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Major tech companies in the spotlight as South Africa investigates dominance abuse – londonbusinessblog.com

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Major tech companies in South Africa are being monitored more closely for abuse of dominant position and anti-competitive behavior just months after the country’s competition authority, the Competition Commission (CompCom), launched an investigation into the behavior of online brokerage (B2C) platforms.

In its initial findings, the regulator found that Apple, Google, UberEats, Airbnb, Booking.com and Mr Delivery from South Africa; a food ordering and delivery platform, Takealot; an e-commerce site, Private Property and Property24; both real estate and auto ads Autotrader and Cars.co.za; have an unfair advantage as market leaders and operate in ways that hinder competition.

The investigation team is seeking further evidence, if any, from parties affected by the “competitive behavior or market characteristic” of these platforms. It is also seeking comments on findings in the reportas it enters the final phase of the investigation, which will include corrective action.

Google and Apple

The regulator pointed to Google’s monopoly and stated that the default positioning of its search engine on Android and iOS mobile devices was problematic. The study also addressed the prominence of paid search results (which appear at the top of the page), indicating a lack of clear distinction from organic search results.

The report recommends that the best search results are generated organically, ads are clearly shaded or labeled, and paid results are placed at the bottom of the results page.

Illustration of the proposed Google search solution on mobile device. Image Credits: South Africa Competition Commission

It also called for an end to Google’s preference for its own specialized (shopping, travel and local) search tools, as these hinder competition from aggregators, comparison sites and online travel agents.

“Google must provide competitive metasearch or specialty searches (including travel, local and other), comparison sites (shopping or other), and online travel agencies the same ability to deliver content and visually rich displays or units that it owns specialty stores, travel agencies, and and local search units. Google should no longer impose minimum bid thresholds for paid results,” CompCom said in its preliminary remedies.

It also recommended “ending standard Google Search schemes on iOS and Android devices sold in South Africa.”

In-app stores, it noted, “complete exclusion of competing software app stores and side-loading by Apple that hinders effective competition for commission fees.” Google Play’s default arrangement on Android devices has affected competition from other Android software app stores, according to the Commission.

The regulator also pointed to the Google Play Points loyalty program, which it says is funded by getting discounts from app developers, a strategy that hindered competition from smaller players.

“A lack of competition has resulted in excessive commission costs to the detriment of South African app developers, publishers and consumers of apps purchased through the SA storefront that require in-app payments,”

“…as Apple does not allow competition and refuses to compromise on security, and Google Play has become entrenched, there must be a remedy that regulates these platforms or successfully takes transactions out of stores altogether so that they cannot be monitored.” For this reason, the Investigation believes there is either price regulation or a complete abandonment of anti-steering provisions recommended by the court in the Epic-Apple case,” CompCom said in the report.

In its preliminary recommendations, the Commission called for an end to anti-driving regulations for all apps and called for the end of exclusive loyalty programs, as well as the Google Play Store’s default scheme on Android devices.

“In terms of ending anti-steering provisions, the study expects this to include the ability for apps to communicate an alternative third-party payment mechanism and provide a clickable link to make a payment.”

Food Delivery Platforms

CompCom also recommended removing restrictions imposed by international restaurant chains on franchisees, especially in the selection of food delivery partners. Other suggestions 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 transparency with consumers – especially about the surcharges for each restaurant.

In addition, it proposed removing and banning price parity clauses used by travel and lodging platforms, Booking.com and Airbnb, which have been found to stifle competition through lower commissions and prices that in turn increase consumer dependency.

These platforms were also found to use “key visibility on their platform” to get discounts from lodging and travel providers to fund their own loyalty programs. CompCom found the practice unfair to small players who can’t take advantage of it. It further recommended the abolition of exclusive loyalty programs and said such programs should be fully funded by the companies.

Ecommerce and Advertising

E-commerce platforms were found to stifle competition as they discouraged merchants from price differentiation between platforms and price distortions in the market through subsidization. CompCom suggested that Takealot, an industry leader, remove price parity clauses and end predatory behavior, “or that the Commission consider investigation and prosecution of predatory behavior as an appropriate deterrent.”

For listing platforms, the study blamed the lack of interoperability of the listing engine software used by South Africa’s top advertising platforms (Property24, Private Property, Autotrader and Cars.co.za) hampering competition. Interoperability and elimination of fees, to also include third-party listing platforms, were recommended.

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