Personal Finance

Making an antitrust case against global tech giants

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Summary

  • Kenya has about 16 per cent of its population on Facebook, according to a report filed last year.
  • The same report puts Kenya as Africa's second largest user of Twitter, behind South Africa.

Most global technology companiesv including Facebook, Microsoft, Google, Zoom and Netflix have consumers in Kenya.

Kenya has about 16 per cent of its population on Facebook, according to a report filed last year. The same report puts Kenya as Africa's second largest user of Twitter, behind South Africa. The finding was made after a compilation of the number of tweets per country.

Last year there were concerns raised by WhatsApp users about the rumoured intention to share data with Facebook. Many WhatsApp users felt that the action by the company was unilateral and unfair but there was nothing much they could do about it. It was either they put up with the changes by accepting the terms and conditions, or be denied access to services.

But the company later calmed nerves by issuing a clarification, saying users need not worry about the privacy of their messages on the two platforms.

Facebook is no doubt the world's largest social media company and in most countries it has established what is known as a dominant position. The same applies to most global tech giants. A dominant position happens when a particular company offers more than a certain percentage of goods or services in the target market. Dominant positions are regulated to protect consumers from abuse and unfair trading terms.

In Kenya, protection from dominant positions is catered for under Sections 24 and 25 of the Competition Act. In Kenya a dominant position occurs when an entity captures more than 50 per cent of the markee. The global tech companies therefore have established dominant positions in the Kenyan market.

Ideally consumers are supposed to be protected by the State from unfair trading terms by such companies. It is, however debateable if the rumoured changes on WhatsApp constitute unfair terms in Kenya. An entity should be free to offer its services on terms and conditions it deems fit. It would therefore be a challenge for consumers to prove the unfairness in the new terms.

According to the Kenyan Competition Act, an abuse of dominance occurs when the supplier imposes unfair trading terms and price variations. Can an abuse of dominance case be sustained against a global tech company in Kenya? Theoretically yes. However for reasons stated above rarely does it happen. Meanwhile anti-trust actions are intended to promote competition for the benefit of consumers. An anti-trust action may not necessarily have aspects of abuse of dominance.

There is a wealth of antitrust rulings against dominant companies, especially in the tech space. The US has a wealth of jurisprudence in this area. Here are some highlights of anti-trust litigation against tech companies that may shed light on how a similar antitrust suit may be decided in Kenya.

Last year, India dismissed an antitrust lawsuit against Facebook. In Germany, however, the finding was that Facebook abused its dominance by improperly combining the collected data. The German position was that Facebook ought to seek the consumers' voluntary consent before using data. I suppose this was done.

In a yet to be decided case, US versus Google, an antitrust action was filed against a deal designating Google as the default search engine when using Apple and Samsung.

In yet another very technical antitrust lawsuit, US versus Microsoft (2001) a suit was filed against Microsoft alleged monopoly in PCs. The ruling proposed some measures including that Microsoft share its supplication program interface with third parties.