The market power of international Internet giants and their ability to influence competition in conventional markets have recently become a focus on interest for all the world's competition agencies. Some of these agencies have taken measures to prevent damage to competition.
Minister of Finance Moshe Kahlon also recently commented on the market power and dominance of the international Internet giants in the local market, including the advertising market, saying that Facebook and Google were "swallowing up" advertising shares from the Israeli market.
This power and dominance are reflected in a great deal of money, so it is no wonder that this platform is tumultuous and stormy and attracting attention from all of the regulators. The first in Israel to take action in pursuit of the big money were the people in charge of the Israel Tax Authority, who promoted and completed some of the measures for taxing the international Internet giants during the term of Moshe Asher, the previous Tax Authority head. Open tax assessments amounting to tens of millions of shekels are now underway with some of the biggest companies.
Israel Antitrust Authority director general Adv. Michal Halperin is now getting in on the act; with European and worldwide backing, she is considering whether regulation is called for in an area not traditionally regarded as part of her activity. The reason why high tech has not been on the Antitrust Authority's radar was that the Antitrust Authority regards the high-tech community as competitive - a market that functions efficiently while dealing with intense international competition and without excessive regulation.
In recent years, however, more and more questions have arisen about how the authorities are dealing with limits on competition that the activity of the international giants are liable to cause and the ability of conventional legislation to deal with those limits. For example, in determining what constitutes a monopoly in a given market, questions arise about what the market definition is, what competitive concerns there are, and whether the threshold conditions in legislation for determining damage to competition are at all relevant to the international Internet giants. For example, it has never been considered whether use of private information voluntarily provided to international Internet companies by people, such as Facebook, for example, is liable to generate monopolistic power. Another question is what happens when an international company acquires a young startup that has been born and developed and is liable to constitute a threat to the international company in the coming years. In many cases, the acquiring companies do not have to report the merger to the Antitrust Authority at all because their activity in Israel is not classified as a monopoly, but the question of whether an international company should be allowed to suppress potential competition in advance certainly deserves consideration.
The current stage reached by the Antitrust Authority is very preliminary. Renewed consideration is being given to all the questions arising in these markets. It is still unclear whether these measures will lead to corrective legislation, but the situation definitely requires regulatory action, which is likely to have a significant effect on the activity of the international Internet companies in Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on September 5, 2018
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