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.

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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 identified in the academic literature, and concludes that none is fully satisfactory for antitrust purposes.

Section 3 discusses some conceptions of harm to competition, and their relevance for antitrust economics.

The paper reviews some of the objectives of antitrust enforcement. These objectives may justify intervention against conduct that: (a) harms some measure of welfare, often either consumer or total surplus; (b) “interferes with and degrades the market mechanism;” or (c) harms small‐ or medium‐sized suppliers. US antitrust law generally prohibits only acts that harm consumer welfare by harming competition. Economic research tends to focus on the consumer‐welfare prong of the standard, without regard to a separate notion of harm to competition. Many economists hold that concerns regarding harm to competition make little sense except as a proxy for expected long‐run harm to consumer welfare. However, there are situations in which harm to competition (at least as competition is commonly understood by economists) can lead to increased consumer welfare; and a definition that equates harm to competition with lowering some measure of social welfare would also be inconsistent with US law (e.g. mere exercise of market power would be anticompetitive).

Lawyers often assess harm to competition by asking whether the conduct at issue “represents competition on the merits,” which might be loosely understood as trying to attract consumers by offering them lower quality‐adjusted prices, as opposed to attempting to reduce rival suppliers’ abilities to make attractive offers. A close concept, widely used by economists, is the no economic‐sense test, under which conduct is viewed as anticompetitive if it makes no economic or business sense but for the likelihood of weakening rivals’ abilities to make attractive offers to potential buyers. However, this concept can be hard to apply in practice.

This brief discussion of antitrust standards should make clear that, if economists want their research to influence the practice of antitrust policy, then they should continue to engage in the debate about the meaning of “harm to competition.” In so doing, economists should recognise that considerations beyond a focus on outcomes and efficiency such as competitive process and fairness can matter too. Along with defining harm to competition, it would be very useful if economists could provide courts with concrete guidance for how to identify instances of such harm – and, particularly, develop practical benchmarks for what constitute workably competitive outcomes in multisided platforms markets.

Section 4 turns to the question of market definition.

Some economists and courts believe that a “transactions platform” operates in a single, two‐sided antitrust market (as opposed to competing in two closely interrelated, but distinct markets). To an academic researcher, it might seem odd that so much would turn on market definition, given that economists tend to place relatively little weight on the formal delineation of market boundaries—such delineation is unnecessary for sound economic analysis and, indeed, an obsession with bright‐line boundaries can be an obstacle to good analysis. In practice, however, market definition can have strong implications. Firstly, it can affect how courts assess market power, including whether they assess market power for the platform as a whole or for each side of the market in turn. Secondly, whether a single two-sided market or two closely related markets are identified can affect whether the welfare effects of a challenged conduct are assessed by considering the effects on user groups on each side of the platform separately or only in aggregate. Lastly, the decision to define a single, two‐sided antitrust market can affect the allocation of the burdens of proof between a plaintiff and defendant. For example, although there is widespread agreement that the appropriate approach to market definition for media platforms is to define two closely interrelated but separate markets, there is considerably less agreement with respect to transactions platforms. This had significant implications in the Ohio v American Express judgment by the US Supreme Court (reviewed here).

Sections 5–7 consider three important practical questions:

  • Is a change in a multisided platform’s “two‐sided” price (i.e., the sum of the prices it charges to users on its two sides for a platform‐mediated transaction) a sufficient metric for a change in consumer welfare? Proponents of relying on the two‐sided price to assess consumer‐welfare effects argue that doing so is an essential element of accounting for the two‐sided nature of a platform. The author disagrees, because such an approach mistakenly presumes that the services consumed on the two sides of the platform are complementary products bought by a single consumer, does not acknowledge the different interests of consumers on each side of the platform, and ignores the existence of cross‐platform network effects. It is a simple matter to identify examples in which the change in the two‐sided price is not a sufficient statistic for the changes in either consumer or total surplus – and the author provides a number of them.
  • Is a change in a multisided platform’s transactions volume a sufficient statistic for the change in the level of consumer welfare and/or the degree of competition? Many courts and antitrust enforcers view a change in output as a proxy for the effects of conduct on competition and/or consumer welfare, so that whether conduct raises or lowers output is the most important test of whether it is illegal. This is problematic at a number of levels. First, the claim that rising industry output indicates that a market is competitive clearly has no basis in sound economics, two‐sided or otherwise. Obviously, a wide range of factors affect output growth, and there is no general result stating that more competitive markets grow faster over time than do less competitive ones. Second, even if one focuses on the specific effect of a conduct on output, increase in total output does not, by itself, imply the absence of harm to welfare. In a one‐sided market, an increase in output holding quality constant typically corresponds to an improvement in consumer welfare absent price discrimination. But in a two‐sided market, divergences between changes in transactions volumes and changes in consumer welfare can arise because the interests of users on opposite sides of a platform are generally not aligned, and a platform may engage in conduct that exploits this fact. For example, platforms that serve as intermediaries between buyers and sellers often prohibit participating sellers from refusing transactions over the platform or from charging higher prices to buyers that use the platform rather than alternative distribution channels. Under the latter rules, sellers are denied the ability to send price signals to buyers to internalise the two sides’ interests and, in effect, the platform is able to tax users of less expensive distribution channels because they pay the same prices for the sellers’ products as do buyers using the more expensive platform. It follows that sweeping claims that an increase in quantity corresponds to an increase in user surplus or total surplus are false.
  • When should a change in the price structure be presumed to be illegal? Allocation of the burden of proof between the plaintiff and defendant can have significant effects on the outcome of litigation. In a previous article – reviewed here just a few weeks ago – the author has suggested that if the plaintiff can show harm to the competitive process and that the resulting change in the platform’s price structure has harmed one or more user groups, then the plaintiff will have met its initial burden of proof. This burden should then shift to the defendant, who will have to show that its challenged conduct does not harm the competitive process and/or or does not harm the users that plaintiff alleges have been harmed. The focus on price structure rather than the two‐sided price reflects the judgement that users on each side of a platform are entitled to the benefits of competition.


This is a solid, thoughtful piece on the challenges raised by multisided markets to competition enforcement. Its focus is clearly to criticise the reasoning underpinning the recent US Supreme Court decision in Ohio v MasterCard, on which I will write more next week.

One consequence of this focus is that the article provides a good overview of debates about competition enforcement and multisided platforms, and a strong critique of certain approaches, but does not go into how competition law should take into account the multisided nature of these platforms in practice. The piece nonetheless provides valuable advice to economists regarding how they should continue to refine their approach to multisided markets in a way that is practical and of value to enforcement.

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