Big tech companies in the spotlight as South Africa investigates abuse of dominance

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Big tech companies are facing increased scrutiny in South Africa for abuse of dominance and anti-competitive behavior just months after the country’s competition regulator, the Competition Commission (CompCom), launched an investigation into the behavior of online mediation (b2c) platforms.

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In its initial findings, the regulator found that Apple, Google, UberEats, Airbnb, and Mr Delivery are from South Africa; food ordering and delivery platform Takealot; e-commerce site Private Property and Property24; ads for both real estate and cars from Autotrader and; have an unfair advantage as market leaders and act in ways that discourage competition.

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The investigation team is seeking additional evidence, if any, from parties affected by the “competition…behavior or market characteristics” of these platforms. He is also seeking comments on the findings in Reportas it enters the final phase of the investigation, which will include remedial action.

Google and Apple

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Noting Google’s monopoly, the regulator said positioning its default search engine on Android and iOS mobile devices is problematic. The study also noted an issue with the visibility of paid search results (those that appear at the top of the page), indicating that there is no clear difference from organic search results.

The report recommends that top search results be organically generated, advertisements be clearly shaded or labeled, and paid results be placed at the bottom of the results page.

in the spotlight as South Africa investigates abuse of dominance

An illustration of the proposed Google search facility on a mobile device. Image credits: Competition Commission of South Africa

He also urged Google to drop its preference for its own specialized search tools (shopping, travel and local), saying they exclude competition from aggregators, comparison sites and online travel agencies.

“Google should provide competing metasearch or specialty searches (including travel, local and otherwise), comparison sites (merchant or otherwise), and online travel agents with the same content and visual experiences or units that it provides to its own specialty stores, travel. and local search parties. Google can no longer set minimum bid thresholds for paid results,” CompCom’s preliminary remedy states.

It also recommended that Google’s default search engines be abolished on iOS and Android devices sold in South Africa.

He noted that app stores “complete exclusion of competing software app stores and third-party downloads by Apple, preventing effective competition for fees.” The commission said that the default location of Google Play on Android devices has affected competition from other Android app stores.

The regulator also pointed to the Google Play Points loyalty scheme, which it says is funded by receiving discounts from app developers, which it says discourages competition from smaller players.

“The lack of competition has resulted in excessive fees to the detriment of South African app developers, publishers and consumers of apps purchased through the SA storefront requiring in-app payments,”

“… given that Apple will not allow competition or compromise on security issues, and Google Play is entrenched, some kind of tool is needed that would either regulate these platforms or completely remove transactions from stores so that they cannot be tracked and taxed tax. For this reason, the Inquiry considers that there is either price regulation or a complete end to the anti-management provisions that were recommended by the court in the Epic-Apple case,” the CompCom report says.

In its preliminary recommendations, the Commission called for an end to anti-management provisions for all apps and advocated an end to exclusive loyalty schemes as well as the standard Google Play store layout on Android devices.

“With regard to the removal of the no-government provisions, the investigation suggests that this will include the ability for applications to report an alternative external payment mechanism and provide an interactive link to make a payment.”

Food delivery platforms

CompCom also recommended lifting the restrictions placed on franchisees by international restaurant chains, especially regarding the choice of food delivery partners. Other proposals included removing price parity clauses (which require suppliers not to offer better or lower prices on other or their own platforms) from contracts, ending predatory pricing, and providing transparency to consumers, especially with regards to per-restaurant markups.

In addition, it has been proposed to remove and ban price parity clauses used by travel and accommodation platforms, and Airbnb, which have been found to discourage competition through lower fees and prices, which in turn increase dependency. consumers.

These platforms have also been found to use “important visibility on their platform” to receive discounts from accommodation and travel providers to fund their own loyalty schemes. CompCom considered this practice to be unfair to smaller players who cannot use it. It further recommended that exclusive loyalty schemes be abandoned, stating that such programs should be fully funded by companies.

E-commerce and ads

E-commerce platforms have been found to stifle competition because they deprive sellers of incentives to differentiate prices between platforms and distort market pricing through subsidies. CompCom suggested that Takealot, the market leader, remove price parity provisions and end predatory behavior, “or, alternatively, that the Commission consider investigating and prosecuting predatory behavior as an appropriate deterrent.”

With regard to listing platforms, the investigation found that the lack of software compatibility of the listing engine used by South Africa’s leading listing platforms (Property24, Private Property, Autotrader and hampers competition. Compatibility and fee waivers were recommended to enable third party listing platforms.

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