Anti-big populism threatens Canadian economic success

In a Post op-ed earlier this spring, “Why Canada's toothless Competition Bureau can't go after Big Tech,” Vass Bednar and Robin Shaban argued that Canada's competition authorities are unable to “protect consumers from the dominance of Big Tech firms like Google and Facebook.” They advocated turning the Competition Bureau, a law enforcement agency, into an agency that investigates, and may even impose penalties or remedial action for conduct that has the potential to be anti-competitive. And they proposed giving the Bureau the power to seize data or compel production of business documentation for “market studies” from entities that are not even being formally investigated. As a 2017 report from the C.D. Howe Institute noted, this would be like compelling local citizens to provide information to the police for a study on local crime.

More importantly, it's not clear that the bureau's existing ability to conduct market studies is deficient. And it is hard to identify any harm to consumers or the economy writ large stemming from anti-competitive behaviour that Canada's competition law is not currently equipped to handle.

Competition law and practice certainly bear regular re-examination, if only to ensure they keep pace with trends in business practices that new technologies enable. In that vein, the increase in the Competition Bureau's resources announced in the 2021 budget is welcome. Nor does anyone dispute that some uses of digital technologies by governments or private actors can pose problems. The very business models enabled by digital technologies often challenge existing tax, trade or regulatory arrangements. In many respects, authorities have begun modernizing these arrangements to address behaviour that poses difficulties. Governments and private enterprise alike are also addressing concerns around privacy, security, and misinformation that digital technologies have brought to the fore.

That Big Tech and other companies have engaged in anticompetitive practices — both in Canada and elsewhere — is also not in question. But one of the cornerstones of our competition laws is that size alone is not illegal. The vague assertion that large tech firms are “too big” or have “too much market power” does not justify bespoke regulations or market restrictions for these new actors.

Let's not forget that size also enables pro-competitive network effects — for example, the ability for small businesses to reach a previously unthinkable number of customers through digital marketplaces, or through targeted advertising, or by using new delivery channels. Yet this positive impact of big tech is often absent from the discussion.

As the cost of collecting and processing data falls, as imitators emerge and traditional industries join the digital game, as compelling new apps challenge the models used by technological first-movers, and as tech giants themselves seek to compete with each other for the same users, competition in many segments of the digital economy is becoming fiercer than ever. To cite only one instance, the “direct-to-consumer” online presence of both traditional and new retailers has grown by leaps and bounds, while emerging Canadian tech giant Shopify offers smaller businesses alternatives to marketplaces such as those offered by Amazon.

Large firms that have grown by providing services that users find, on their face, to be good value should not automatically be treated as if their market position is so unassailable they must be assumed guilty of reducing competition — not without evidence based on actual behaviour, such as a merger or acquisition that aims at suppressing competition in the bud.

Awarding powers to compel evidence and proactively punishing firms for potential rather than actual behaviour could result in significant costs and uncertainties for Canadian businesses. Canadian firms that themselves increasingly rely on the data shared by users of their services — a commercial practice apparently controversial when the tech giants practice it — would likely be ensnared in the process. Some of these firms loom large in Canada's ability to compete at home and grow in the global marketplace. Indeed, in the last five years the market value of Canadian tech companies has grown just as fast as that of foreign tech giants.

We hope generalized concerns about Big Tech will soon morph into a focus on what actual barriers big tech does or does not pose to the emergence of new innovators and competitors, or to Canadian businesses' ability to reach potential customers. Let's not, in short, jeopardize the considerable benefits of the digital economy because of an aversion to Big Tech.