Joshua Wright and John Yun ‘Burdens and Balancing in Multisided Markets: The First Principles Approach of Ohio v. American Express’ (2019) Review of Industrial Organization

This article, available here, argues, contrary to the arguments made in the piece above, that the Supreme Court decided the Ohio v American Express case correctly. Multisided platforms have distinct and critical features that set them apart from single-sided markets. Any prima facie antitrust assessment of competitive harm must incorporate the impact on consumers in all sides of a market regardless of market definition, and output effects should be the primary emphasis of any such competitive effects analysis. The paper is structured as follows: Section 2 identifies two broad schools of thought on market definition and competitive effects for multisided platforms. There is a divide among antitrust practitioners, courts, and economists regarding how multisided platforms should be assessed in antitrust investigations. A first school advocates for a separate effects and markets’ approach. Because users on different sides of a platform have different economic interests, it is inappropriate to view platform competition as being for a single-product offered at a single (i.e., net,…

Erik Hovenkamp ‘Platform Antitrust’ Journal of Corporation Law (forthcoming),

This paper argues that the recent Supreme Court decision in American Express v Ohio is misguided. It is available here. Platform competition creates challenges for antitrust, but does not warrant the upheaval of the antitrust laws that the Supreme Court’s majority opinion prescribed. Instead, the traditional rule-of-reason approach is much better suited to deal with such cases. The paper is structured as follows: The paper begins by providing an overview of the distinctive features of platforms and platform competition, as reflected in the platform economics’ literature. There is no universally accepted definition of a two-sided platform, since multi-sidedness is a matter of degree. The economic literature identifies various types of platforms, such as: (a) transaction platforms, i.e. platforms that provide instrumental value by facilitating transactions between the two sides of a market; and (b) media platforms, where the two-sides of a platform comprise consumers of content and advertisers. It is sufficient here to describe a two-sided platform as a firm that (a)…

Andres Caro ‘Leveraging market power online: the Google Shopping case’ (2018) Competition Law Journal 17(1) 49

The Google Shopping case raises many important questions, such as: how do we deal with the leveraging of market power in digital markets? How do we weigh the benefits to consumers against the potential harm to competition? And, lastly, what are the appropriate remedies for this type of behaviour? In addressing these questions, this paper is structured as follows: A first section describes the background to the Google Shopping decision by the European Commission. Google aggregates, sorts, displays and provides direct access to retailers’ webpages in exchange for a fee through Google Shopping. Other online platforms, including Nextag, Foundem and Shopzilla, offer similar services. However, until early 2018 ‘while competing comparison shopping services can appear only as generic search results and are prone to the ranking of their web pages in generic search results on Google’s general search results pages being reduced (‘demoted’) by certain algorithms, Google’s own comparison shopping service is prominently positioned, displayed in rich format and is…

Edward Iacobucci and Francesco Ducci ‘The Google Search Case In Europe: Tying and the Single Monopoly Profit Theorem in Two-Sided Markets’ (2018) European Journal of Law and Economics 47 15

According to the authors, the European Commission in its Google Shopping case did not outline which theory of foreclosure justified its finding of infringement. Likewise, there is no consensus in the literature about which theory of harm may best justify the decision. In the light of this, the authors seek to develop such an economic and legal theory of harm in this paper, which can be found here. They argue that, by tying its search and shopping platforms, Google became able to serve customers with whom it would have not dealt otherwise. However, this may divert trade from potentially more efficient vertical platforms. By tying its shopping search to its general search service through visual prominence, Google can attract additional advertisers on its search platform that would otherwise have possibly advertised on competing search platforms. Thus, the effect of tying is a restriction on competition in vertical search that deserves antitrust scrutiny. The paper is structured as follows: Section 2 reviews the…

Thomas Hoppner, Felicitas Schaper, and Philipp Westerhoff ‘Google Search (Shopping) as a Precedent for Disintermediation in Other Sectors – The Example of Google for Jobs’ (2018) Journal of European Competition Law & Practice 9(10) 627

The Google Shopping decision was said by the Commission to be “a precedent which establishes the framework for the assessment of the legality of this type of conduct”, i.e. the use of a dominant platform to favour one’s own ancillary service. Despite this, in 2018 Google launched a new service, Google for Jobs, for the matching of job seekers and employers in Europe. This article, available here, examines whether the manner with which Google is presenting its new Google for Jobs service on its general search results pages complies with the precedent set out by the Google Shopping decision. The paper is structured as follows: Sections II and III provide some insights into search and search bias, and reviews the European Commission’s Google Shopping decision. Upon a user’s query in Google Search, Google’s general search results pages generally produce three different categories of search results: (i) Generic Search Results, (ii) Specialised Search Results and (iii) AdWords Results. The likelihood that a user…

Nicholas Banasevic ‘The European Commission’s Android Decision and Broader Lessons for Article 102 Enforcement’ CPI Antitrust Chronicle December 2018

The aim of this article, which can be found here, is to analyse some of the main issues that arose in the European Commission’s Google Android decision, and to place these issues in the context of hotly debated broader themes relating to antitrust enforcement in hi-tech markets. The author is head of unit at the European Commission, so his analysis may be more authoritative than other ones, at least until the full decision is published.  The piece is structured as follows: Section II provides an overview of the Commission’s decision. Android is an open-source smart mobile operating system. Google started providing the core version of Android commercially to smartphone and tablet manufacturers (“OEMs”) for free, but included a range of contractual requirements relating to the terms for obtaining Google’s associated proprietary apps (e.g. Google’s search app) and services. The free and open-source provision of Android was a key part of getting all major OEMs signed up, which led (by 2011) to Google…

Randal Picker ‘Google Android Antitrust: Dominance Pivots and a Business Model Clash in Brussels’ CPI Antitrust Chronicle December 2018,

This paper, which can be found here,  argues that the Android decision is an exercise in platform engineering by European antitrust authorities. The decision makes a statement about acceptable entry paths for firms dominant in one market into another by demanding that a successful firm pivot away from the practices that consumers found valuable, and that indeed led to the emergence of dominance in the first place. In doing so, the Commission appears to undervalue the virtues of business model competition. The paper is structured as follows: Section II describes the European Commission’s interactions with Google. Google’s core business consists of organic horizontal search results matched with ads paid for by third parties. This, of course, is the classic business model of media markets offering consumers content – sometimes for a fee, sometimes for free – and charging advertisers that want to reach those consumers. So-called vertical search competitors, on the other hand, offered specialised search results. On November 30,…

Giovanna Massarotto ‘From Standard Oil to Google: How the Role of Antitrust Law Has Changed’ (2018) World Competition 41(3) 395

This paper, which can be found here, explores the evolution of antitrust over time, and how some of the challenges with network businesses are recurring issues for competition law. It is structured as follows: Section 1 examines the evolution of antitrust law over time. Before the introduction of antitrust law, markets were generally subject to self-regulation. Antitrust was introduced to regulate a number of business practices without engaging in full-fledged regulation. Nonetheless, antitrust has teeth and can be quite intrusive. A first example of this can be seen in the Standard Oil case. Standard Oil’s success was mainly due to a set of mergers and trusts it entered into with its competitors and railroads. The result of this success was that, by the 1890s, most businesses had to deal with Standard Oil or with one of the constituents of its extensive trust l. In order to address the  ‘evil of restriction of output’, the Supreme Court ordered the dissolution of the…

John Yun on ‘Understanding Google’s Search Platform And The Implications For Antitrust Analyses’ (2018) Journal of Competition Law & Economics 14(2) 311

The paper, which can be found here, seeks to describe the precise nature of the various anticompetitive claims against Google, and to develop an economic framework and empirical test to assess these claims. In particular, the paper seeks to develop a conceptual framework to assess claims of leveraging monopoly power and foreclosure of vertical search competitors that could be empirically tested and applied in other jurisdictions or future investigations in platform-settings with related allegations. The paper is structured as follows: Section II describes the precise nature of the antitrust claims against Google. Google operates a multisided platform that offers users free access to its content. In turn, it sells access to those users to advertisers who wish to convert those users to purchasers. Advertising platforms must compete for both users and advertisers. These platforms attract users through quality content, more relevant and less intrusive ads, and lower prices (typically, at free or highly subsidised prices). Ad platforms attract advertisers by having users,…

Michael Katz ‘Platform economics and antitrust enforcement: A little knowledge is a dangerous thing’ (2019) Journal of Economics and Management Strategy 28 138

This article, available here, argues that, while the economics of multisided platforms have led to important insights for antitrust policy, academic knowledge falls short of providing useful advice to enforcement agencies and courts on a number of critical topics. The author identifies several areas in which economics research could potentially make significant contributions to the practical antitrust treatment of platforms. The paper is structured as follows: Section 2 discusses various economic definitions of platforms. When should a firm be defined as a multisided platform? As has been widely noted among academics, there is a lack of consensus regarding the definition of a multisided platform. For purposes of antitrust economics, a fruitful way to rephrase the question is to ask: under what conditions is it important to account for cross‐platform interactions to ensure an accurate understanding of industry equilibrium, and when is it meaningful to examine just one side of a firm’s operations? The paper reviews a number of definitions that have been…