Online Platforms : The interplay of regulation and antitrust enforcement

Séminaire "Droit et économie de la concurrence" organisé par la Revue Concurrences avec Thomas Kramler (DG COMP) en partenariat avec White & Case et Compass Lexecon.

Thomas Kramler

The main question for this conference is whether antitrust enforcement as regards online platforms could, and should, be complemented by regulation. Platforms have been developing rapidly in the past few years. Does the platform economy raise competition concerns ? Online platform markets tend to be characterized by high market shares but they are also fast-moving markets, so potentially there could be no competition concerns as competition for the market may kick-in. On the one hand, it could be argued that competition for the market is fierce and disruptive innovation could at any time affect the position of the market leader and change the market structure. On the other hand, online platform markets provide first mover (or second mover) advantages and protect established market positions through direct and indirect network effects and economies of scale also linked to data.

The few online platforms with a strong market position may have the incentive to leverage their position on a related market. These issues justify taking a close look at online platform markets from an antitrust perspective. The argument that they are fast-changing is not entirely convincing as some platform markets tend to remain stable. For example the market for online search has been dominated by one operator for several years. It might therefore be risky to simply wait for disruptive innovation to rearrange the market structure. For the assessment of market power in technology markets, different features have to be taken into consideration as they can play in favor or against the incumbent : multi-homing and two-sidedness, as well as platform competition, are important factors. In terms of economics, default installation causes a behavioral issue : consumers will generally settle for pre-installed apps or software rather than search for competing products. Consequently, companies pay for default installation and the impact of these practices is difficult to counter. Big data is another ‘hot topic’. So far, the Commission’s decisions in this area have mostly been in merger cases. Personalized advertising based on search and purchase history is also much discussed. Technology allows for it but in fact, it is currently not implemented very often. Big data alone might not create value for companies without the processing algorithms. One topical question with regard to data is whether data protection is sufficiently valued by consumers to become an object of competition between market actors. On some markets, consumer data can be assimilated to the “price” for a seemingly free service. This is a challenge in the merger control field and in antitrust. As regards market definition, platform markets require enforcers to consider new parameters to establish substitutability. As regards market power assessment, a competitive advantage due to data can exist but some complementary elements seem to be necessary : it is mainly the combination of algorithms and certain types of (big) data which allows companies to improve their service and gain an advantage on the market.

Photos © Emilie Gomez

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  • European Commission - DG COMP (Brussels)
  • RBB Economics (Brussels)
  • White & Case (Brussels)
  • White & Case (Brussels)