Martin Cave ‘Platform Software Versus the Software of Competition Law’ (2019) Journal of European Competition Law & Practice 10(7) 472

The emergence of two-sided platforms challenges competition law to adapt its ‘software’—the practical way in which cases are addressed. Competition authorities carefully and conservatively manage competition policy’s operating system, but the radical nature of multi-sidedness imposes major challenges. The purpose of this article, available here, is to discuss how these challenges might be addressed in practice. This is done by reference to a two-sided platform merger inquiry that was undertaken by the UK Competition and Markets Authority (CMA) in 2017. The case concerned two merging food-ordering platforms that linked restaurants and customers, and accounted for 80% of the market (with the merger leading to a 10% increment).  A monetary transfer linked the two sides of the market – these platforms were usually rewarded by a percentage of the customers’ bill. The wider marketplace also included firms which operated ordering platforms and provided food delivery (‘food-ordering and logistics companies’), as well as restaurants and restaurant chains which themselves took orders and delivered food….

Ariel Ezrachi and Viktoria Robertson ‘Competition, Market Power and Third-Party Tracking’ (2019) World Competition 42(1) 5

Trackers on our websites and apps enable multi-sourced data gathering. While numerous operators engage in tracking, a small number of data giants controls the majority of these trackers. This article, available here, considers the rise and growth of this industry, the power it has bestowed on a handful of platforms, and the possible implications for consumer welfare and competition. Section 2 describes the pervasiveness of third-party tracking. Third-party tracking is a mechanism through which a company (the third-party tracker) hooks onto another (first-party) website or application and collects identifiable data about users, enabling the tracker to build a comprehensive profile about these users. Tracking may occur both actively and passively. It may offer generic information on usage and webpage visits, or combined and analysed information which enables the identification of the individual. The gathering of personalised data – through third-party tracking or otherwise – is primarily relied upon for four purposes in the digital realm: to provide data-based (i.e. individualized or targeted)…

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…

Gregory Werden and Luke Froeb  ‘Antitrust and Tech: Europe and the United States Differ, and it matters’ (working paper)

While merger and cartel enforcement lead to similar outcomes on both sides of the pond, there are significant differences regarding “abuse of dominance” and “monopolisation”. The European Commission and some national competition authorities in Europe have taken on tech giants in high-profile cases. However, hard-wired differences between the European and American enforcement regimes make very difficult for the US antitrust enforcement agencies to emulate their European counterparts. This piece, available here, seeks to identify these differences. A first set of differences relates to how an administrative model prevails in Europe, while the US system is mostly accusatorial. The European system was conceived of as regulation enforced by an administrative agency, not as law enforcement by the courts as in the US.  One important distinction in this respect is that a contested court order in the United States typically contains a series of conduct mandates and prohibitions, while administrative decisions usually merely provide for cease-and-desist orders. Furthermore, the European system is driven by…

Herbert Hovenkamp ‘Platforms and the Rule of Reason: The American Express Case’ (2019) Columbia Business Law Review, 1 34

In Ohio v. American Express Co. (“Amex”), the Supreme Court had its first explicit opportunity to apply the rule of reason to an allegedly anticompetitive practice on a two-sided platform– i.e. a business that depends on relationships between two different, noncompeting groups of transaction partners (e.g. newspapers, as regards readers and advertisers). This article, available here, considers how the rule of reason should be applied to an exclusionary practice on a platform market. It considers the rule of reason’s basic burden-shifting framework, unique elements of market delineation on platform markets, and the relevance of placing production complements into the same “market.” It criticises the Supreme Court’s unjustified conclusion that a market definition is necessary in an antitrust challenge to a vertical practice; its odd treatment of free rider problems; its lack of attention to the record and to economic analysis; and its confusion of total with marginal harms and benefits. Finally, it looks at the implications of the Court’s decision for market…

Pinar Akman on ‘Online Platforms, Agency and Competition Law: Mind the Gap’ (2019) 43 Fordham International Law Journal 209

The platform business model, inasmuch as it facilitates contracts between suppliers and customers, displays the qualities of an agency relationship more than any other commercial arrangement – and many platforms do indeed claim that they are mere agents. Since EU competition law does not apply to agreements between principals and agents – even where such agreements restrict competition – the implication would be that anticompetitive agreements between a platform and suppliers would fall outside the scope of, and could not be scrutinised by EU competition law. The same principle would apply to other competition system that adopts such an approach to agency (e.g. the US and many others). As a result, there is potentially a “platform gap” in the application of competition law in digital markets. This article, available here, argues that platforms’ relationships with their suppliers can be categorised as a principal-agent arrangement falling outside the scope of competition law. Since this “immunity” from competition law can have significant implications for…

Jay Matthew Strader ‘Google, Monopolization, Refusing to Deal and the Duty to Promote Economic Activity’ (2019) International Review of Intellectual Property and Competition Law 50(5) 559

Almost no consumers have the resources to assess the quality of information online. Search engines seek to remedy asymmetries in information, effectively providing a quality certification service to consumers. Google claims to rank organic results ‘‘scientifically’,’ based strictly on relevance and the quality of the listings. Ninety two percent of all Google search traffic occurs on the first page, encompassing the top ten organic results and paid ads, which reflects high levels of consumer trust.   This paper, available here, argues that Google’s search engine is indispensable for innumerable companies, which cannot compete effectively when Google fails to rank organic results according to relevance. However, Google’s ad-based business model creates incentives for it to promote paying advertisers or its own business, in particular by lowering the rank of more relevant results. This leads to lower quality in the search market, to lower output in downstream markets and, ultimately, to lower consumer welfare – independently of whether Google operates downstream or…

Giorgio Monti ‘Abuse of a Dominant Position: A Post-Intel Calm?’ (2019) Competition Policy International – Antitrust Chronicle March

The EU’s abuse of dominance doctrines have been criticised for two reasons. The first is their focus on the form of the conduct rather than on the relevant theory of harm; the second is that the law is applied to protect rivals of the dominant firm without requiring a showing that this would improve economic welfare. Several commentators considered that the Commission’s 2009 Guidance Paper on Exclusionary Abuses brought a paradigm shift to the analysis of Article 102, moving towards a more economics and effects’ based approach. A question that remained was how the courts would react to this. Some decisions – such as Post Danmark I – seemed to move towards the approach adopted in the Guidance Paper, while others – such as Telia Sonera or Post Danmark II – seemed to revert to a more expansive and formalistic approach to Article 102 TFEU. This paper, available here, asks whether the recent move back towards a more effects’ based…

Giuseppe Colangelo and Mariateresa Maggiolino ‘Applying Two-Sided Markets Theory: the MasterCard and American Express Decisions’ (2018) Journal of Competition Law & Economics 14(1) 115

The first judgments to apply the economic theory of multisided markets to the payment card industry have been recently adopted in the UK and in the US. This paper, available here, uses these cases to try to show that antitrust authorities should take into consideration the two-sided nature of the credit-card industry, and to explain how this can be done. Taking the multisided nature of payment systems into account is necessary to arrive at a realistic description of these markets, and to develop solid theories of harm and procompetitive justifications that can explain some business practices involving credit cards. It is structured as follows: Section II briefly describes the main economic features of multisided business models. Different authors have defined multisided markets differently, as they looked at different markets and business models. Nonetheless, the following generic traits tend to characterise all such markets: the presence of indirect network externalities that cannot be internalised through a bilateral exchange (usage and membership…

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…