Abstract

This Article will evaluate the consequences of the General Data Protection Regulation (“GDPR”) implemented by the European Union (“EU”) in 2018. Despite its aim to bolster user privacy, empirical evidence from thirty-one studies suggests a nuanced impact on market dynamics. While GDPR modestly enhanced user data protection, it also triggered adverse effects, including diminished startup activity, innovation, and increased market concentration. Further, this Article will uncover a complex narrative where gains in privacy are offset by compliance costs disproportionately affecting smaller firms. This Article will also highlight the challenges of regulating highly innovative markets, which is particularly important given subsequent EU regulations, such as the Digital Markets Act (“DMA”) and Digital Services Act (“DSA”). As other jurisdictions consider similar privacy regulations, the GDPR experience is a cautionary tale.

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Abstract

The Supreme Court’s landmark decision in Ohio v. American Express (“Amex”) remains central to the enforcement of antitrust laws involving digital markets. Specifically, the decision established a framework to assess business conduct involving transactional, multisided platforms from both an economic and legal perspective. At its crux, the Court in Amex integrated both the relevant market and competitive effects analysis across the two distinct groups who interact on the Amex platform, that is, cardholders and merchants. This unified, integrated approach has been controversial, however. The primary debate is whether the Court’s ruling places an undue burden on plaintiffs under the rule of reason paradigm to meet its burden of production to establish harm to competition. Enter Epic v. Apple (“Epic”): a case involving the legality of various Apple policies governing its iOS App Store, which, like Amex, is a transactional, multisided platform. While both the district court and the Ninth Circuit largely ruled in favor of Apple over Epic, these decisions are of broader interest for their fidelity to Amex. A careful review of the decisions reveals that the Epic courts operationalized Amex in a practical, sensible way. The courts did not engage in extensive balancing across developers and users as some critics of Amex contended would be required. Ultimately, the courts in Epic (a) considered evidence of effects across both groups on the platform and (b) gave equal weight to both the procompetitive and anticompetitive effects evidence, which, this Article contends, are the essential elements of the Amex precedent. Relatedly, the Epic decisions illustrate that the burden of production on plaintiffs in multisided platform cases is not higher than in cases involving regular, single-sided markets. Additionally, both parties, whether litigating single-sided or multi-sided markets, are fully incentivized to bring evidence to bear on all aspects of the case. Finally, this Article details how the integrated Amex approach deftly avoids potential issues involving the out-of-market effects doctrine in antitrust, which limits what type of effects courts can consider in assessing conduct.

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Abstract

In administering the antitrust laws, is it relevant what a firm’s market power was when a business practice was first implemented? Relatedly, should the commonness of a practice — in terms of use by other firms in a market or industry — be a consideration when assessing its legality? This article proposes that, under certain, well-specified conditions, the legacy of a business practice and its commonness within a market can be used as a “marginally procompetitive presumption” under the rule of reason framework. Specifically, if a practice was implemented before a firm obtained substantial market power or a practice is commonly used by other firms across the market power spectrum, then the burden placed on defendants to demonstrate the practice is procompetitive should be lessened in proportion to the strength of the legacy and commonality.

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Abstract

Antitrust analyses relegate efficiencies to a second-class status. Not only are they often an after-thought when assessing conduct within a relevant market, but the Supreme Court, in 1963 with its Philadelphia National Bank (PNB) decision, established that efficiencies realized outside of the relevant market construct, that is, “out-of-market” efficiencies, are not even counted. While the PNB case involved a horizontal merger between two Philadelphia banks, many interpret the PNB precedent as establishing a prohibition of out-of-market efficiencies in non-merger cases as well. The precedent and associated out-of-market efficiencies principle have had an immense influence on the enforcement of antitrust laws. Yet, the principle is increasingly out of step with sound assessments of business conduct—particularly in digital markets with network effects. Further, the principle unreasonably handicaps defendants, which is an increasing concern due to the current policy movement to severely tilt antitrust enforcement in favor of plaintiffs. Consequently, this Article argues that the out-of-market efficiencies principle needs serious reform—but in a specific way. Rather than considering ‘within market’ and ‘out-of-market’ efficiencies under different standards (including outright exclusion), there should be one unified, “relevant” efficiency classification. Out-of-market efficiencies must be “interdependent” with the relevant market to be a relevant efficiency—which this Article demarcates based on established economic principles. This reformed approach has the advantage of providing more flexibility to courts to consider adjacent, or related, markets that are not strictly within a relevant market, while also mitigating the administrative burden of assessing all possible efficiency claims. Relevant efficiencies must still be verifiable, and plaintiffs can show that there are less restrictive alternatives available to achieve the same benefit. This proposal seeks to harmonize scholarship that has been highly critical of PNB with scholarship that believes in preserving the precedent.

Abstract

There is a raging debate within antitrust to determine how to best assess the conduct of digital platforms and tailor the enforcement of antitrust laws to the modern economy. The distinguishing features of digital platforms can make their analysis quite different from conventional, single-sided markets. The Supreme Court’s ruling in Ohio v. American Express (“Amex”) was the first decision to explicitly incorporate features of multisided platforms into antitrust analyses. However, the decision has divided academics and practitioners as to whether the Court properly incorporated platform features into antitrust’s rule of reason framework, which seeks to divide the burden of production between plaintiffs and defendants. Adding fuel to the fire are the lower courts’ interpretation of Amex, including in U.S. v. Sabre, where the district court ruled that only “transactional” platforms compete with other transactional platforms, which effectively short-circuited the competitive analysis. This Article argues that antitrust has forgotten the lessons from Ronald Coase’s work on the nature of the firm. Specifically, categorizing business organizations as “platforms” is insufficient to properly inform the actual competitive effects analysis. Firms organize in various ways to ultimately turn inputs into outputs. Precisely how this process is achieved is relevant to understand a firm’s conduct and incentives, but firm organization alone should not lead to competitive effects conclusions. In light of Coase, this Article reexamines the Court’s Amex decision to put suitable bounds on its precedential value. Additionally, this Article examines several key antitrust cases before and after Amex to assess their fidelity to a Coasian interpretation of platforms.

Abstract

On October 25, 2021, in a 3-to-2 vote, strictly along party lines, the Federal Trade Commission (“FTC”) announced a major policy shift in how the agency will review and settle mergers. Going forward, all parties who agree to a merger remedy order, including a divestiture, must also agree with the agency’s demand that, for at least a decade, they obtain “prior approval” from the agency before closing a future acquisition within the same relevant market. Further, buyers of any divested assets must also agree to a prior approval condition for a minimum of ten years. Finally, the agency “may decide,” at its discretion, to apply the prior approval condition even to markets beyond those in which the transaction at issue raised competitive concerns.

This new prior approval policy nontrivially weakens parties’ due process protections and puts the FTC more into a regulatory position, implicating significant ongoing costs to businesses and to the economy as a whole. While the Commission may defend its new policy as targeted only at “facially anticompetitive deals,” the practical effect is to trap both anticompetitive and procompetitive acquisitions in the agency’s regulatory net. This increases the cost of merger activity and likely will lead to consequences — whether intended or not — that are detrimental to economic efficiency and overall economic growth.

Abstract

How should competition agencies and courts consider acquisitions by “big tech” (that is, Amazon, Apple, Google, Facebook, and Microsoft) of smaller, startup companies? There are several competing visions. On one end of the spectrum is the view that these companies have strong incentives to engage in anticompetitive acquisitions of nascent and potential competitors; consequently, agencies and courts should implement strong presumptions of harm. On the other end of the spectrum is the view that there is little reason to change current merger presumptions or to treat acquisitions by big tech companies differently than “medium tech” or “small tech” companies.

To inform the issue, this Article reviews a recent FTC report on acquisitions by the largest technology platforms. While the report is largely descriptive using aggregated data and, therefore, offers modest insights, there is little in the findings that raise alarms. As a point of contrast, the Article examines several recent acquisitions by Spotify, a technology company that sits outside of the “big tech” classification. Specifically, Spotify has expanded beyond its core music streaming business through a series of startup acquisitions—namely, into podcasts and audiobooks. Interestingly, these acquisitions have not raised concerns from agencies, practitioners, or academics. Consequently, if Spotify’s recent series of acquisitions can reasonably be considered procompetitive, then why is the same not true for Apple and Amazon, who are chasing Spotify in music streaming services and podcasts? Administering antitrust laws based on the mere identity or market capitalization of a company—rather than on specific market factors—is engaging in what could be called “discriminatory antitrust.”