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…

Angela Daly ‘Beyond Hipster Antitrust:  A Critical Perspective on the European Commission’s Google Decision’ (2017) European Competition and Regulation Law Review 1(3) 188

The argument of this article – which can be found here – is straightforward: “competition law as it stands is not well-equipped to address (all of) the problems a very large concentration of private power such as Google poses to Internet users. However, unlike the ‘antitrust hipsters’, it is argued that reform to competition law is insufficient – other areas of law and regulation may be more appropriately employed to ensure user autonomy in these circumstances.” The paper begins with an extremely cursory analysis of the Commission’s decision in the Google case. Since the decision is not yet published, the paper relies on comments from the Competition Commissioner that there was an abuse because Google: “promoted its own comparison shopping service in its generic search results, and demoted the results of its competitors, with the effect that competitors were ‘denied… the chance to compete on the merits and to innovate’ and European consumers were ‘denied… a genuine choice of services…

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…

Mark Anderson and Max Huffman, ‘The Sharing Economy Meets the Sherman Act: Is Uber a Firm, a Cartel, or Something in Between?’ (2017) Columbia Business Law Review 859

This is a rather long piece – which you can find here – that tries to understand how antitrust should be applied in the context of the sharing economy. I think the spur for this piece is the recent price-fixing case brought against Uber in New York. Regardless of the incentives for writing the paper, it tries to identify the various approaches that antitrust can adopt regarding digital platforms and to determine which one is better suited. The paper also argues that: “Unique to sharing economy enterprises is a structure that approaches a single entity while remaining a set of agreements among individual actors. This structure results in a sharing of economic risks among the participants in a sharing economy enterprise which can incentivize efficiencies in operation that ordinarily are found in a single entity. The article concludes that those efficiencies can overcome anticompetitive concerns about coordination on competitively sensitive matters.” The paper begins by observing that: “antitrust law has…

Maurice Stucke and Ariel Ezrachi “Looking Up in the Data-Driven Economy’ (2017) CPI Chronicle May

This paper – which you can find here – argues that analyses of the impact of internet platforms on competition should not only take into account the behaviour of these platforms towards their consumers downstream, but also towards their input/content providers. The paper begins with the observation that U.S. antitrust policy (aside from cartel enforcement) has been plagued by a number of shortcomings. Competition has declined since the 1970s, along with the number of new businesses being created, while market and profit concentration have increased. There is a risk of these trends being reinforced by the emergence of big data and AI. This is not something which is inherent to these technological developments: big data and AI’s effects on society depend on how firms employ them, how markets are structured, and whether firms’ incentives are aligned with society’s interests. At times, big data and big analytics can promote competition and welfare by making information more easily available and by providing access to…

Frank Pasquale “When Antitrust Becomes Pro-Trust: The Digital Deformation of US Competition Policy” CPI ANTITRUST CHRON. (May 2017).

This paper – which can be found here – argue that “in digital industries in particular — such as search engines and social networks — U.S. merger review has been lax”. According to the author: “Massive digital platforms have exacerbated an old problem in American antitrust law — the tension between the efficiencies that mergers achieve in theory, and the pressure they inevitably create for firms in, or adjacent to, the industry of the merged firms, to themselves combine in order to better compete.” Problems are said to arise from adherence by antitrust enforcers to three myths that rationalize market power online: The Myth of Easy Platform Switching – This theory holds that consumers can and will easily shift from Google to Yahoo, or from Amazon to Barnes & Noble, or from Uber to Lyft. In reality, however, a long history of personalisation of results (through machine learning algorithms), network effects and lock-in make it hard to switch providers. The Myth of the…

John M. Newman ‘Complex Antitrust Harm in Platform Markets’ Antitrust Chronicle 2017, Spring, Vol. 1(2)

This paper – which can be found here – develops a rather orthodox argument about market leveraging and foreclosure. In short, the argument is that: “Under certain conditions, digital platforms can harness the power of reputation to steer users to favored suppliers. This steering forecloses non-favored suppliers in a related, though distinct, relevant market. Where favored suppliers are able to split the resulting rents with the platform, the strategy s rational. The resulting foreclosure reduces efficiency and consumer welfare.” In short, “Platform markets exhibiting substantial algorithm-driven reputation competition can facilitate a unique type of competitive harm. This article briefly summarizes the marketplace evolutions that have fiercely intensified [algorithm driven] reputation competition. It then describes this novel second-order, out-of-market competitive harm that can arise as a result of certain conduct in such markets.” Given this, it is unsurprising that the paper begins with a discussion of why reputation is relevant to competition. Antitrust doctrine generally treats “consumer choice” as being good. Yet…

Orla Lynskey ‘Regulating ‘Platform Power” LSE Law, Society and Economy Working Papers 1/2017

This paper – which can be found here – is not strictly about competition, but has a wider regulatory focus. Its main arguments are that: (i) the term ‘platform power’ fails to reflect the potentially problematic power at the heart of the information society. Focus should therefore shift from this concept to the identification of concerns raised by the practices of Internet intermediaries; (ii) blind spots exist when the issue of ‘platform power’ is viewed solely through an economic lens. As a result, competition law fails to capture and sanction practices that negatively impact upon non-economic parameters, such as freedom of expression and privacy. The argument about platform power is made out in Section 2, and it is broken down into three different elements: The initial focus of the argument is on the EU’s attempts to address developments in the digital sphere, and in particular on the European Commission’s Digital Market strategy. The various meanings given in Europe to “platforms”…

Jens Prufer and Christoph Schottmüller ‘Competition with Big Data’ CentER Discussion Paper 2017-007

This working paper – which can be found here – attempts “to better understand data-driven markets: i.e. markets where the cost of quality production is decreasing in the amount of machine-generated data about user preferences or characteristics (henceforth: user information), which is an inseparable by-product of using services offered in such markets”. The authors start from the assumption that data-driven markets are characterized by imperfect competition and subject to indirect network effects. In the light of this, they try to determine: (a) under which conditions a duopoly can be a stable market structure in a data-driven market; (b) when the propensity to market tipping (i.e. to monopolization) becomes overpowering; (c) the conditions that allow a dominant company in one data-driven market to leverage its position into another market. The paper begins, at least implicitly, by distinguishing between indirect network effects (which mix supply and demand effects. They occur where increased demand leads to decreasing costs in obtaining a product input – in…

Giuseppe Colangelo and Mariateresa Maggiolino ‘Data Protection in Attention Markets: Protecting Privacy through Competition?’ (2017) 8(6) 363

This paper – which you can find here – asks whether it is possible to protect privacy through competition. The paper begins from the observation that we are witnessing the advent of many businesses dedicated to offer zero-price services in exchange for advertising revenues and data. While not completely new – old media companies had similar business models –, these new businesses benefit from “new” digital technologies to collect, store and analyse huge amounts of users’ data. Thus, it is unsurprising that user data are now conceptualized as the currency for the many services and products that users find on the Internet at zero-price. Given this, the question the authors seek to address is “whether and how EU competition law could be enforced as a substitute of EU data protection law.” At this point, I must ask you to moderate your screams of “sacrilege”, appropriate as they may be for the festive season, and give the article a chance. The paper and its…