Reuben Binns and Elettra Bietti ‘Acquisitions in the Third-Party Tracking Industry’

This working paper, which can be found here , draws attention to one particularly complicated kind of digital data intensive industry: third party tracking, in which a firm does not (only or primarily) collect and process personal data of its own customers or users, but focuses instead on collecting data of users of other ‘first party’ services. The authors focus on mergers and acquisitions of third-party tracking firms because they raise some unique challenges which are often missed in regulatory decisions and academic discussions of data and market concentration. The paper is structured as follows: Section 1 contains a brief overview of the technical elements of third party tracking and of the business practices associated with it. This description is somewhat long because it provides a good overview of these business practices; you may want to skip it if you are familiar with them. ‘Tracking’ refers to a range of data collection and processing practices which aim to collate the behaviours…

Marco Botta and Klaus Wiedemann ‘EU Competition Law Enforcement vis-à-vis Exploitative Conducts in the Data Economy’ Max Planck Institute for Innovation & Competition Research Paper No. 18-08

This long paper (90 pages), which can be found here, seeks to understand how traditional principles of EU law – particularly those related to exploitative abuses and respective remedies – apply to new business models that mainly rely on processing large amounts of users’ data. The analysis does not extend to the US because, following Trinko, the authors consider that antitrust law there does not extend to exploitative practices, even if the FTC has powers under the Sherman Act to pursue such practices under consumer and unfair practices law. I am afraid the review is rather long, because this paper’s contents are the equivalent of multiple articles. The paper is structured as follows: Section 2 provides an overview of European case law vis-à-vis exploitative abuses. Art. 102 TFEU lists a number of exploitative abuses. Nevertheless, the European Commission has long focused on investigating exclusionary, rather than exploitative abuses. While this has led to limited case law on exploitative abuses, the authors identify…

Ariel Ezrachi on ‘EU Competition Law Goals and The Digital Economy’ (2018) Report for BEUC – The European Consumer Organisation

This paper  can be found here. I have already reviewed it in an earlier post. At the time, I focused on the article’s overview of the goals of EU competition law. However, the article also contained a detailed discussion of the impact that the digital economy may have on these goals. I was unable to review this discussion then, so I propose to do it here. Competition policy is one of several instruments used to advance the goals of the European Treaties. According to the European Commission, competition on the market is protected as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources. This notwithstanding, EU competition law has also consistently been held to protect ‘not only the interests of competitors or of consumers, but also the structure of the market and, in so doing, competition as such.’ Moreover, a genuinely indigenous objective is worthy of note, namely that of promoting European market integration. In addition…

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…