Watchdog now goes after tech giants with law review

The Competition Authority of Kenya (CAK) could soon begin regulating the activities of players in the digital marketplace in a move that could see platforms like Facebook and Google declared dominant. 

According to proposed amendments to the Competition Act, the markets regulator is seeking to widen its mandate to declare online companies with more than 40 per cent market share in Kenya as dominant.  

“In the context of digital activities, where dominance can be established even with market shares below 40 per cent, the Authority shall consider factors that typically grant significant market position, whether they arise from the digital activity being performed in one or multiple markets,” reads the proposed amendment to Section 4 of the Competition Act, 2012.

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Currently, CAK determines dominance by considering factors like the importation of goods or the supply of services, the market shares of entities operating in the market as well as the ability of these entities to expand their market shares and potential for new market entrants.

If approved, CAK will begin assessing the digital activities of entities operating in the country across a variety of digital markets. 

The amendment defines digital activities as the provision of a service through the Internet or the provision of digital content.

This includes online intermediation services including online marketplaces and app stores, online search engines and online social networking activities. 

The proposed amendments will also give CAK oversight over video-sharing platforms, operating systems, cloud computing services and online advertising services. 

This means the regulator could soon declare entities like Alphabet and Meta, which own Google and Facebook respectively, as dominant due to the market shares they hold in online search and social networking respectively. 

It could also see platforms like TikTok, owned by Chinese firm ByteDance, declared dominant due to the firm’s video-sharing platform, which is currently among the most popular in the country.

Other amendments proposed to the Competition Act, 2012 will see mergers exposed to public comments before they are reviewed or approved by CAK. 

The regulator also seeks to accredit consumer bodies and initiate consumer complaints without relying on consumers lodging complaints.   

According to the regulator, the proposed amendments create an opportunity for members of the public to give input in the review of mergers that could raise competition and consumer welfare concerns. 

“The Authority is proposing to introduce a requirement to publish merger notifications and invite the public to give their input when the merger is notified to the Authority,” said a CAK spokesperson. 

“This amendment will enhance the quality of our merger review process by considering more external information from stakeholders early in the merger review process. At the moment, the Public only becomes aware of merger transactions after the Authority publishes its determination.”

According to digital rights lobby group Article 19, the amendments by CAK follow in the footsteps of regulators in developed markets like the European Union where antitrust authorities are pushing for new standards to police the digital age.

“Evidenced by recent and proposed legislation in the EU, Brazil, and India, there is increasing global recognition that pro-competitive regulation of digital markets plays a crucial role in protecting not just the economy but also democracy and human rights,” said the lobby in submissions on the bill.

“The draft Competition (Amendment) Bill 2024 (the Draft Bill) builds on a number of international best practices, with the amendment including a new definition of digital activities.

"We also commend the introduction of a new provision on abuse of superior bargaining position, but if this and other new additions to the Authority’s toolkit are to be effective in practice, the Authority must be equipped with sufficient deterrent force – including higher fines as penalties for abuse.”

Part of the amendments also propose CAK to attach assets of entities to recover unpaid fines where the entities have exhausted all appeal avenues but are still unwilling to settle outstanding amounts.

This is the latest attempt by State regulators to seek a more decisive role in regulating the activities of digital entities that hold a strong footing over consumers in the country but have little physical presence in the country. 

As of last year, analysts estimate that more than 14 million Kenyans use Facebook, while Google and YouTube reported 253 million and 183 million users respectively in 2022. 

Last year, the Reuters Institute Digital News reports indicated that Kenya leads the world in TikTok usage, with about one in three people relying on the platform for news.     

Earlier this year, the United States House of Representatives passed a law requiring ByteDance to sell TikTok or be banned in the country. This followed a move by the US Army and Navy to ban the app on government devices over security concerns.