Summary

Given this exposure of citizens, one might assume Big Tech companies are under strict scrutiny of the state and subject to dedicated legal frameworks. However, reality tells a different story. Instead of specialised rules for the digital economy, New Zealand relies on its general competition law for dominant market players. The key question is: can this ex-post framework protect New Zealand’s digital markets, or should we follow the EU and UK in adopting an ex-ante regulation?

Written by Philipp Drixler, a student in LAWCOM733: Special Topic: Shaping the Law in Tech Driven Era (2025); this blog summarises his longer academic essay.

When you open your phone to search for a restaurant, buy a product, or message friends, chances are high you are relying on platforms owned by just a handful of global giants: Google, Apple, Meta, Microsoft, and Amazon. These companies not only dominate the global digital economy – they also shape how New Zealanders live, work, communicate and do business online. With a higher than ever internet penetration rate at around 98% (Statista 2025), no New Zealander is untouched by their influence.

Given this exposure of citizens, one might assume Big Tech companies are under strict scrutiny of the state and subject to dedicated legal frameworks. However, reality tells a different story. Instead of specialised rules for the digital economy, New Zealand relies on its general competition law for dominant market players. The key question is: can this ex-post framework protect New Zealand’s digital markets, or should we follow the EU and UK in adopting an ex-ante regulation?

To answer this, we first need to understand the dynamics of digital markets and how the existing competition law addresses dominant market player. We will then look into the limitations of ex-post regulation and explore what an ex-ante regime could look like for New Zealand.

1. Dynamics of Digital Markets: A Global and Domestic Perspective

Digital markets are ruled by only a few tech giants. Globally, just 10% of the companies account for approximately 80% of all digital revenues (McKinsey 2019). This extreme concentration of market share – and thus market power – is characteristic for digital markets. Two dynamics in particular drive this trend and make it difficult to reverse any time soon.

First, network effects play a central role. In simple terms, this means that the value of a digital service increases as more people use it (Khan 2019, p. 1025). The appeal of platforms like Facebook or WhatsApp lies precisely in connecting with friends and family members who also use them. This can lock users into a single platform, especially when services lack interoperability, making it difficult to switch providers.

Second, control over data creates powerful barriers to the market (Khan 2019, p. 1025). Established platforms hold vast amounts of user data, which make these platforms more attractive for advertisers. Smaller businesses, with little or no access to such user data, struggle to attract users at scale.

Together, these factors create ‘winner-take-all’ dynamics, where a small number of companies dominate global digital markets and potential competitors face significant market entry barriers (OECD 2015, p. 121; Rubinfeld & Gal, p. 370).

New Zealand’s “offline” markets already show high levels of concentration due to geographic remoteness and modest population size (Dennery 2024, pp. 47-48). Digital markets have the potential to offset these disadvantages. In fact, the tech sector has become one of New Zealand’s fastest growing sectors, now the country’s third-largest export (NZTech 2025, p. 4). Nevertheless, domestic firms have little realistic chance of challenging the dominance of global tech giants. This is mainly due to a lack of capital and economies of scale (The Treasury 2020, p. 4).

For New Zealand consumers, this dominance can translate into fewer choices, higher prices, and slower innovation. For New Zealand businesses, it means having to operate on platforms that set the rules and can influence the competitive environment in their favour. While New Zealanders enjoy the benefits from Big Tech’s services, the risks of excessive dependence and lack of competition are real. The question is whether our laws are prepared to respond.

2. New Zealand’s Ex-Post Approach

At the centre of New Zealand’s competition law is the Commerce Act 1986 (Commerce Act), enforced by the New Zealand Commerce Commission (NZCC). The key tool for addressing dominant market players is Section 36 of the Commerce Act, which deals with the (unilateral) misuse of market power that prohibits companies with a substantial degree of power in a market from engaging in conduct that has the purpose, the effect or likely effect of substantially lessening competition.

This constitutes an ex-post regulation: the NZCC can only intervene after anti-competitive behaviour has occurred. In its Misuse of Market Power Guidelines, the NZCC provided a non-exhaustive list of conduct that is at increased risk of substantially lessening competition, such as refusals to supply, margin/price squeezing, exclusive dealing, loyalty rebates, tying and bundling strategies, predation and self-preferencing (NZCC Market Power Guidelines 2022, pp. 15-25). The most striking behaviour is self-preferencing, i.e. favouring its own products or services over those of its competitors, which is particularly characteristic of concentrated digital markets.

On paper, the scope of prosecutable conduct seems broad enough to capture the harmful behaviour of Big Tech. In practice, however, relying solely on ex-post enforcement creates serious limitations given the realities of digital markets.

3. The Limits of Ex-Post Enforcement

The core weakness of ex-post enforcement is its timing. Ex-post rules, such as Section 36 of the Commerce Act, punish anti-competitive conduct only after the harm is done. In fast-evolving digital markets, however, harm can be caused quickly and irreversibly, making ex-post approaches ineffective (see OECD 2021, p. 11). Platforms can entrench dominance in a matter of months, while legal proceedings take years.

New Zealand faces the same challenge. A local startup might have already been pushed out of the market, or consumers may have lost meaningful alternatives, before the NZCC becomes aware of an incident at all. Ex-post enforcement is slow, complex, and costly – poorly suited to the speed of digital markets. It also places a heavy evidentiary burden on the regulator, while global tech giants have vast legal and financial resources.

Therefore, ex-post enforcement like the Commerce Act may be legally sound (and still important), but as the only means of enforcement, it is structurally too reactive to safeguard competition in fast-moving digital markets.

Other jurisdictions have recognised these shortcomings and are moving in a different direction.

4. Ex-Ante Regulation: Setting Rules Before Harm Occurs

The EU’s Digital Markets Act (2022) and the UK’s Digital Markets, Competition and Consumers Act 2024 adopt a proactive, ex-ante approach. Instead of waiting for harm, ex-ante rules place obligations on dominant firms before it occurs. These regimes identify dominant “gatekeepers” in advance and impose obligations on them. These can include ensuring interoperability between platforms, fair access to platforms, data portability for users and ban of self-preferencing.

Breaches can still be punished, but the framework shifts the balance from rigid damage control to a more flexible damage prevention. Further, it can be argued that proactive obligations increase the pressure on firms to act compliantly. Since the spotlight will already be set on certain dominant market players, the reputational damage would be greater if they nevertheless failed to fulfil these obligations.

While next-door neighbour Australia is consulting on a new digital competition regime (Australian Government the Treasury 2024), New Zealand’s Government has so far left digital-specific regulation off the table in its review of competition law. That silence could prove costly.

5. What an Ex-Ante Regime Could Look Like in New Zealand

While New Zealand does not need to reinvent the wheel and can draw inspiration from international models, there should be an adaptation to the characteristic of New Zealand’s digital markets. Key measures might include:

• Fair access to services, platforms and markets: Ability to access services or platforms that are essential for third-party product offerings on fair and reasonable terms. For example, app developers should not face unfair restrictions or fees just to reach consumers.
• Interoperability: Ensuring open and standardised interfaces that allow different systems to work together seamlessly. For instance, messaging services could be required to connect across platforms, reducing lock-in for consumers.
• Data portability: The ability for users to easily transfer their data between different service providers. This could enable switching social media platforms without losing contacts, photos or messages.
• Fair design of digital platforms: Restriction of self-preferencing activities.
• Structural obligations/remedies: Structural separation of dominant digital companies to promote competition

The right mix of tools from this (non-exhaustive) toolbox could help level the playing field, allowing local businesses to compete and innovate while giving consumers more choice and better service.

6. A Matter of Size?

Despite the proposed solution outlined above, one may argue that New Zealand is too small to implement such a regulation for Big Tech, as it has failed to do so on several occasions in the past (Andhov 2025). After all, these are global companies with resources that overshadow our regulatory authorities.

But size does not mean insignificance. Even modest rules can have ripple effects if they align with global trends. And for a market as concentrated as ours, there is even more at stake: unchecked dominance can materialise inequalities faster here than elsewhere.

Moreover, regulation is not just about punishment. Clear rules can give both companies and consumers confidence. Firms know what is expected of them, and smaller players gain the certainty needed to invest and grow.

7. Conclusion: From Playing Catch-Up to Shaping the Future

The Commerce Act gives New Zealand a way to address Big Tech abuses. But as an ex-post tool, it is inherently reactive, slow, and often too late. In a digital economy where market power consolidates quickly, this is not enough.

The lesson from the EU, UK, and Australia is clear: ex-ante rules are better suited to set fair conditions before harm occurs. This can improve competition, even in a concentrated market environment, as well as the user experiences for consumers. A key factor in achieving this goal will be the selection of the right regulatory tools tailored to our domestic digital markets. This certainly does not mean that ex-post rules become obsolete, rather, it calls for the regulatory framework to be expanded to include ex-ante rules.

New Zealand has the choice between continuing playing catch-up or to designing a forward-looking framework that reflects our values of fairness, innovation, and openness. The choice is ours, but time is short. As the rules of the digital economy are being written, New Zealand must decide: do we want to be a rule-maker—or a rule-taker?

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