Transcript of Conference Call with Dr. Cristina Caffarra 

Aug 03, 2022

On July 28, The Capitol Forum hosted a conference call with Dr. Cristina Caffarra to discuss the current state of antitrust regulation and enforcement in Europe and her concerns about the influence of economists on antitrust enforcement. The full transcript, which has been modified slightly for accuracy, can be found below. 


TEDDY DOWNEY:  Welcome to everyone listening in on today’s conference call. A special welcome goes to our guest, Dr. Cristina Caffarra, who is joining us from London. Dr. Caffarra is a world renowned competition economist. And in today’s conversation, she’ll be giving us an update and outlook on the current state of antitrust regulation and enforcement in Europe.  


A quick note before we get our conversation underway. I will interview Cristina and then we’ll move into a Q&A format where we will entertain questions from the audience. If you have questions for us, please email them to And Cristina, thanks so much for doing this.  

CRISTINA CAFFARRA:  Thank you, Teddy. It’s a pleasure to be here. Thank you, everyone.


TEDDY DOWNEY:  And you’re an economist, but you’ve been critical of the economics profession and its impact on antitrust enforcement. And I’d love to dive into that, your thoughts on where are we with the current state of economics? And what do you think the impact has been and what do you think it should be going forward?  

 CRISTINA CAFFARRA:  It’s a great question. And let me start with something I like to start with in every kind of conversation I have, which in a way feeds into the discussion we’re going to have. It is disclosure. I’m quite religious about disclosure. I think that anyone who works in the private sector and whose affiliation is not obvious should start every public discussion with disclosure. So my standard disclosure is that I have worked adverse to Google and Facebook on a number of matters, both for private clients and for governments. I have worked in the past two years on various matters for Amazon, Apple, Uber, Microsoft and others.


And the reason I am religious about this, and it feeds into your question, is the fact you don’t often find economists coming to speak in public and being candid about who it is they work for. The typical disclosure you will hear is something that goes I have worked for a number of big companies, but what I’m going to discuss is my view. But it doesn’t excuse you from giving full disclosure. Or I work for and against big companies. So, I’m not biased.  


So I think part of what is wrong with the way in which the practice of economics in the context of antitrust enforcement has developed is that much of it has become a form of economic advocacy, and a form of economic advocacy that pretends to be scientific and objective, but in fact, it is not. And I think that economists should be candid and disclose and recognize that.  


If I can give you a little bit of the arc of history. It wasn’t always like this. I’ve been in this profession for 25 years. And I dare say 25 years ago, I think there was, at least on my part and in many other cases, significant idealism about what we were doing. Because we thought at the time, we were introducing structure and some form of rigor into what at the time was perceived to be a fairly soft discipline.  


But over time, over the last 20 years, economists have learned there is a lot of money to be made giving lawyers useful narratives. Useful narratives that are sometimes close to reality and can be useful, yes. But some other times are contrived just to effectively support a position. And I think that we have moved in a direction in which the economic contribution is commoditized. It’s become cookie cutter in many cases. It is as far as can be from some form of academic purity and agencies have in many ways absorbed this view so there is no deference which is being paid—rightly so now—to much of the economic evidence, which is being put in, whether by consultants or by famous consulting professors because there is a presumption that much of this is being produced in the form of advocacy.  


So I think that it’s not a particularly healthy state of affairs because we should recognize that when we work with clients, we should make clear, even if we believe the arguments we make, even if we think we are making coherent and defensible arguments, that they need to be viewed with an amount of skepticism and they need to be certainly probed. And they need to be certainly looked at in context as a form of advocacy. We are far away from economic theory at this point.  


TEDDY DOWNEY:  One of the things that I’m curious, beyond just disclosure, full disclosure, can be done to improve the economics profession. The problem that I come across as a journalist dealing with a lot of economists is that a lot of it comes back to theory. That doesn’t make sense in theory. The theory says this. The theory says that. And it’s, to my mind, often detached from how the world actually works. It’s the opposite of that kind of rigor and evidence-based analysis that I think you’re getting. You’re getting the opposite in many respects.  

 CRISTINA CAFFARRA:  Well, yeah. I think it’s a good angle. I mean, economists have been trained to think in terms of theory because it is a way of identifying how different effects going in different directions may trade off against each other. So there’s nothing wrong in principle with some bit of theory. But indeed, I think that we have come to a place where there is amongst economists a belief that, well, economic theory says so. So it must be true. When in fact, we know that it is far more complicated. And there are some fundamental aspects of it that can be captured, but reality is much more complex.


So much so that you have regulators, certainly in Europe, in the UK, we have the Competition and Markets Authority, which is actively promoting the view that we do not want you to present to us these economic models. We don’t care. We don’t want to see them. We don’t know what to do with them. We are interested in internal documents, understanding the business strategies, understanding what companies do. And only if what you tell us is consistent with this, we are going to listen to you.  


But certainly, there has been a shift towards that over time. The notion that we can produce an economic model that will prove that this is how the market works. And then in the end, if it is contrived, if it is different from what you observe in reality, it doesn’t matter. In a way, this is how we think about this economy. But nobody is paying deference to that view anymore.  


So I think that economists who think that this kind of view is influential are deluded or delusional at this point and need to really look at themselves in the mirror and say what exactly are we saying that is interesting to our regulator? How should the regulator pick up what we are saying and make something of it? I can give you endless examples from vertical arithmetic to elimination of double marginalization—is it real? Is it made up? Is it something that we believe exists? But is it actually out there? Does the company recognize it? I am skeptical. So it doesn’t really matter.  


TEDDY DOWNEY:  Yeah, and I think that provides a really good segue. Because I think in the U.S. and to some extent, the CMA, as you point out, has been pretty explicit that they want the language of economics to be more in the language of real people and real business. And we really want to talk to you about Europe. What’s going on in Europe? There’s a lot of legislation. There’s a lot of regulation on tap when it comes to big tech. We’ve looked at Europe in the past and we’ve had a lot of interest there with privacy laws, GDPR and things like that. And it seems to be a lot of energy and then sort of falls flat when it comes to enforcement. We’d love to get your take on what’s going on in Europe on legislation and regulation on big tech and antitrust.  

CRISTINA CAFFARRA:  Sure. So we certainly live in interesting times in Europe, because we have adopted, in record time, legislation to deal with digital giants. It forces everyone to listen to and know we have the Digital Markets Act, the Digital Services Act. And it’s interesting as an outsider to watch the kind of debate in the U.S. about whether your laws are going to be voted on? Are they going to be put to the floor for voting? In Europe—and this is certainly an achievement—in record time, these rules were turbocharged through the European Parliament and they got passed with great support from multiple parties. Every side of the House in Europe really supported this legislation. So in that sense, this is a major achievement which I think, of course, as Europeans in many ways we’re proud of.


The reality of it, though, is that it is a response to a deep and uncomfortable realization that although, again, Europe was a fairly early mover in antitrust enforcement, outcomes do not really match these efforts. There has been—and I think it would be churlish not to recognize—significant efforts on the part of the European Commissions, on the part of member states, to enforce antitrust cases against multiple GAFAM, as we call them in Europe. And while the cases have been deserving and the theories have been good, in reality, the outcomes have been really disappointing and there is a host of reasons for it.  


Briefly, I think this has to do a lot with the fact that when you’re talking about conduct cases – I’ll get to mergers in a moment. But it has to do with the fact that there are these enormously lengthy processes that are exploited in a grotesque way by the companies themselves. Every case takes seven years. By the time you’re doing this case, everything is done piecemeal and you do not take in the big picture. 


So the first case the European Commission enforced in the Google wars was the Shopping case. Now the Shopping case was a nice case. The theory of harm is good. But would one have sort of taken the view that the priority in a big enforcement action against Google Search was necessarily comparison shopping? Was that an enforcement priority? Well, I mean, there are questions on that. And then while the Commission was busy doing that case, Google was busy occupying the Android space and the Commission did not get to it till much later.  


So the point is that the time it takes to really do these cases is extremely long. And in the end, there is on the part of the regulators, are we going to win this case or are we not going to win it? Let’s kind of just take a little bit of a cautious approach. And finally, the remedies piece is always terrible. Because, of course, in Europe, you do not do the kind of settlement negotiation on the remedy. You just basically end up in a cease and desist. And then the company comes up with some remedy which is typically ineffectual and nothing happens, okay?  


So, enforcement unfortunately hasn’t delivered, which is why we’re pivoting towards digital regulation, a separate chapter on mergers. I mean, this whole point of enforcement ought to be in many ways to prevent the creation of market power, which is then going to be so difficult to fight with ex-post. And yet, in merger enforcement, we have been extremely weak in Europe and in the U.S.. We have passed everything. Everything went through.  


And so as a result, I mean, the CMA famously in the last few months has blocked the Giphy deal by Facebook, but it was the first blockage of a case in forever. And so if you don’t enforce hard against mergers, then there is a question about how you’re going to deal with that market power ex-post.  


So to conclude, I think that it’s great we’re moving to digital regulation. It is in some ways a manifestation of failure to actually make a big difference on the ground, notwithstanding the efforts and the goodwill, in terms of enforcement. Now, the next question is, will it work? I’m sure you’re going to ask that.  


TEDDY DOWNEY:  Yeah, that was my next thought. And then we can come back to the enforcement. But when they’re laying out these new regulations, obviously some of it’s to be determined. Are you optimistic that they will be robust and effective? Or do you think they’re going to end up effective the way merger enforcement and conduct enforcement have been?  

CRISTINA CAFFARRA:  Well, look, I think that at the moment there is a great deal of momentum behind it. The European Commission is certainly showing a major effort to begin to put resources behind this. But, of course, everything happened so fast. The law was passed in a matter of a year. So there wasn’t really a clear followup plan for how they were going to become a real digital regulator in Brussels as opposed to an enforcer. I mean, remember DG Competition is not traditionally a regulator. They are an enforcer. So there is a big step up to be made to basically be able to process the role of a regulator, which is not something that is built into the system. So there is a great deal of effort and movement there.


The real question is going to be implementation, of course. Because the law is the law. The law is discussed. Everybody who read the various articles of the law said this is not very precise. It’s too general. It’s not very clear. So if you have something that says thou shall not sell preference, then the question is what does that really mean in the context of very different business models? So you have Amazon. You have Apple. You have Microsoft. You have Google. You have Facebook. How does any one of these companies actually make that prescription actionable? And how do they understand it? What is it of that particular conduct that falls into that?  


So in principle, there should be guidance. But, of course, everything happens so quickly, it’s difficult and there is going to be no guidance as such. So it’s all kind of happening in real time. What I think is happening right now in Brussels is each of these companies are going into the European Commission to just try and shape what it is that they should be doing in the circumstances. And there’s going to be a significant amount of coming and going and toing and froing to try and see what ”do not self preference” means in their particular case.  


The issue to me, and this is more a fundamental one, is what is this law capable—what is this legislation capable of achieving? Remember the two guiding principles that were touted as being the pillars of this legislation in the European Parliament where fairness and contestably. This is what we want to achieve. Fairness and we want to make markets contestable moreover.  


My view, is that I think this legislation might achieve somewhat more fairness in the way in which these platforms deal with dependents. They will be held to certain standards and that piece is already something. But if your concern is the level of market power that is being held in each of these hands, and if you are concerned about a future in which you would like that market power more disperse, then this legislation doesn’t do it. It doesn’t do it because it cannot. It’s not going to create real challenges that are going to disperse the market. It will make the market, the platforms themselves, behave better with defendants. But I don’t think it is capable of creating serious challenges to the market power that exists.  


TEDDY DOWNEY:  I want to go back to enforcement because I don’t want to just leave it as it’s been ineffective. I want to tap a little bit into why? We’ve heard in the past that to some extent it’s about will and that EC could sort of lay the hammer down when it comes to remedies and impose more dramatic reforms on the companies. But there’s sort of this deferential attitude. And they sort of end up in this endless game of Google coming up with its own remedies and the EC saying can you change this? Can you change that? Can the EC do something within its own authority now to actually be more aggressive when it comes to enforcement? Or is it really a statutory thing?  

CRISTINA CAFFARRA:  Well, look, if one is interested in structural remedies, such as, for example, breakdowns, although they are not impossible—and I’m not a lawyer, but I don’t think they are inconceivable under European law—they will never happen in Europe. I think it’s going to be very unlikely that you will see the European Commission or a European regulator mandate breakups of American companies. This is just simply not in the cards, not even a portion of a company.


So you’re left with two situations. Either you have a settlement decision in which you don’t have effectively a finding of liability, and you can kind of do behind the scenes agreements or remedies. But it doesn’t tend to happen. Companies tend to want to take it all the way to an infringement decision. And when you have an infringement decision, you take it all the way to appeal. The Commission can only basically give a cease-and-desist order, which is do not do what you’re doing and do not do it again under any sort of similar – under any equivalent means. Do not come up with this conduct in an equivalent manner.  


And therein lies a lot of the problem. Because if you take some of the two landmark decisions, the Shopping Google decision, the Google Android decision, both of these were infringement decisions. The reason companies prefer to go that way is because, of course, when you have an infringement decision and challenges in Luxembourg and these kind of cycles can go on for years. Tthe decision said in the case of, for example, Android, that there should not be an equivalent type of deal, with OEM, for example, for the way in which they were obtaining the Google app store. There shouldn’t be anything equivalent to the tie, which was at the heart of the case.  


But, of course, you put to a company okay, you cannot tie any more, there are 100 different things they can do in practice that are not a tie literally, but have the equivalent effect. And so you come up with something which is a little bit different, is not a formal tie, but it has possibly similar effects. And then the European Commission needs to just wake up to the fact that this was actually having the effect of a tie. So this remedy won’t work. So go back to square one. Go back to the drawing board. Come back and redesign. So you can see this process can go on for months and months. And it isn’t one in which the Commission can tell the company do this. It is a bit like in your hands. You have to come up with something which isn’t what you did and which isn’t equivalent. The ability to do something equivalent, particularly giving the asymmetry of information, the asymmetry of knowledge, on the technical side, is huge, there is enormous scope for circumventing or for doing something which ultimately doesn’t work on the ground. And that is the real problem, that we don’t really have a means to really get results out of this.  


TEDDY DOWNEY:  And so if you think about—so if you put conduct, at least as of right now, to the side to some extent, because that’s just unworkable, when it comes to mergers. as you point out, we have seen at the CMA a much more active investigation, I think a more rigorous process, a process that I think moves beyond the consumer welfare standard. But in many respects, the EC approach to mergers is very similar to sort of legacy U.S. or the previous 30 years, 40 years of U.S. antitrust enforcement, very consumer welfare oriented, and extremely focused on coming up with remedies to sort of fix problematic deals or fix problems with deals and things like that. Is it just stuck there for the foreseeable future in terms of that same approach? Or what’s your outlook for merger enforcement and whether or not it will continue to be in that mold? Or is it changing at all?  

 CRISTINA CAFFARRA:  Well, in the UK, just starting from there, the UK has, I think, under the leadership of Andrea Coscelli (the CEO) really moved the dial significantly in enforcement. Many who may be listening think that the UK is crazy. I mean, there is a view in the defense bar that the CMA are off their trolly. They are just extremely aggressive. They are not reasonable anymore. There’s no question that they have been more interventionist than ever before. And I think because they were animated by a view that, I mean, certainly I’m not speaking for the CMA, but the impression is that they were animated by a view that this kind of state of affairs in which the parties always end up getting the deal through with remedies that are effectively gerrymandered and don’t deliver anything, has to come to an end.


There’s been too much weight put on the view that if you over enforce a little bit, then the world will come to an end. That will kill incentives for all sorts of things. And I think in the UK that view has come under significant pressure. I mean, I practiced for 20 years when the mantra was, oh no, no. We cannot. We cannot do” type one” errors. Which means the danger of essentially blocking something that shouldn’t have been blocked, is going to be fatal because it will kill the incentive to innovate, to create business. We’ve heard that for 20 years.  


And I think that logic has come under severe pressure because there is no evidence that (a) we were over enforcing; and (b) that if you block three more deals a year, that will really kill the animal spirit in Silicon Valley. No one will do more innovation. Everything will come to sort of a standstill. This is the kind of rhetoric that you hear very much from the defense bar and from everyone who is on the defense side. We cannot block a deal that doesn’t deserve to be blocked because that will have repercussions throughout the economy. Innovation will come to an end.  


I’m absolutely of the view that that is exaggerated. We have under enforced significantly. So what if we do block two or three more deals a year? I do not think that will really kind of take the creative spirit and grind it to a halt. In any event, we have far too many people who are innovating to be bought or creating an app or something just to be bought for several millions so they can go to the beach. I’m not sure that is the type of innovation that necessarily serves consumers in society.  


That said, I think that the UK—going back to your question—has adopted that view that there isn’t going to be the end of the world as we know it if there is a little bit more enforcement in markets. The European Commission is behind but may be moving a little bit. I mean, now that there is a great pride in this Illumina GRAIL case that the European Commission also was facing, a situation in which they, by design, didn’t have jurisdiction in a number of deals that didn’t go to them. You needed to have a certain threshold in order to be entitled to one-stop shop in Brussels. Now the EC have won the jurisdictional challenge of Illumina GRAIL in Luxembourg. So now they’re sitting with the case in their lap. And so it is considered an important judgment because it does say in effect the European Commission can claim jurisdiction of a number of small deals.  


Now, the question is then, okay, jurisdiction is one thing. What do we do with that? How are you going to exercise that jurisdiction? Are you going to be aggressive or not? Are you going to be stopping more deals? Or is it just the case that you’re going to look at more? So that is the question. And I think, yes, you’re right, there is a more traditional posture in Brussels which is still persisting, which is far behind from where the CMA has gone. There are differences in Europe though. Because let’s not think that Europe is just the UK and Brussels. There is France. There is Germany. These are powerfully important jurisdictions where deals also get looked at. And certainly Germany is quite an interventionist jurisdiction. France also has been quite progressive in some ways. So I think—I’m hoping that there will be more movement and that the Commission will be embracing a more CMA like position. But I know that many will be horrified at me saying this.  


TEDDY DOWNEY:  Are there any people or any cases or investigations in Germany and France that we should really be looking at as sort of pioneering a more aggressive approach?  

CRISTINA CAFFARRA:  Well, Germany has pioneered sort of the pursuit of Facebook. This is a case that goes back a few years. The German agency—I had no involvement in this— famously, they pursued Facebook and did their own abuse of dominance case for effectively not giving people the kind of privacy—I’m simplifying—for excessive use of data if you like. So the case that Germany has pursued against Facebook is a case that uses traditional antitrust but the fundamental conduct they’re worried about is the collection of excessive amounts of data, the use of these data. So it is an interesting case. It sits in some ways as an interface between antitrust and data protection. It is a case which is in front of the judges in Luxembourg because, of course, that’s being referred back to the European courts. It’s an enormous case. Germany has been tremendously pioneering in this area.


France has pursued tech cases against Google, also cases to do with bargaining code as between news outlets and platforms. So France is also being quite at the forefront. I think it’s easy to forget that there are these member states, that they’re doing some significant work and they’re often quite further out there than we think.  


TEDDY DOWNEY:  And one of the things that I find interesting, and I’m curious to get the European view, there are only a select number of, I think, members of Congress and Senators who look at Facebook and big tech as really fundamentally a threat to democracy in terms of the role that propaganda plays on the platforms and the dangers there. What is the view about the degree of the threat from big tech to not just competition, but other broader concerns like the threats to democracy and concerns about propaganda at the member state level and in Brussels? 

CRISTINA CAFFARRA:  You know, Europeans are very sensitive to data protection and privacy issues. And I think that it doesn’t necessarily roll into a big discussion on a threat to democracy. That’s more of a U.S. discussion. But certainly, Europe is very animated by privacy and data protection values. I get very upset when I hear people disparaging the GDPR, which is our own data protection regulation, which has incredible amounts of flaws. Yes, it’s not ideal. Yes, the design of the data protection institutions has been not ideal because we ended up not with a single one, but we ended up with multiple ones. And so data protection enforcement is not as effective as it should be. But Europeans and European members of Parliament are hugely animated by the notion of our data, how it is used, what abuses are perpetrated off of this. And that is something that is very much something that politicians are aware of. I mean, you can talk to multiple members of the European Parliament for whom this is absolutely the animating principle and the concern for that is why they are actually pursuing digital companies. Not so much a democracy one—there is a concern about economic power, yes. But the power over our lives that comes through appropriation of our data is a major issue.


TEDDY DOWNEY:  And another question I have, we’ve spent a lot of time talking about Europe. But I would like to get your thoughts on if you have to put everything in perspective, you’ve got all this activity in Europe. You’ve got a lot of activity in the U.S. Do you see Europe as close or on par with what’s going on in the U.S. in terms of importance of taking on big tech? What’s your perspective of things going on in the U.S. and the role that will play relative to what you’re seeing in Europe?  

CRISTINA CAFFARRA:  Well, I mean, I need to be a little careful because, of course, I’m someone sitting in Europe. And I don’t want to give the impression that I am a really particularly central commentator to the discussion in the U.S. But, of course, I follow from a distance. So take it as the comments of someone sitting in Europe and watching things from here.


Look, there is a clear sense that Europe, has in the past, certainly has the lead in enforcement. I recall in 2018 and 19, when I was coming to the U.S., there was a permafrost over there. There was no enforcement at all. And we Europeans were smug and we would say, well, look at us, right? We are pursuing all these cases at least. At the beginning of Facebook, Germany was also implicated in and there were all of these reports. So there was a sense that Europe was certainly at the forefront.  


Then I think what has dawned on everybody in the last three years is that while we were pioneering in starting cases, we really haven’t really delivered on the promise yet. That is this law that is going to have to be looked at in terms of what it can do. Then the U.S., you know, we were all kind of taken aback when we started seeing a reawakening and a big shift in the Overton Window in the U.S. around 2018, 2019 with multiple activities. I mean, I recall starting to advise the Attorneys General and then Texas, Colorado, Nebraska on the Google complaints that they were pursuing. And then that kind of grew. I mean, I remember very distinctly that the sort of bipartisan effort that was started in 2019, in September, was remarkable to us Europeans. Because we were like, whoa. The giant has woken up. Something is happening over there after 20 years in which nothing was moving. We knew the last big enforcement case in the U.S. was Microsoft. And then after that, pretty much nothing.  


Then in 2019, we started seeing Congressional reports. We started seeing the drumrolls coming from the hills, from the attorneys general, which was a revelation to me and to Europeans. We really had been used to just seeing the federal agencies, but we hadn’t understood or appreciated that so much could be done at the state level. I was awed by that. I thought, this is incredible. It’s amazing. And then there has been, of course, yet more progression. And, of course, we have seen appointments at the agencies.  


And so there is expectation in Europe that enforcement could begin to deliver in the U.S. We’re not clear because it takes time, because all of these complaints are taking time to come forth. The concern remains what will judges make of this, the usual concern when one thinks about the U.S., that judges are much more conservative and not following. But as to regulation, I think the perception is that Europe has kind of taken a kind of bold step forward and then to where these kind of rules and other projects that were sort of sitting there waiting to be approved, but nothing really, I mean, seems to be moving forward. I mean, we are in this time of critical weeks. So I suppose we will see.  


There is also a notion, I think, in Europe, realistically, that the conduct of these companies will really only change materially if there is significant enforcement effort in the U.S., and that’s both antitrust and regulation. There’s only so much that the Europeans can do. But ultimately, my perception is that these companies are going to take things seriously only when they happen on the Hill, when they happen in Washington. And Brussels is a bit of a painful thing to deal with. But not yet at a place where it’s going to fundamentally change business models. We will have to see. But that’s my judgment.  


TEDDY DOWNEY:  And we have a question here from the audience. Are there any other mergers besides Illumina GRAIL that are being reviewed at the CMA and the UK that are interesting or landmark deals or investigations?  

CRISTINA CAFFARRA:  Well, I mean, yes, there are multiple ones. And I think the CMA is very active on multiple fronts. And as everybody knows, there is an open Microsoft/Activision deal. At least before regulators let them… significant deal. But there are multiple others, yes.


TEDDY DOWNEY:  Do you have any thoughts on whether or not they’re going to be aggressive on Microsoft’s Activision?  

CRISTINA CAFFARRA:  No, I shouldn’t be – I shouldn’t be weighing in, I have a conflict.


TEDDY DOWNEY:  Okay. And another question. One of the things that comes up is that Europe and the CMA have done a lot of these investigations, and they’ve learned a lot. And there’s a lot of interesting factual information about these markets that have come out and sort of informed other decision makers and may have better tools or may end up being more aggressive. Have you seen that play a role? And do you see that kind of dialogue happening between the EU and any other countries when it comes to sort of sharing industry knowledge or information from investigations and things like that?  

CRISTINA CAFFARRA:  Oh I think, I mean, traditionally there has been, of course, a great deal of exchange of information between the kind of agencies you’d expect. I mean, the European Commission has always been working closely to the DOJ and the FTC on deals that they were examining together. It’s just no news and everyone will tell you there is great cooperation between them.


I think that post-Brexit, the UK, of course, has cast itself in a different position. And so they are in a different place. They are now dealing with Brussels and with Washington in their own right. And so, I mean, I think that there are, of course, constant, constant contacts. But I also think that the perception of the CMA as being a forward agency and one that is ahead of many, doesn’t make it particularly liked by anyone. I will leave it at that. Okay? So if you are perceived to be really ahead and not to look back, others may think that you are not exactly a team player. But that said, I think what is interesting, my experience that was interesting was to see how the attorneys general, when they started really playing in this space, had no real visibility in Europe. And then since, there has been more cooperation. Europeans, we’re used to dealing only just with the federal agencies, right? And so nobody’d ever heard of the attorneys general. And I think since 2019, since the AGs have actually produced more efforts in this space, there has been direct communication between them and say, France and Germany, the UK, say even the European Commission, in their own right, which is a novel development, and an interesting one.  


TEDDY DOWNEY:  Yeah, that is really interesting. And last question here. I’d like to ask, I think we got a little bit of a mixed measured outlook here from you in terms of the EU really meaningfully going after and being aggressive. But I would like to ask you if you could, with the tools that they have, with the new tools available to Europe and the CMA with the new authorities, the power that they’re having, what do you think are some of the top things, the top one or two or three things that they could do? They’re not going to break it up. But short of breaking it up, breaking up big tech. But there are a lot of business models where you don’t have to break them up, but you could meaningfully deter this type of business model and have a real impact and force some real changes. What are some of the top things that you would suggest? You wave your magic wand. You get three things done. What would they be with these new tools?  

CRISTINA CAFFARRA:  Well, I mean, I think I would tackle it slightly differently. I think that the problem—well, the issue is that we are looking at companies that are fundamentally different business models. Some are app funded. Some are device funded. So take Apple is funded mostly by devices. Amazon is a store. But there are also changes underway. Because, of course, advertising is becoming more important. It’s become very important for Amazon. It’s becoming more important for Apple. So there are changes, but the business models continue to be different.


So what I was very much in favor of was the way in which the UK actually, again, have conceived of the digital regulation. They were going to have a bespoke approach to each of these companies and saying, you listen. You are this business model. You are this company. You are going to be sitting down and you’re going to do these five things. And this is your list. It isn’t the list of everybody else. Because just to say do not self-preference is going to open a can of worms because what does self-preferencing mean in general? Does it mean that every time that Amazon serves up its own product in the buy box it’s selfpreferencing? No, if the product is cheaper and better than others. It could have been served up. How do I know? I haven’t got visibility of the algorithm.  


So how does one actually meet that kind of requirement? I think that there are situations in which you may want to, for example, mandate that there is some level of transparency with the regulator in terms of the algorithm. How does this sort of selection get made? That is not something you’re going to open up to the world, but you’re going to—you cannot just kind of take tons of data and look at outturns and say, well, that’s self preference. You can’t. It’s too complicated. It’s too difficult. So you need to have, in each case, a view of what it is that is potentially the question. 


So is the selection, which is recommended to the customer, one that is being made with a thumb on the scale? Or is it objective? I don’t think we can make that decision just by looking from the outside if you need to somehow have a degree of algorithmic transparency. But then you need to have a regulator who’s capable of dealing with engineers and dealing with understanding something, not just a bunch of economists and lawyers. And so that is where things get complicated. But in principle, I think one ought to think about prescriptions that are specific to the companies and not generic occurrences. Because I don’t see how those become actionable.  


TEDDY DOWNEY:  Yeah. That is a good point to get to these conduct cases are really where you get to the nitty gritty of how these companies work. Actually, I have one last question for you, which is in the U.S., I think one thing we’ve seen is kind of a highlighting of how the small businesses that have to deal with big tech, talk about it in terms like they’re being extorted and they’re being bullied and just kind of almost like criminal kind of implications. And DOJ Antitrust Chief Kanter has said they want to revitalize criminal section two enforcement. Is there any kind of criminal element angle in Europe or the CMA when it comes to these types of businesses that could—I think a lot of people here, like a lot of people don’t get jail time and things like that. They’re just never going to change. Is there any angle like that in Europe as well?  

CRISTINA CAFFARRA:  No, I think that in Europe, realistically, you’re not going to see that. We have in the UK, definitely criminal sanctions for cartels, but not in the European Commission. And so you’re not going to see that kind of enforcement. What is the case though—and this is a big issue. And this is what I was referring to before when I was talking about fairness. One of the big objectives that the regulation ought to pursue is to try and achieve more or greater fairness of conduct on the part of these platforms with great market power vis-a-vis the small independent. This is certainly a worthwhile objective.


In the UK, again, we had this problem for some time in the past with the groceries, the grocery retailers are very concentrated. And there was a concern that they would be particularly beastly to the small suppliers, the farmers, the small suppliers. And the way in which the UK has dealt with it is effectively with a very detailed code of conduct, which essentially they have to follow. And that had recourse. So there is a particular way in which that gets applied. And it isn’t necessarily sort of the criminal sanction, but it does get some of it.  


TEDDY DOWNEY:  Got it. And in terms of Europe—in the U.S., we sort of have this—we idealize small business in many respects, which as a small business owner I like. But it’s not exactly—a lot of times it’s more talk than action when it comes to Congress. What is the view from the European decisionmakers when it comes to protecting small business? Are they sort of a class that they’re historically interested in protecting?  

CRISTINA CAFFARRA:  Very much so. Very much so. I mean, small business in Europe are the fabric of much—small and medium enterprises are the fabric of much of the economy. We don’t have – remember, we are a continent fragmented by culture and language. And you have a lot of small businesses. And members of Parliament in each member state will totally champion the cause of national or small business. So, no, in Europe, this is a very, very large issue. We don’t have giants that rule the roster. We really are quite in tune with that.


TEDDY DOWNEY:  Well, we’re excited to be covering all of this in the months and years ahead. And thank you so much for taking all this time to chat with us. It was really interesting. 

CRISTINA CAFFARRA:  Thank you. It was a pleasure. Thank you so much for having me, Teddy.


TEDDY DOWNEY:  And thanks, everyone, for joining us on today’s call. And this concludes the call.