There is literally no political issue more important for the UK than housing. With Covid on the way out, unless a portal to hell opens up under Clapham High Street there is no problem more urgently in need of fixing than the shortage of homes in the most prosperous parts of the country. Nothing else makes us poorer or more unhappy — that we could solve so straightforwardly.

Read the full piece here.

Many people hope that data interoperability can increase competition, by making it easier for customers to switch and multi-home across different products. The UK’s Open Banking is the most important example of such a remedy imposed by a competition authority, but the experience demonstrates that such remedies are unlikely to be straightforward. The experience of Open Banking suggests that such remedies should be applied with focus and patience, may require ongoing regulatory oversight to work, and may be best suited to particular kinds of market where, like retail banking, the products are relatively homogeneous. But even then, they may not deliver the outcomes that many hopes for.

Data portability and interoperability tools allow customers to easily move their data between competing services, either on a one-off or an ongoing basis. Some see these tools as offering the potential to strengthen competition in digital markets; customers who feel locked in to services that they have provided data to might be more likely to switch to competitors if they could move that data more easily. This would be particularly true, advocates hope, where network effects grant existing services value that new rivals cannot emulate or where one of the barriers to switching services is the cost of re-entering personal data.

The UK’s Open Banking system is one of the most mature and important examples of this kind of policy in practice. As such, the UK’s experience to date may offer useful clues as to the potential for similar policies in other markets, for which the UK’s Furman Report has cited Open Banking as a model. But fans of interoperability sometimes gloss over the difficulties and limitations that Open Banking has faced, which are just as important as the potential benefits.

In this article, I argue that Open Banking provides lessons that should both give hope to optimists about data portability and interoperability, as well as temper some of the enthusiasm for applying it too broadly and readily.

I draw on my experiences as part of the team that produced the industry review “Open Banking: Preparing For Lift Off” in 2019. That report concluded that Open Banking, though promising, needed several additional reforms to succeed, a few of which I discuss in this piece. I was also the co-author of a white paper that argued for an Open Banking-like remedy in the UK’s retail electricity market, which I discuss briefly below. All views expressed here are my own.

I argue that there are three main lessons to draw from Open Banking for considerations of similar remedies in other markets:

1. Implementation is difficult and iterative, and probably requires de facto regulatory oversight if it is to be implemented effectively, with all the attendant costs and risks that entails.
2. The outcomes that interoperability produces may differ from those policymakers have in mind, and may not mean more switching of core services.
3. If Open Banking does succeed, it will be thanks to features of the UK banking market that may not be present in other markets where similar interoperability is being proposed.

I conclude that Open Banking has not yet led to noticeably stronger competition in the UK banking sector. Implementation challenges suggest that taking an equivalent approach to other markets would require more time, investment and effort than many advocates of interoperability requirements usually concede and may not deliver the anticipated benefits. To the extent that Open Banking is to be a model, it would be best applied as a focused approach in markets that bear particular characteristics and where the costs are outweighed by the benefits, rather than a blanket measure that can be applied to every market where customer data matters.

Read the full white paper here.

While the senator has pitched her proposal as a way to crack down on allegedly anticompetitive concentration and so-called “killer acquisitions,” where dominant firms buy emerging competitors to shut down development of rival products or services, there is a serious risk the change would do more to harm competition than to help it.

Read the full piece here.

ICLE Director of Competition Policy Sam Bowman participated in a digital panel discussion about the state of U.S. antitrust law, Big Tech, and the economy writ large as part of Americans for Tax Reform’s launch event for the ATR Open Competition Center. You can watch the full video below.

The government’s roadmap for ending Covid restrictions in England commits it to steps that may increase the rate at which the virus spreads. Some of that is unavoidable. But even as we reopen, there is more that we could do to mitigate the risk, and get us to the summer – and normality – without a resurgence.

Read the full piece here.

This week, Facebook blocked news articles on its apps for all Australian users, and is blocking Australian news articles for users worldwide. This is a drastic step, but it is probably the least bad option the company has left. The Australian government has forced it into this position, with an attempted shake-down of Big Tech that leaves Australians worse off.

Read the full piece here.

Background…

Sen. Amy Klobuchar (D-Minn.) has introduced the Competition and Antitrust Law Enforcement Reform Act (CALERA), sweeping legislation that, if enacted, would change the antitrust rules not just for Big Tech, but for the whole economy.

Read the full explainer here.

Competitive markets are important not just because they affect the price of things we buy, but also the look and feel of where we live, and even where we go when we die.

Read the full piece here.

Background…

In antitrust law, the Consumer Welfare Standard (CWS) directs courts to focus on the effects that challenged business practices have on consumers, rather than on alleged harms to specific competitors. Critics of the standard claim this focus on consumer welfare fails to capture a wide variety of harmful conduct. In addition to believing that harm to competitors is itself a valid concern, critics of the CWS believe it leads to harmful concentrations of political and economic power by biasing antitrust enforcement against intervention. Under this view, the CWS contributes to such harms as environmental degradation, income inequality, and bargaining disparities for labor. 

But…

Returning to a pre-CWS state of the law would lead antitrust enforcement to become confused, contradictory, and ineffective at promoting competition. The CWS makes antitrust economically coherent and democratically accountable.

However…

The CWS is agnostic about how much antitrust enforcement is necessary. Indeed, many advocates of more vigorous antitrust enforcement are also defenders of the CWS. The standard uses objective economic analysis to identify actual harms and to recommend remedies when those harms are not outweighed by countervailing benefits to consumers. While the issues the CWS critics care about may be important, antitrust law is a bad way to address them.

Read the full explainer here.