This document discusses platforms and competition policy. It summarizes several reports on digital platforms and competition. Key characteristics of digital platforms include economies of scale, network effects, data collection, and tipping markets. While entry barriers exist, there is also scope for competition. Policy aims to foster dynamic competition and lower barriers to encourage more market entrants. Challenges for antitrust include a lack of benchmarks, fast-changing markets, and different business models. Proposals include creating a digital authority, accounting for potential competition, and adapting tools like considering quality-adjusted prices.

1. Platforms and competition policy
#Infra4Dev Conference: December 11th 2019

2.  Jullien, B., Sand-Zantman, W.: “The Economics on Platforms: A Theory Guide for Competition
Policy”, TSE Digital Center Discussion Paper, September 2019, No. 1
 Scott Morton, F., Bouvier, P., Ezrachi, A., Jullien, B., Katz, R., Kimmelman, G., ... & Morgenstern, J.
(2019). “Committee for the study of digital platforms: Market structure and antitrust subcommittee
report.” Chicago: Stigler Center for the Study of the Economy and the State, University of Chicago
Booth School of Business.
 Others
• Crémer, J., de Montjoye, Y. A., & Schweitzer, H. (2019). Competition policy for the digital era—final report.
Publications Office of the European Union, Luxembourg
• Furman, J., Coyle, D., Fletcher, A., McAules, D., & Marsden, P. (2019). “Unlocking Digital Competition: Report
of the Digital Competition Expert Panel.” HM Treasury, United Kingdom.
• “A new competition framework for the digital economy”, Report by the Commission ‘Competition Law 4.0’ ‘’,
Federal Ministry for Economic Affairs and Energy (BMWi)
Reports

3.  Unique combination of several factors
• Economies of scale at global reach level
• Economies of scope
• Importance of data
• Network externalities, so prone to “tipping”
• Multi-sided market
⇒ Large firms => concentrated market structure
⇒ But not natural monopoly?
⇒ Demand induced economies of scale
⇒ Differentiation with low entry cost
⇒ Multi-homing
⇒ Competition for the market, rather than in the market
Characteristics of Digital Platforms

4.  Entry barriers
• Network effects, incumbency advantage, scale
• Inertial consumers: switching costs, default bias, impatience, hyperbolic discounting
• Data
 But there is scope for competition
• Entry costs are small
• Complements may become competitors
• Multi-homing reduces switching costs
 Acquisition of small entrants by incumbent platform
• Generate efficiencies but
• May be used to eliminate potential competition
• Distort innovation away from substitutes toward complements
 Major objective for policy: foster dynamic competition, lower entry barriers, protect
entrants, induce more entry
Dynamic competition

5.  Lack of competitive benchmark
• Benefits from network effects vs harm from market power
• Competition for the market
• Economics of multi-sided platforms
 Fast innovation and evolving markets
• Large platforms are in the best position to lead the development of AI (best data)
• The “time” of antitrust is too long
• There is a view that digital markets will often not self-correct
 More specific
• Zero-price: “Free” is not a special zone where economics do not apply but
• Lack of empirical/theoretical models for competition with diverse business models
• Seemingly different services may compete for “attention”
• One instrument for competition (price) is cornered: implications are ambiguous
• Potential competition in merger reviews
• Risk of algorithmic coordination on high prices
Some challenges for anti-trust

6.  Creating a “digital authority” with mandate to preserve and
foster dynamic competition
• Build expertise and collect information
• Code of good conduct?
• Impose interim measure?
• Participate to merger reviews and monitor behavioral remedies
 Accounting for potential competition?
• Reversal of burden of proof when there is a “presumption” of potential competition?
• Introducing more efficiency considerations in merger analysis to reach a balance
• Systematic review of mergers by firms with “bottleneck power”
 Special responsibility
• Competition on the platform
• Transparency
Some proposals

7.  Adapting the tools with new approaches to economic analysis of cases
• Quality-adjusted prices
• Utility competition
• Opportunity costs
 Data interoperability
• To foster multi-homing
• To facilitate disintermediation of a platform by a complement
 Access to training data for algorithms
 Promoting open standards
• Micro-payments
• Digital identities
• Internet of Things
Some proposals