ALEX BRUMMER: Vodafone-Three deal will never work for consumers

You have to feel some sympathy for Vodafone CEO Margherita Della Valle. The mobile pioneer had a big chance to become a real technology champion for Britain after a rapid series of deals from predecessor Chris Gent, who was in charge from 1997 to 2003.

The short-termism of his successors and the impatience of investors caused Vodafone to lose its most valuable assets in Japan and the US before the data revolution – which has transformed telephony – matured.

Della Valle inherited a sinking property. She is fleeing underperforming markets in her native Italy and Spain to focus more on Germany and Britain.

Liberty Media outsmarted Vodafone when it bought Germany’s slow-growing, dying cable assets. As for Britain, Vodafone’s path to expansion – a merger with rival Three – has landed the country in a regulatory battle with the Competition & Markets Authority (CMA).

A Vodafone-Three deal may be great for two lower-octane mobile operators looking for more pricing power, but will never work for consumers.

You would at least expect the combative Sarah Cardell, chief competition regulator, to come up with testing solutions. On the other side of the Atlantic competition, regulators are also waking up from a long sleep. The rapid post-pandemic US growth, despite the Federal Reserve’s monetary tightness, can largely be attributed to big tech.

More established players have been joined by Tesla, Nvidia and Space X.

Joe Biden’s government is in the curious position of providing £15.5 billion in subsidies to chipmaker Intel to boost semiconductor production while challenging Apple’s economic model.

Apple is loved by consumers around the world for its beautifully designed devices, intuitive ease of use and glamorous shopping malls.

But behind every Apple device, as the US Department of Justice has predicted, lie opaque service agreements that generated £66.5 billion in revenue by 2023 with a gross profit margin twice that of overpriced devices.

Older consumers may remember that Apple insisted that only the Sahara search engine was readily available on iPhones, iPads and laptops.

Apple needed Google. But Google needed Apple even more because it had 65% of the mobile phone market. Therefore, Google agreed to pay a fee for access on Apple devices.

Almost every app supplier such as Spotify falls into the same trap. The Ny Breaking’s MailOnline, the world’s largest newspaper website, pays a fee to Apple for downloads.

These tolls are considered anti-competitive because they increase the cost of access to the World Wide Web, which, when first conceived, would have been free for everyone.

Apple may be the biggest technology offender, but it’s not the only one. Who can forget the way Microsoft’s Brad Smith tried to muscle his way past the CMA when it wanted to take full control of gaming site Activision Blizzard. Microsoft won its way when it granted open access.

Amazon is being sued by the US Federal Trade Commission (FTC) for allegedly overcharging consumers and exploiting the sellers it allows on its site.

Here in Britain, Amazon is seen as the cuckoo in the nest by almost every retailer, as it escapes most business rates and other taxes.

Meta, which owns Facebook, is under scrutiny by the FTC for its social media dominance, bolstered by its ownership of Instagram and WhatsApp.

The Silicon Valley giants are the gift that keeps on giving in terms of popularity and productivity. But they can also be compared to earlier Standard Oil-style oligopolies of the early 20th century. The first oil company eventually ran afoul of trust breakers and was broken up.

It’s great to see competition enforcers in the UK, in the case of Vodafone-Three, and Apple in the US, flexing their muscles. Unfortunately, overwhelming financial power has a nasty track record of outmaneuvering what is in the best interests of the free market and consumers.