Don’t be evil
By Atty. Amabelle C. Asuncion
June 5, 2019

 

Abuse in any context is bad.

There are laws against different forms of abuse: child abuse, abuse of women, abuse of authority, to name a few. The essence of these laws is to protect those in a position of weakness or disadvantage against those occupying a position of strength or power. Likewise, those enjoying such a position are not supposed to take advantage and cause harm to those in an inferior position.

The same can be said about abusive conduct in the context of competing businesses. The Philippine Competition Act’s (PCA) prohibitions against abuse of dominant position guard against abusive exercise of market power over other, often smaller, players. Business practices that prevent entry or growth of other players are detrimental not only to the competitors but also to the consumers because they can be left with a dominant player turned monopolist. Some practices that offer some form of “benefit” may appear altruistic, such as bundling another product for free or giving an incentive in exchange for exclusivity. Other practices may be as brazen as threatening to refuse supply, or advocating regulatory barriers under the guise of public interest. Regardless of the form, however, these practices are considered
abusive conduct.

Abuse was bad even then.

In the late 1990s, Microsoft used its dominant position in the desktop computer operating systems (OS) market to exclude the Internet browser Netscape Navigator, which was competing with Microsoft’s own Internet Explorer. At the time, Microsoft’s Windows enjoyed a 90-percent + market share in the OS market. Most applications were written to be compatible with Windows so users purchased it over other OS. With the advent of the worldwide web, a then up-and-coming company developed Netscape Navigator, which enabled users to access applications located in another server. In response, Microsoft came up with Internet Explorer. Using its dominant position in OS, Microsoft then bundled IE with Windows for free and gave incentives to other firms in exchange for their commitment to distribute and promote IE. Microsoft also engaged in practices to exclude Navigator from important distribution channels. Some of these practices were considered abusive conduct in the United States.

Abuse remains bad today.

From desktop browsers in the 1990s, the battle for online supremacy is now being waged on the mobile front with the Google Chrome case decided only last year. In order to cement Chrome’s dominant position in the market for general Internet search engines, Google imposed certain restrictions on Android device manufacturers. These included requiring them to preinstall Google Chrome as a condition for licensing Google Play Store; making payments in exchange for exclusively preinstalling Google Chrome; and preventing those wishing to preinstall Google Chrome from selling smart mobile devices running on alternative versions of Android (i.e., Android forks) without Google’s approval. These restrictions were considered by the European Commission (EC) as abusive conduct because these foreclosed Google’s rivals’ opportunity to compete, and obstructed the development of Android forks, which could have provided alternative platforms for rival search engines to gain traffic. The EC slapped Google with an unprecedented fine of €4.34 billion.

It is almost inexplicable why Google did not learn from Microsoft. Then again, businesses do continue to engage in similar practices to this day. The drive to maintain and cement market dominance intensifies the inclination to resort to strategies that would exclude competitors, big or small, old or new. When this tendency arises, taking the perspective of the small/new player or that of a consumer may temper the temptation—take the child’s position, or the woman’s, or that of the abusive officer’s victim.

Recall the challenges you had to hurdle as a new business. Were there artificial barriers that made it difficult to set up the business and enter the market? Did you attempt to penetrate a distribution channel only to be told that an exclusivity arrangement with a long-time dominant player prevents a distributor from carrying your product? Did your competitor crowd you out by offering incentives to a big customer, which purchased most of its supply requirements from them?

Remember your frustrations as a consumer. How often did you have to suffer from a bad service or product because the dominant provider or manufacturer managed to prevent its competitors from making their service or product equally available to you? How many times did you have to purchase something you did not want/need, or felt compelled to agree to a condition because you were told it was required for the purchase you actually wanted to make? Do you find goods to be priced higher than they should?

If these concerns resonate, it is because these are the very ills that a misbehaving dominant player can cause, whether intentionally or unintentionally. Thus, as one loathes being at the receiving end of such conduct, one must also learn to behave. As Google’s own motto (ironically) puts it, “Don’t be evil.”

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Before her appointment to the Philippine Competition Commission, Commissioner Asuncion was engaged in corporate and commercial practice and served as chief legal counsel of a top company and a corporate partner of a law firm. She was also previously involved in legislative, law and policy reform, advocacy, and adjudication work. Commissioner Asuncion has a master of laws degree (with distinction) in international legal studies from Georgetown University Law Center in Washington, D.C., and is admitted to the New York bar. 

(Originally published on Business Mirror’s Competition Matters column on June 5, 2019 here.)