Nicolas Petit ‘Technology Giants, the Moligopoly Hypothesis and Holistic Competition’

The gist of the argument in this paper – which can be found here – is intriguing, and plausible: tech giants do not compete within itemized relevant markets where they are monopolists. Instead, they are conglomerates that compete three-dimensionally as oligopolists across industries, which is what the author meant by a moligopoly. This blindness of antitrust to competition across markets is likely to lead to mistakes, and should be rectified. The paper is structured as follows: Section I sets out the moligopoly hypothesis and tests it by reference to empirical data. The author begins by reviewing how the competition law literature’s default position is to characterise the tech giants as dominant firms. Competition law focuses on one industry segment – i.e. a “relevant market” – where the investigated tech giants often enjoy unassailable clout, and where substitution by actual or potential rivals is unlikely. For example, Google’s competitive stronghold is search, Apple’s core is its unique ecosystem, Facebook’s moat is…

David Evans  ‘Why the Dynamics of Competition for Online Platforms Lead to Sleepless Nights but Not to Sleepy Monopolies’

This paper – which can be found here – makes more use of the dismal science than the paper above, but makes a similar point: claims that online platforms have secured permanent monopolies protected by barriers to entry arising from network effects and stockpiles of data are inconsistent with economics, the technology literature, and the history of online competition. The paper is structured as follows: Section I provides an Introduction. It notes that: “The record is replete with forecasts, soon proved wrong and then forgotten, that winners that took all, or most, were unbeatable’. Furthermore, there are four reasons why comparison to old staid corporate giants is unsuited to online platforms. First, turbulent waves of disruptive innovation have constantly shaken the business models of platform leaders and opened new avenues for entry and competition since the dawn of the digital age. Second, online platforms pegged as leaders in one area compete with each other in many other areas. They identify…

Niamh Dunne ‘Competition Law (and its Limits) in the Sharing Economy’ Forthcoming, Nestor Davidson, Michèle Finck and John Infranca (eds.), Cambridge Handbook on Law and Regulation of the Sharing Economy (Cambridge University Press)

As the title indicates: ‘This contribution (which can be found here) considers the potential application of competition law—specifically, the ‘antitrust’ rules governing anticompetitive unilateral or coordinated conduct—within the sharing economy.’ The sharing economy is described as a sector marked by recurrent characteristics, such as: (i) its underlying economic rationale is the under-utilisation of durable goods or other assets, which generates excess capacity that can be rented out; (ii) sharing economy businesses provide classic examples of ‘disruptive’ innovation, which originates outside a value network and displaces it; (iii) the innovations that underpin the sharing economy are rooted in the internet and mobile technologies; (iv) sharing economy businesses are often platforms in multi-sided markets; (v) sharing economy firms frequently conflict with regulatory regimes that control and limit the activities of competitors, resulting in recurrent critiques that such competition is inherently ‘unfair’. The paper is structured as follows: Section II examines how prohibitions against anticompetitive unilateral conduct may apply to the sharing economy. It begins…

David Evans and Richard Schmalensee ‘Network Effects: March to the Evidence, Not to the Slogans’ (2017) Antitrust Chronicle

The basic position of this paper – which can be found here – is that: ‘Competition authorities (…) with support from some dismal scientists, saw the dark side of network effects. Firms could rig the race to become the winner and thereby “tip” the market to make themselves monopolies. And even if a firm won fair and square, network effects would result in insurmountable barriers to entry and would be the font of permanent monopoly power. (…) A recent argument in this debate is that online platforms have troves of data that make network effects even more potent. Unfortunately, this view of network effects evolved from a seminal economic contribution to a set of slogans that don’t comport with the facts.” A first section looks at the economics of networks. This covers the origins of theoretical studies on this topic – which focused on telephone networks and fax machines, and standard-tipping (i.e. the VCR-BetaMax war). Theoretical refinements to the theory…

Giuseppe Colangelo and Mariateresa Maggiolino ‘Big Data as a Misleading Facility’ (2017) European Competition Journal 13(2) 249

This paper – which you can find here – asks whether big data should be treated as an essential facility. Without getting into matters relating to accuracy, freedom of choice, pluralism, or even whether regulation is adequate, this paper simply explores whether and how antitrust law could impose a duty on dominant firms to share their big data. The paper is structured as follows: Section 2 seeks to debunk the current (antitrust) narrative about big data. To summarise, the argument is that while data is an important input, it is not that different from other inputs. Unlike what certain authors seem to hold: (i) the economic utility of big data does not depend on the data as such, but on the material and intellectual resources that a firm invests in developing the analytics necessary to draw reliable and grounded inferences out of that data; (ii) data is not a single input like oil, but is instead a concept that contains…