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German Monopoly Commission advises not to regulate algorithms

08/06/2015
This week, the German Monopoly Commission has published its extraordinary opinion on digital markets. Particularly interesting: the Commission advised not to regulate algorithms – which seems to be an This week, the German Monopoly Commission has published its extraordinary opinion on digital markets. Particularly interesting: the Commission advised not to regulate algorithms – which seems to be an answer to a question nobody posed only at first glance.

The study, which is available in German here, looks at a broad scope of digital business models and markets. One thing that immediately sprang to my mind is a section about the need to regulate algorithms. The background is that the Commission sees the risk that search engine providers that also offer other services such as review websites, map services or price comparison tools, may prioritize their own services against third-party offerings.

First, the Monopoly Commission clearly advocates against an unbundling of such businesses, arguing that the impact of such an unbundling is severe, and the unbundling would also contravene the general goal of competition regulation to generate an incentive for innovation by accepting organic, internal growth.

Second, the Commission also denied the feasibility of an “algorithm” regulation, i.e. an agency that would look into an algorithm to determine whether it works “neutrally”. Here, the Commission states that the number of changes that a typical search engine provider implements each year would constitute an unreasonable effort. Further, given the complexity of those algorithms, the Commission doubts that it would be possible to detect a bias at all.

In particular the last point is interesting. At first glance, it seems to be the answer to a question nobody posed, but we have occasionally seen requests for an “algorithm police” in the recent past, and a couple of weeks ago, when I asked Jan Philipp Albrecht, very well-known for being the rapporteur of the European Parliament for the EU’s General Data Protection Regulation as well as for the EU-US data protection framework agreement, he clearly spoke in favour of regulating algorithms. The fact that the Monopoly Commission addressed this topic may thus be more than just a side note, and it seems that this debate has only just started.

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