Wolfgang Kerber ‘Data Sharing In IoT (Internet of Things’) Ecosystems And Competition Law: The Example Of Connected Cars’ (2019) Journal of Competition Law & Economics (forthcoming)

In Internet of Things (IoT) ecosystems, one firm often has exclusive control over the data produced by a smart device, as well as of the technical means of access to this device. Such a gatekeeper position can empower firms to eliminate competition for aftermarket and other complementary services in these ecosystems. This paper, available here, analyses whether competition law can help address problems concerning access to data and interoperability in this context, by reference to connected vehicles. In short, it argues that, while competition offers some solutions to these data access problems, on its own it is insufficient to fully address these problems. As such, additional solutions such as data portability requirements, data access rights or sector-specific regulation might also be needed. Section II provides a brief overview of the economics of digital ecosystems and of data interoperability. Data tends to be non-rivalrous in use. It follows that data should be used as much as possible to maximise its value….

Nicolas Petit ‘Are “FANGs” Monopolies? A Theory of Competition under Uncertainty’ (working paper)

This paper, available here, builds on draft sections of a forthcoming book on tech giants and public policy. It lays down the rudiments of a descriptive theory of competition among the digital tech platforms known as “FANGs” (Facebook, Amazon, Netflix and Google). The paper begins by addressing the debate over whether FANGs are monopolies. One school argues that they are indeed monopolies, reflecting FANG’s control of a large share of output in relevant product(s) or service market(s), high barriers to entry, lateral integration and strong network effects. Some of these works also discuss (novel) theories of harm such as reductions in privacy, labour market monopsony and distortions of the democratic process. A different current argues that traditional monopoly harms are not manifest in FANGs. To the contrary, FANGs would outperform textbook monopolies by observable metrics of prices, output, labour or innovation. In addition, the tech industry is arguably rife with examples of once dominant later irrelevant companies like AOL, MySpace or…

The Common Understanding of G7 Competition Authorities on “Competition and the Digital Economy”

While adopted on 5 June, this communique was embargoed until yesterday. It can now be found here. As it says on the tin, this document reflects the common position that the competition authorities in the G7 countries (namely, the Autoritá Garante della Concorrenza e del Mercato (Italy), the Autorité de la Concurrence (France), the Bundeskartellamt (Germany), the Competition Bureau (Canada), the Competition and Markets Authority (United Kingdom), the Department of Justice (United States of America), the Directorate General for Competition (European Commission), the Federal Trade Commission (United States of America) and the Japan Fair Trade Commission (Japan)) have reached on the digital economy. It may come as no surprise that the level of agreement is relatively thin, and that the document does not go into the most controversial topics addressed in the reports reviewed last week and further below. The common understanding begins with the mandatory section on the benefits of the digital economy. Investment and innovation in the digital…

UK CMA’s Digital Market Strategy

The CMA’s Digital Market Strategy, available here, could be said to be a reaction to the Furman Report reviewed last week,  even if the official reaction took the form of a shorter and earlier letter to Government which can be found here. The paper begins by describing why digital markets are different and how the CMA sees its role in their respect. The underlying features of digital markets include substantial network effects, economies of scale and scope, the role of data and the computing power to use it, scope for personalisation, and market concentration. Most of these are not new individually, but in combination they are novel. Combined with the pace of change, it can be hard for both consumers and public authorities to keep up. Some of these features, or their effects, raise questions, including: firms’ use of people’s data; the market power or ‘gatekeeper’ status of certain platforms; use of increasingly sophisticated technology to target advertising; or the risk of so-called ‘killer acquisitions’. The…

Japan’s Interim Study on Digital Platforms and Fundamental Principles for Improvement of Rules Corresponding to the Rise of Digital Platform Businesses (sic) [Updated with correct link]

Japan published late last year an interim study on digital platforms and a number of Fundamental Principles for Improvement of Rules Corresponding to the Rise of Digital Platform Businesses (sic), both available here. The study, which was produced by a working group, is structured as follows. Section I and II review the characteristics of digital platforms and the legal regime to which they are subject. The study begins by outlining the characteristics of online platforms and the various benefits they bring in terms of innovation, ease of market entry and consumer welfare. The study also notes how digital platforms benefit from direct and indirect network effects and from economies of scale. These features can raise switching costs between different platforms, which would tend to facilitate monopolisation or oligopolisation. Further, once a business model based on using and accumulating data is established data, a virtuous cycle may be created, where the competitive advantage of such business is maintained and strengthened through further…

Italy’s Big Data Report

This is a report published by Italian competition authority, together with the telecommunications regulator and the data protection authority, on how to address big data. It is available here. In my analysis below, I will focus on the elements of the report that touch or focus on competition law. I would also emphasise that this is not the first competition authority in Europe to look at data – the joint Franco-German report in 2016 also looked at the intersection between competition and data. The decision to pursue an interdisciplinary study arose from a recognition that the characteristics of the digital economy are very often such that it touches on the competences of the three authorities. The relationship between competition, privacy and pluralism requires a particularly close coordination between different regulators, not only to ensure effective regulatory action but also to identify and reconcile possible trade-offs between the values protected by different regulatory schemes. Furthermore, joint action will allow a better understanding of…

UK Furman Report – Unlocking digital competition, Report of the Digital Competition Expert Panel,

This Report, which can be found here, follows a review ordered by the UK’s Treasury to make recommendations on changes to competition and pro-competition policy to help unlock the opportunities of the digital economy. The report’s recommendations build on a number of propositions, namely that: the digital economy is creating substantial benefits; that a number of digital markets are prone to tipping and being ‘winner-takes-all’; market concentration in these markets both creates benefits and incurs costs; but government policy and regulation have limitations. In the light of this, the report found that the standard tools of competition policy, evaluating whether mergers can proceed and whether antitrust action is warranted to remedy abuses by companies, could play a role in helping to promote competition and the associated better outcomes for consumers and innovation. To do so, competition policy will need to be updated to address the novel challenges posed by the digital economy. Some of these updates can happen within current powers,…

EU group of experts, ‘Competition Policy for the digital era’

This Report, which can be found here, explores how competition policy should evolve to continue to promote pro-consumer innovation in the digital age. It is structured as follows. Chapter 2 describes the digital world and markets. The report focuses on three key characteristics of the digital economy: extreme returns to scale, networks externalities and role of data. Regarding returns to scale, the cost of production of digital services is disproportionate to the number of customers served. While this aspect is not novel as such (bigger factories or retailers are often more efficient than smaller ones), the digital world pushes it to the extreme and this can result in a significant competitive advantage for incumbents. Concerning network externalities, the convenience of using a technology or a service increases with the number of users that adopt it. Consequently, it is not enough for a new entrant to offer better quality and/or a lower price than the incumbent does; it also has to…

Stigler Center (University of Chicago) Report on Digital Platforms

This Report, which can be found here, was written by a working group who came together to address specific problems arising from the digital platforms’ reach, scale, scope, and use of data. They examined concerns stemming from the market structure contemporary platforms have created, and to investigate their competitive behaviour, including the consequences of network effects that can create barriers to entry for new innovators and entrench incumbents. The theme that runs throughout the report is the difficulty of entry into digital platform businesses once an incumbent is established. Whether the entrant is vertical or horizontal, has succeeded to some degree, is nascent, is a potential entrant, or is a large platform in an adjacent space, market entry improves consumer welfare by either providing more choice, different features, and a chance of higher quality, or creating a threat that spurs the incumbent to provide lower prices, higher quality and innovation, and to do so more quickly. The Report is structured…

Thibault Schrepel  ‘The Antitrust Blockchain Paradox’ 3 Geo. L. Tech. Rev. (Forthcoming)

This paper, which can be found here, seeks to portray the challenges that might arise regarding unilateral practices as a result of the deployment of blockchains.     It is structured in three parts: The first section details how unilateral practices can be implemented on blockchain and draws a risk map. It begins by describing how the blockchain works. This was already described in my reviews above, but it is worth pointing out that the author places some weight on the existence of two main forms of blockchain: public blockchains, also called permissionless or open blockchain, and private blockchains, also called permissioned blockchains. The main difference is that in the latter the permission to access the contents of the blockchain may be restricted to certain participants only. In practice, semi-private and private blockchains can have a multitude of access levels. The paper then turns onto conditions for the enforcement of competition law against unilateral practices. It begins by noting that there are…