hosted by the Fair Trade Commission. This symposium focused on discussing the profit distribution of digital platforms and media content providers. In fact, the symposium is of great significance to influence how Taiwan can be connected to the development of the world order of the digital economy. As an independent agency, the Fair Trade Commission should be recognized for its efforts in taking the initiative to review current laws and regulations. Of course, legislator Liu Shyh-fang and others have previously held public hearings on this topic. Legislator Kuan Bi-ling has written several official letters to urge the Commission to take action. They are all crucial promoters who made this groundbreaking initiative possible.

On that day, many representatives from the media and the industry criticized the titan digital platforms that did not produce content on their own but took away huge amounts of profit from advertising with content. Many scholars and experts also commented on this matter from the “Fair Trade Act” perspective and offered many valuable opinions. Here, I want to emphasize that traditional competition law does not foresee the characteristics of an economy with digital platforms. It is of course, quite difficult to directly apply the norms and concepts of competition to search engines and social media platforms that could easily account for more than 90% of the market share. However, it doesn’t necessarily guarantee an order for trade ensuring fair competition in the market when the “Fair Trade Act” is no longer applicable. On the contrary, it may even highlight the urgent necessity of re-examining and structuring the “Fair Trade Act” for the digital age in case it would fall behind.

Media of Original Content are Losing

With regard to the issue of digital platforms and the payment for media content, we have seen many times that in other countries, when media content providers try to demand payment, digital platforms with a 90% market share could leave the negotiation without caring. On the other side, the platform titans who have become the gatekeepers of digital content have gained the best advantage across desktops, mobile phones, and other portals for Internet browsers. They are not afraid that media content providers would refuse to accept their deal.

In particular, even if media that produce high-quality and original content face losses and bankruptcies under such unfavorable conditions, it does not prevent the titans of digital platforms that center on click rates from gaining profits from content providers of all kinds of mess and information that is false and distorted. If there is any degree of “fairness,” it would be the fairness with which the titans of digital platforms treat media content providers that are constantly losing money. They would “fairly make you bankrupt over unbearable financial losses.”

But is this the “order for trade ensuring fair competition” that we want? Professor Tim Wu, who was just appointed as an important adviser to the White House over technology and economy, proposed many suggestions for the roles the “Fair Trade Act” should play. Another equally high-profile professor, Lina Khan, who has criticized the digital titans for violating fair trade, has also been nominated to be a Commissioner of the Federal Trade Commission (similar to the commissioner of the Fair Trade Commission in Taiwan).

In a famous paper about competition law published in 2016, Lina Khan mentioned that the standard used to judge the welfare of consumers in the competition law of the past was mainly measured by the prices of the products, which is not applicable in the age of digital economy. Because the services in a digital economy tend to be free of charge, it seems that the rights and interests of consumers are protected at the maximum level. However, if the competition law would since become irrelevant and overlook the various behaviors of digital giants to reduce market competition, it would instead ensure the rise of monopoly.

At the confirmation hearing, Lina Khan even cited her previous paper that takes search engine Google as an example, saying that digital platforms use various market entry barriers to eliminate other competitors and establish a monopoly in the market. In conclusion, if there is no effective intervention of regulations or other policy mechanisms, the Matthew effect of the Internet would ensure the monopoly of digital platforms with no competitor.

Antitrust Commission would React

Whether it is the draft of the Digital Markets Act (DMA), the one of the Digital Services Act (DSA) proposed by the European Union at the end of 2020, or the antitrust lawsuit filed by the U.S. Department of Justice against giant platforms, they all show that European and American countries are becoming more and more aware of the characteristics of the digital economy, and that only a few digital titans dominate the global market. And when the Taiwanese media issued a joint statement insisting that the era of free news should end, the legislators also picked up the trend of the digital economy and urged legal and competent authorities to do something. Since the Fair Trade Commission has initiated a symposium on the new challenges in the digital world, it would be a matter of course and a great opportunity to establish a new “fair” market order if further actions are taken actively.

(Chiang Ya-chi, Associate Professor of the Graduate Institute of Intellectual Property and Director of the Research Center of Policy and Law for Smart Science and Technology at National Taipei University of Technology)

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