The European view
In response to the growing relevance of digital platforms, Germany—probably as the first jurisdiction—has, in 2017, introduced a number of additional criteria into its competition law that the German competition authority and the courts now need to consider when assessing market power in platform markets. The newly introduced §18 no. 3a of the Act against Restraints of Competition now requires that, when assessing an undertaking’s position in a market, the following five factors need to be also considered for multi-sided markets and networks:
(1) Direct and indirect network effects
(2) The parallel use of several services and users’ switching costs
(3) Economies of scale in relation with network effects
(4) Access to data relevant for competition
(5) Competitive forces of innovation
These factors are based on research by Evans and Schmalensee (2008, 2015) which identifies the ways concentration increases in digital platforms:
A German Approach to Antitrust for Digital Platforms
By: Justus Haucap – University of Duesseldorf
The US view
The European Union is considering more regulation of digital firms, and insisting on greater care for the handling of data may make sense. But the EU also substantially missed out on the round of digital entrepreneurship that began in the 1990s, and it is not generally at the forefront of this sector currently – so few people in the US are rushing to follow its example.
Should Tech Companies Be More Tightly Regulated?
By: Simon Johnson – MIT
An underappreciated issue
Data ownership can create a barrier to entry in AI-driven innovation. “There is a current debate between platform ownership (the current state) and the prospect of a user-centric approach. This is an underappreciated subject that economists should take up and try to make progress on.”
Interview with Jean Tirole: Competition and Regulation
By: Timothy Taylor – Journal of Economic Perspectives
A cautionary tale about these disagreements
If regulations are initiated by individual states without an international cooperation, then we risk the emergence of national digital borders, which would not only inhibit flows of data and information, but also disrupt trade, supply chains, and cross-border investment.
Preventing the Balkanization of the Internet
By: Michael Spence, Fred Hu – NYU, Primavera Capital Group
