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61. Improving the contestability of e-commerce in two jurisdictions: the Amazon case

Author:
Fiona Scott Morton
Publication Date:
12-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Antitrust cases against Amazon in the United States reveal that the e-commerce giant has developed algorithms that mimic price protection contracts called MFNs (from most-favoured nations, a term borrowed from international trade), even though the company said publicly that it ended the contracts themselves some years ago. MFNs are well known in antitrust enforcement for their anticompetitive effects: higher prices and less entry. The complaints describe how Amazon demotes merchants from its coveted Buy Box if Amazon finds a lower price on a rival e-commerce site, creating an incentive for merchants to set higher prices on rival sites. The European Union, the Digital Markets Act bans such contracts. This would be a good remedy for the US as well as it would restore competition with minimal harmful side effects. The US complaints describe a different scheme that penalises brands if Amazon must reduce its retail prices to match a rival retailer. The EU may have to pursue this conduct under Article 102 of the Treaty on the Functioning of the European Union that prohibits abuse of dominance. Both the US Federal Trade Commission (FTC) and the European Commission have found that Amazon’s policy of tying its own logistics service to Amazon Prime status raises entry barriers to rivals. The European Union remedy redesigns the Buy Box and allows rival logistics services access to consumers. This remedy provides a useful benchmark to consider in designing remedies for the FTC and for California, which is also pursuing an antitrust case against Amazon. In general, both the US and the EU gain from the enforcement actions of the other.
Topic:
Contracts, Digital Markets Act (DMA), Competition, E-Commerce, and Amazon
Political Geography:
Europe, North America, and United States of America

62. Competition in generative artificial intelligence foundation models

Author:
Christophe Carugati
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Foundation models (FMs) are the origin of breakthrough innovations in generative artificial intelligence (AI) applications, such as ChatGPT. Only responsible developments in competitive markets can help ensure that FMs deliver their full benefits at minimum risk. FM developers require language models (LMs), data and computing power to generate natural language output, such as texts, from language input. Thus, the FM value chain is composed of three main elements: LMs, data and computing resources. These markets are currently competitive, with multiple providers and degrees of openness thanks to several closed- and open-source models, open-source and proprietary data, and vigorous competition between firms at the computing-resources level, despite high degrees of concentration in some of these markets. These market characteristics ensure that FM developers face low or surmountable entry barriers. Still, potential competition issues are likely to arise in the future. Dominant firms could leverage their dominant positions, refuse to give access to their LMs, scrape data, refuse to grant access to data, impose undue barriers to switching and lock their users into their ecosystems. Firms could also use LMs to achieve an anticompetitive agreement through algorithmic collusion. Competition authorities should focus their efforts on short-term risks. They should also remain vigilant in terms of ensuring the competitive process between open- and closed-source models works and that open-source developers and public authorities do not impose undue restrictions to mitigate the risks of open-source models, which would deter their development in a way that would favour closed-source models. Finally, at this development stage, studies are lacking. Researchers and competition authorities should investigate the impact of fms on content providers and the digital advertising industry, the role of FMs in digital ecosystems, and cooperation mechanisms between competent authorities across regulatory fields and countries.
Topic:
Digital Economy, Artificial Intelligence, Competition, and ChatGPT
Political Geography:
Global Focus

63. Globalisation and automation as sources of labour-market competition, and support for European Union unemployment insurance

Author:
Brian Burgoon, Gregorio Buzzelli, Francesco Nicoli, and Stefano Sacchi
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Societies and economies are experiencing deep and intertwined structural changes that may unsettle the perceptions European citizens have of their economic and employment security. Such labour-market perceptions are likely in turn to alter people’s political positions. For instance, those worried by labour-market competition may prefer greater social protection to compensate for the accrued risk, or might prefer more closed economies where external borders provide protection (or the illusion of protection). We test these expectations with a conjoint experiment in 13 European countries on European-level social policy, studying how citizens’ demands align with parties’ political supply. Results broadly corroborate our expectations on the moderating effects of different types of concerns about perceived sources of labour-market competition on the features of preferred European-level social policy.
Topic:
Globalization, European Union, Unemployment, Automation, Labor Market, and Competition
Political Geography:
Europe

64. New technologies are challenging EU in outer space

Author:
Trine Rosengren Pejstrup
Publication Date:
08-2023
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
The increasing commercialisation and militarisation of outer space has intensified geopolitical competition and is re-shaping international relations. Public and private actors are increasingly looking to emerging technologies to gain a technological edge. This brief explores the topic of experimentation with emerging technologies in outer space and why EU decision-makers should address the main risks and implications of this development.
Topic:
Security, Science and Technology, European Union, Space, Emerging Technology, Militarization, and Competition
Political Geography:
Europe

65. Export controls effectively constrain China's advance in microchip production

Author:
Lisa Fuller
Publication Date:
08-2023
Content Type:
Policy Brief
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
American and allied export controls have been successful in slowing the advance of China’s equipment for semiconductor chip production. Chinese players have been increasingly cut off from a global industry where customer-client interaction is essential. The US and its allies should continue with the controls and subsidies they have in place but expanding them further, as some advocate, would be excessively punitive.
Topic:
Science and Technology, Economy, Exports, Industry, and Competition
Political Geography:
China, Asia, and United States of America

66. Fair Competition for an Evolving Economy

Author:
Keldon Bester
Publication Date:
09-2023
Content Type:
Policy Brief
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
Fair competition is essential to economic growth. Without it, corporate concentration takes over. Canada’s permissive merger law has allowed a small number of big corporations to dominate key sectors of the Canadian economy, resulting in limited consumer choice. Although Canada’s competition laws are currently under review, its global peers are taking steps to protect competition in their own economies. This paper recommends that Canada should focus on the role of fair competition in its competition law framework, specifically differentiating beneficial and harmful competition. Canada’s abuse of dominance provision protects against anti-competitive conduct, but it does little to protect new and emerging competitors. This paper suggests that Canada should look to international peers such as the European Union, Germany and the United States for cues to reform its own system.
Topic:
Economy, Economic Growth, Competition, and Financial Governance
Political Geography:
Canada and North America

67. China between lockdowns and the 20th Party Congress: What can we expect for the EU and globally?

Author:
Jan Hoogmartens
Publication Date:
10-2022
Content Type:
Policy Brief
Institution:
EGMONT - The Royal Institute for International Relations
Abstract:
Whether it is aggressive industrial subsidies, the militarization of the South China Sea, human rights violations in Xinjiang or political suppression in Hong Kong, there is a whole litany of foreign policy concerns which are attributed by media and China watchers to the People’s Republic of China. This policy brief will try to make some sense out of these worries by focusing on how current events might shape the outcome of the 20th Party Congress. It will start by assessing China’s track record and examining some of its main policy drivers. Consequently, it will explore what it means for the EU and its companies doing business with China, focusing on supply chains and strategic autonomy. Finally, the policy brief will come to the question whether we do not focus too much on the great power competition between the US and China.
Topic:
Foreign Policy, Hegemony, Leadership, Power, and Competition
Political Geography:
China and Asia

68. Balancing Conventional and Hybrid Threats in (Future) State Competition

Author:
Pieter Balcaen and Bernard Siman
Publication Date:
07-2022
Content Type:
Policy Brief
Institution:
EGMONT - The Royal Institute for International Relations
Abstract:
Much attention has been drawn in latest years to the increasing challenges posed by ‘hybrid threats’, and the question how to deter them. The events in Ukraine have prompted NATO allies to accelerate the expansion of their military capabilities to deter further Russian aggression, resulting in an increased political will to reinforce conventional deterrence. While we are certainly in favour of strengthening a long neglected defence, this paper aims to point out some pitfalls in policymaking, associated with the blindly adapting of the (future) force generation process to the events in Ukraine. The course of the conflict, and the consequences that stem from it should prompt us to reflect more thoroughly on the security challenges Western countries are most likely to face.
Topic:
Security, Defense Policy, Hybrid Threats, and Competition
Political Geography:
Global Focus

69. The Arctic, a new front for great power conflict?

Author:
Berk Vindevogel
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
EGMONT - The Royal Institute for International Relations
Abstract:
Since 2014, public debate in Europe has focused almost exclusively on what Russia would do on its western flank and how it would manifest its vexation over NATO enlargement. On 24 February 2022, analysts and policymakers in Europe woke up to news of a large-scale Russian invasion of Ukraine. What will the future hold for security on the European continent? An underexposed aspect of this security architecture is the accelerated militarisation and rise of tensions in the Arctic. Although the EU and NATO have both recognised the geopolitical importance of the Arctic, public debate in member states is still lagging behind. The Arctic is heating up, and not only literally. This paper will answer what is happening there, what the strategic interests are, and how the Russian invasion in Ukraine is linked to the Arctic.
Topic:
Rivalry, Territory, Power, and Competition
Political Geography:
Arctic

70. US-China geoeconomic rivalry intensifies: A risk or an opportunity for European companies?

Author:
Jana Titievskaia
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
As the US and China balance between the pursuit of strategic security interests and ambitions to attain economic growth, novel sources of risk are emerging for globally active businesses, ranging from sanctions to export controls. The Biden presidency will offer only moderate respite from the escalation of this geoeconomic rivalry, even as US-China trade recovers in the aftermath of the pandemic. In the face of US-China rivalry, the EU and its member states have opted for the third way of “open strategic autonomy”, including a range of trade instruments that will allow the EU to support the competitiveness of its companies more effectively. European companies need to closely monitor their risk exposure in various transmission channels and stay attuned to unexpected opportunities that can materialise in the form of market entry possibilities and the development of new niches.
Topic:
Hegemony, Rivalry, Strategic Interests, and Competition
Political Geography:
China, Europe, Asia, North America, and United States of America