Download publication

Working Paper

Digital platforms and antitrust

The market power of online platforms raises concerns that they may engage in anti-competitive practices, but traditional (ex-post) antitrust intervention will be less effective in markets driven by network effects unless it is combined with a proper (ex-ante) regulatory framework. Intervention should not reduce value creation, should focus on fair sharing of value, and should eliminate incentives for anti-competitive strategies.

By: , and Date: November 23, 2020 Topic: Innovation & Competition Policy

Digital platforms are at the heart of online economic activity, connecting multi-sided markets of producers and consumers of various goods and services. Their market power and their privileged ecosystem positions raise concerns that they may engage in anti-competitive practices that reduce innovation and consumer welfare. This paper deals with the role of market competition and regulation in addressing these concerns. Traditional (ex-post) antitrust intervention will be less effective in markets driven by network effects unless it is combined with a proper (ex-ante) regulatory framework. Antitrust tools should focus on value creation and its distribution before focusing on competition. The scope of regulatory intervention should satisfy three criteria: i) value creation from operation of the platforms does not decrease due to the policy intervention; in particular, interventions should not reduce network effects; ii) allocative efficiency is based on distributing the value created in a fair way among market participants e.g. use of the Shapley Value. Fair and transparent rules must govern the platform ecosystem; iii) dynamic efficiency and competition ensure that incentives for market misconduct and anticompetitive strategies such as artificial entry barriers are eliminated. Market interventions that target a firm’s market power should ideally retain value creation while also encouraging small firm entry and innovation. Data has a central role in online markets. Value creation is reinforced through a recursive a data capture and data deployment feedback loop which is enabled by machine learning technologies. A regulatory intervention that facilitates data sharing mechanisms, such that data will not only confer value to market leaders but also to their competitors to the benefit of consumers, is crucial for creating more competitive and innovative digital markets.

Recommended citation:
Parker, G., G. Petropoulos and M. Van Alstyne (2020) ‘Digital platforms and antitrust, Working Paper 06/2020, Bruegel

Read article More on this topic More by this author
 

Opinion

The four pillars of a digital strategy

The European Commission’s digital compass attempts to build strong fundamentals. It is a start. An ambitious digital agenda however requires a strategy that is all encompassing and coherent.

By: Maria Demertzis Topic: Innovation & Competition Policy Date: March 16, 2021
Read about event More on this topic
 

Past Event

Past Event

Declining competition: a transatlantic challenge

Join us for a discussion of transatlantic competition with Kristalina Georgieva, Margrethe Vestager and Amy Klobuchar among others.

Speakers: Romain Duval, Kristalina Georgieva, Greg Ip, Amy Klobuchar, Nancy Rose, Tommaso Valletti, Margrethe Vestager, David Wessel and Guntram B. Wolff Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 15, 2021
Read about event More on this topic
 

Past Event

Past Event

Protecting workers in the platform economy

How can we protect platform workers while preserving the opportunities and benefits that are generated by the sharing economy?

Speakers: Payal Dalal, Mario Mariniello, Diane Mulcahy, Ana Carla Pereira, Jacob Rudbäck and Shamina Singh Topic: Innovation & Competition Policy Date: February 24, 2021
Read article More on this topic
 

Blog Post

Regulating big tech: the Digital Markets Act

The European Union’s proposed Digital Markets Act will attempt to control online gatekeepers by subjecting them to a wider range of upfront constraints.

By: Julia Anderson and Mario Mariniello Topic: Innovation & Competition Policy Date: February 16, 2021
Read article Download PDF More on this topic
 

Working Paper

Platform mergers and antitrust

This paper sets out a framework for addressing competition concerns arising from acquisitions in big platform ecosystems.

By: Geoffrey Parker, Georgios Petropoulos and Marshall Van Alstyne Topic: Innovation & Competition Policy Date: January 26, 2021
Read article More on this topic More by this author
 

Opinion

Regulation in the era of matchmaking economics

New approaches and new tools are needed to prevent excessive concentration of economic power in the hands of a few matchmaking digital platforms that form multi-sided markets. Regulation in this area is only just emerging.

By: Maria Demertzis Topic: European Macroeconomics & Governance Date: January 5, 2021
Read article More by this author
 

Podcast

Podcast

The new EU digital regulations: Explained

Bruegel's experts walk you through all the details of the EU's Digital Services Act and Digital Markets Act.

By: The Sound of Economics Topic: Innovation & Competition Policy Date: December 16, 2020
Read article More on this topic More by this author
 

Opinion

Brussels’ Digital Plan Leaves the Key Issue Unaddressed

To promote well-being and shared prosperity, EU decision-makers will need to show the same desire for competition beyond the boundaries of digital markets.

By: Mario Mariniello Topic: Innovation & Competition Policy Date: December 14, 2020
Read about event More on this topic
 

Past Event

Past Event

Innovative approaches to monitoring the risks and impact of COVID-19

What new innovative tools can we use to measure real-time economic and social risk?

Speakers: Zsolt Darvas, Jaime Garcia, Ben McWilliams, Nicola Villa and Georg Zachmann Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: December 8, 2020
Read article More on this topic More by this author
 

Opinion

A timid start for European Union data governance

Europe needs all pieces of its data strategy puzzle to be in place to enhance its competitive position: there is still a long way to go.

By: Mario Mariniello Topic: Innovation & Competition Policy Date: November 26, 2020
Read about event More on this topic
 

Past Event

Past Event

Digital Platforms, Regulation and Competition: What's next for Europe?

Will the new rules of the internet go far enough for consumers and creators? Should we regulate platforms or will a code of conduct suffice?

Speakers: Diane Coyle, Jorge Padilla, Georgios Petropoulos and Alex A. Saliba Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 26, 2020
Read article
 

External Publication

European Parliament

Data flows, artificial intelligence and international trade: impacts and prospects for the value chains of the future

In-depth briefing and analysis on the issues of digital trade and the geopolitics of trade provided to the European Parliament.

By: Dennis Görlich, Michèle Finck, Georgios Petropoulos, Niclas Poitiers and André Sapir Topic: European Macroeconomics & Governance, European Parliament Date: November 26, 2020
Load more posts