Abstract

This study investigates the evolution of economic analysis in antitrust litigation using an original dataset encompassing all decided antitrust cases since the enactment of the Sherman Act in 1890. Our analysis reveals three distinct breaks in the frequency of economists mentioned in antitrust cases: 1974, 1994, and 2007. Furthermore, we observe substantial fluctuations in the success rates of plaintiffs across various stages of litigation. Additionally, the study finds that the underlying statutory basis of cases involving economists has shifted over time, with a notable increase in Sherman Act cases and a corresponding decrease in Clayton Act and combined Clayton-Sherman Act cases.

 

Abstract

Sherlocking refers to an online platform’s use of nonpublic third-party business data to improve its own business decisions—for instance, by mimicking the successful products and services of edge providers. Such a strategy emerges as a form of self-preferencing and, as with other theories about preferential access to data, it has been targeted by some policymakers and competition authorities due to the perceived competitive risks originating from the dual role played by hybrid platforms (acting as both referees governing their platforms, and players competing with the business they host). This paper investigates the competitive implications of sherlocking, maintaining that an outright ban is unjustified. First, the paper shows that, by aiming to ensure platform neutrality, such a prohibition would cover scenarios (i.e., the use of nonpublic third-party business data to calibrate business decisions in general, rather than to adopt a pure copycat strategy) that should be analyzed separately. Indeed, in these scenarios, sherlocking may affect different forms of competition (inter-platform v. intra-platform competition). Second, the paper argues that, in either case, the practice’s anticompetitive effects are questionable and that the ban is fundamentally driven by a bias against hybrid and vertically integrated players.

I. Introduction

The dual role some large digital platforms play (as both intermediary and trader) has gained prominence among the economic arguments used to justify the recent wave of regulation hitting digital markets around the world. Many policymakers have expressed concern about potential conflicts of interest among companies that have adopted this hybrid model and that also control important gateways for business users. In other words, the argument goes, some online firms act not only as regulators who set their platforms’ rules and as referees who enforce those rules, but also as market players who compete with their business users. This raises the fear that large platforms could reserve preferential treatment for their own services and products, to the detriment of downstream rivals and consumers. That, in turn, has led to calls for platform-neutrality rules.

Toward this aim, essentially all of the legislative initiatives undertaken around the world in recent years to enhance competition in digital markets have included anti-discrimination provisions that target various forms of self-preferencing. Self-preferencing, it has been said, serves as the symbol of the current competition-policy zeitgeist in digital markets.[1] Indeed, this conduct is considered functional to leveraging strategies that would grant gatekeepers the chance to entrench their power in core markets and extend it into associated markets.[2]

Against this background, so-called “sherlocking” has emerged as one form of self-preferencing. The term was coined roughly 20 years ago, after Apple updated its own app Sherlock (a search tool on its desktop-operating system) to mimic a third-party application called Watson, which was created by Karelia Software to complement the Apple tool’s earlier version.[3] According to critics of self-preferencing generally and sherlocking in particular, biased intermediation and related conflicts of interest allow gatekeepers to exploit their preferential access to business users’ data to compete against them by replicating successful products and services. The implied assumption is that this strategy is relevant to competition policy, even where no potential intellectual-property rights (IPRs) are infringed and no slavish imitation sanctionable under unfair-competition laws is detected. Indeed, under such theories, sherlocking would already be prevented by the enforcement of these rules.

To tackle perceived misuse of gatekeepers’ market position, the European Union’s Digital Markets Act (DMA) introduced a ban on sherlocking.[4] Similar concerns have also motivated requests for intervention in the United States,[5] Australia,[6] and Japan.[7] In seeking to address at least two different theories of gatekeepers’ alleged conflicts of interest, these proposed bans on exploiting access to business users’ data are not necessarily limited to the risk of product imitation, but may include any business decision whatsoever that a platform may make while relying on that data.

In parallel with the regulatory initiatives, the conduct at-issue has also been investigated in some antitrust proceedings, which appear to seek the very same twofold goal. In particular, in November 2020, the European Commission sent a statement of objections to Amazon that argued the company had infringed antitrust rules through the systematic use of nonpublic business data from independent retailers who sell on the Amazon online marketplace in order to benefit Amazon’s own retail business, which directly competes with those retailers.[8] A similar investigation was opened by the UK Competition and Markets Authority (CMA) in July 2022.[9]

Further, as part of the investigation opened into Apple’s App Store rule requiring developers to use Apple’s in-app purchase mechanism to distribute paid apps and/or paid digital content, the European Commission also showed interest in evaluating whether Apple’s conduct might disintermediate competing developers from relevant customer data, while Apple obtained valuable data about those activities and its competitors’ offers.[10] The European Commission and UK CMA likewise launched an investigation into Facebook Marketplace, with accusations that Meta used data gathered from advertisers in order to compete with them in markets where the company is active, such as classified ads.[11]

There are two primary reasons these antitrust proceedings are relevant. First, many of the prohibitions envisaged in regulatory interventions (e.g., DMA) clearly took inspiration from the antitrust investigations, thus making it important to explore the insights that competition authorities may provide to support an outright ban. Second, given that regulatory intervention will be implemented alongside competition rules (especially in Europe) rather than displace them,[12] sherlocking can be assessed at both the EU and national level against dominant players that are not eligible for “gatekeeper” designation under the DMA. For those non-gatekeeper firms, the practice may still be investigated by antitrust authorities and assessed before courts, aside from the DMA’s per se prohibition. And, of course, investigations and assessments of sherlocking could also be made even in those jurisdictions where there isn’t an outright ban.

The former sis well-illustrated by the German legislature’s decision to empower its national competition authority with a new tool to tackle abusive practices that are similar and functionally equivalent to the DMA.[13] Indeed, as of January 2021, the Bundeskartellamt may identify positions of particular market relevance (undertakings of “paramount significance for competition across markets”) and assess their possible anticompetitive effects on competition in those areas of digital ecosystems in which individual companies may have a gatekeeper function. Both the initiative’s aims and its list of practices are similar to the DMA. They are distinguished primarily by the fact that the German list is exhaustive, and the practices at-issue are not prohibited per se, but are subject to a reversal of the burden of proof, allowing firms to provide objective justifications. For the sake of this analysis, within the German list, one provision prohibits designated undertakings from “demanding terms and conditions that permit … processing data relevant for competition received from other undertakings for purposes other than those necessary for the provision of its own services to these undertakings without giving these undertakings sufficient choice as to whether, how and for what purpose such data are processed.”[14]

Unfortunately, none of the above-mentioned EU antitrust proceedings have concluded with a final decision that addresses the merits of sherlocking. This precludes evaluating whether the practice would have survived before the courts. Regarding the Apple investigation, the European Commission dropped the case over App Store rules and issued a new statement of objections that no longer mentions sherlocking.[15] Further, the European Commission and the UK CMA accepted the commitments offered by Amazon to close those investigations.[16] The CMA likewise accepted the commitments offered by Meta.[17]

Those outcomes can be explained by the DMA’s recent entry into force. Indeed, because of the need to comply with the new regulation, players designated as gatekeepers likely have lost interest in challenging antitrust investigations that target the very same conduct prohibited by the DMA.[18] After all, given that the DMA does not allow any efficiency defense against the listed prohibitions, even a successful appeal against an antitrust decision would be a pyrrhic victory. From the opposite perspective, the same applies to the European Commission, which may decide to save time, costs, and risks by dropping an ongoing case against a company designated as a gatekeeper under the DMA, knowing that the conduct under investigation will be prohibited in any case.

Nonetheless, despite the lack of any final decision on sherlocking, these antitrust assessments remain relevant. As already mentioned, the DMA does not displace competition law and, in any case, dominant platforms not designated as gatekeepers under the DMA still may face antitrust investigations over sherlocking. This applies even more for jurisdictions, such as the United States, that are evaluating DMA-like legislative initiatives (e.g., the American Innovation and Choice Online Act, or “AICOA”).

Against this background, drawing on recent EU cases, this paper questions the alleged anticompetitive implications of sherlocking, as well as claims that the practice fails to comply with existing antitrust rules.

First, the paper illustrates that prohibitions on the use of nonpublic third-party business data would cover two different theories that should be analyzed separately. Whereas a broader case involves all the business decisions adopted by a dominant platform because of such preferential access (e.g., the launch of new products or services, the development or cessation of existing products or services, the calibration of pricing and management systems), a more specific case deals solely with the adoption of a copycat strategy. By conflating these theories in support of a blanket ban that condemns any use of nonpublic third-party business data, EU antitrust authorities are fundamentally motivated by the same policy goal pursued by the DMA—i.e., to impose a neutrality regime on large online platforms. The competitive implications differ significantly, however, as adopting copycat strategies may only affect intra-brand competition, while using said data to improve other business decisions could also affect inter-platform competition.

Second, the paper shows that, in both of these scenarios, the welfare effects of sherlocking are unclear. Notably, exploiting certain data to better understand the market could help a platform to develop new products and services, to improve existing products and services, or more generally to be more competitive with respect to both business users and other platforms. As such outcomes would benefit consumers in terms of price and quality, any competitive advantage achieved by the hybrid platform could be considered unlawful only if it is not achieved on the merits. In a similar vein, if sherlocking is used by a hybrid platform to deliver replicas of its business users’ products and services, that would likely provide short-term procompetitive effects benefitting consumers with more choice and lower prices. In this case, the only competitive harm that would justify an antitrust intervention resides in (uncertain) negative long-term effects on innovation.

As a result, in any case, an outright ban of sherlocking, such as is enshrined in the DMA, is economically unsound since it would clearly harm consumers.

The paper is structured as follows. Section II describes the recent antitrust investigations of sherlocking, illustrating the various scenarios that might include the use of third-party business data. Section III investigates whether sherlocking may be considered outside the scope of competition on the merits for bringing competitive advantages to platforms solely because of their hybrid business model. Section IV analyzes sherlocking as a copycat strategy by investigating the ambiguous welfare effects of copying in digital markets and providing an antitrust assessment of the practice at issue. Section V concludes.

II. Antitrust Proceedings on Sherlocking: Platform Neutrality and Copycat Competition

Policymakers’ interest in sherlocking is part of a larger debate over potentially unfair strategies that large online platforms may deploy because of their dual role as an unavoidable trading partner for business users and a rival in complementary markets.

In this scenario, as summarized in Table 1, the DMA outlaws sherlocking, establishing that to “prevent gatekeepers from unfairly benefitting from their dual role,”[19] they are restrained from using, in competition with business users, “any data that is not publicly available that is generated or provided by those business users in the context of their use of the relevant core platform services or of the services provided together with, or in support of, the relevant core platform services, including data generated or provided by the customers of those business users.”[20] Recital 46 further clarifies that the “obligation should apply to the gatekeeper as a whole, including but not limited to its business unit that competes with the business users of a core platform service.”

A similar provision was included in the American Innovation and Choice Online Act (AICOA), which was considered, but not ultimately adopted, in the 117^th U.S. Congress. AICOA, however, would limit the scope of the ban to the offer of products or services that would compete with those offered by business users.[21] Concerns about copycat strategies were also reported in the U.S. House of Representatives’ investigation of the state of competition in digital markets as supporting the request for structural-separation remedies and line-of-business restrictions to eliminate conflicts of interest where a dominant intermediary enters markets that place it in competition with dependent businesses.[22] Interestingly, however, in the recent complaint filed by the U.S. Federal Trade Commission (FTC) and 17 state attorneys general against Amazon that accuses the company of having deployed an interconnected strategy to block off every major avenue of competition (including price, product selection, quality, and innovation), there is no mention of sherlocking among the numerous unfair practices under investigation.[23]

Evaluating regulatory-reform proposals for digital markets, the Australian Competition and Consumer Commission (ACCC) also highlighted the risk of sherlocking, arguing that it could have an adverse effect on competition, notably on rivals’ ability to compete, when digital platforms exercise their strong market position to utilize nonpublic data to free ride on the innovation efforts of their rivals.[24] Therefore, the ACCC suggested adopting service-specific codes to address self-preferencing by, for instance, imposing data-separation requirements to restrain dominant app-store providers from using commercially sensitive data collected from the app-review process to develop their own apps.[25]

Finally, on a comparative note, it is also useful to mention the proposals advanced by the Japanese Fair Trade Commission (JFTC) in its recent market-study report on mobile ecosystems.[26] In order to ensure equal footing among competitors, the JFTC specified that its suggestion to prevent Google and Apple from using nonpublic data generated by other developers’ apps aims at pursuing two purposes. Such a ban would, indeed, concern not only use of the data for the purpose of developing competing apps, products, and services, but also its use for developing their own apps, products, and services.

TABLE 1: Legislative Initiatives and Proposals to Ban Sherlocking

As previously anticipated, sherlocking recently emerged as an antitrust offense in three investigations launched by the European Commission and the UK CMA.

In the first case, Amazon’s alleged reliance on marketplace sellers’ nonpublic business data has been claimed to distort fair competition on its platform and prevent effective competition. In its preliminary findings, the Commission argued that Amazon takes advantage of its hybrid business model, leveraging its access to nonpublic third-party sellers’ data (e.g., the number of ordered and shipped units of products; sellers’ revenues on the marketplace; the number of visits to sellers’ offers; data relating to shipping, to sellers’ past performance, and to other consumer claims on products, including the activated guarantees) to adjust its retail offers and strategic business decisions to the detriment of third-party sellers, which are direct competitors on the marketplace.[27] In particular, the Commission was concerned that Amazon uses such data for its decision to start and end sales of a product, for its pricing system, for its inventory-planning and management system, and to identify third-party sellers that Amazon’s vendor-recruitment teams should approach to invite them to become direct suppliers to Amazon Retail. To address the data-use concern, Amazon committed not to use nonpublic data relating to, or derived from, independent sellers’ activities on its marketplace for its retail business and not to use such data for the purposes of selling branded goods, as well as its private-label products.[28]

A parallel investigation ended with similar commitments in the UK.[29] According to the UK CMA, Amazon’s access to and use of nonpublic seller data could result in a competitive advantage for Amazon Retail arising from its operation of the marketplace, rather than from competition on the merits, and may lead to relevant adverse effects on competition. Notably, it was alleged this could result in a reduction in the scale and competitiveness of third-party sellers on the Amazon Marketplace; a reduction in the number and range of product offers from third-party sellers on the Amazon Marketplace; and/or less choice for consumers, due to them being offered lower quality goods and/or paying higher prices than would otherwise be the case.

It is also worth mentioning that, by determining that Amazon is an undertaking of paramount significance for competition across markets, the Bundeskartellamt emphasized the competitive advantage deriving from Amazon’s access to nonpublic data, such as Glance Views, sales figures, sale quantities, cost components of products, and reorder status.[30] Among other things, with particular regard to Amazon’s hybrid role, the Bundeskartellamt noted that the preferential access to competitively sensitive data “opens up the possibility for Amazon to optimize its own-brand assortment.”[31]

A second investigation involved Apple and its App Store rule.[32] According to the European Commission, the mandatory use of Apple’s own proprietary in-app purchase system (IAP) would, among other things, grant Apple full control over the relationship its competitors have with customers, thus disintermediating those competitors from customer data and allowing Apple to obtain valuable data about the activities and offers of its competitors.

Finally, Meta faced antitrust proceedings in both the EU and the UK.[33] The focus was on Facebook Marketplace—i.e., an online classified-ads service that allows users to advertise goods for sale. According to the European Commission and the CMA, Meta unilaterally imposes unfair trading conditions on competing online-classified ads services that advertise on Facebook or Instagram. These terms and conditions, which authorize Meta to use ads-related data derived from competitors for the benefit of Facebook Marketplace, are considered unjustified, as they impose an unnecessary burden on competitors and only benefit Facebook Marketplace. The suspicion is that Meta has used advertising data from Facebook Marketplace competitors for the strategic planning, product development, and launch of Facebook Marketplace, as well as for Marketplace’s operation and improvement.

Overall, these investigations share many features. The concerns about third-party business-data use, as well as about other forms of self-preferencing, revolve around the competitive advantages that accrue to a dominant platform because of its dual role. Such advantages are considered unfair, as they are not the result of the merits of a player, but derived purely and simply from its role as an important gateway to reach end users. Moreover, this access to valuable business data is not reciprocal. The feared risk is the marginalization of business users competing with gatekeepers on the gatekeepers’ platforms and, hence, the alleged harm to competition is the foreclosure of rivals in complementary markets (horizontal foreclosure).

The focus of these investigations was well-illustrated by the European Commission’s decision on Amazon’s practice.[34] The Commission’s concern was about the “data delta” that Amazon may exploit, namely the additional data related to third-party sellers’ listings and transactions that are not available to, and cannot be replicated by, the third-party sellers themselves, but are available to and used by Amazon Retail for its own retail operations.[35] Contrary to Amazon Retail—which, according to Commission’s allegations, would have full access to and would use such individual, real-time data of all its third-party sellers to calibrate its own retail decisions—sellers would have access only to their own individual listings and sales data. As a result, the Commission came to the (preliminary) conclusion that real-time access to and use of such volume, variety, and granularity of non-publicly available data from its retail competitors generates a significant competitive advantage for Amazon Retail in each of the different decisional processes that drive its retail operations.[36]

On a closer look, however, while antitrust authorities seem to target the use of nonpublic third-party business data as a single theory of harm, their allegations cover two different scenarios along the lines of what has already been examined with reference to the international legislative initiatives and proposals. Indeed, the Facebook Marketplace case does not involve an allegation of copying, as Meta is accused of gathering data from its business users to launch and improve its ads service, instead of reselling goods and services.

FIGURE 1: Sherlocking in Digital Markets

As illustrated above in Figure 1, while the claim in the latter scenario is that the preferential data use would help dominant players calibrate business decisions in general, the former scenario instead involves the use of such data for a pure copycat strategy of an entire product or service, or some of its specific features.

In both scenarios the aim of the investigations is to ensure platform neutrality. Accordingly, as shown by the accepted commitments, the envisaged solution for antitrust authorities is to impose  data-separation requirements to restrain dominant platforms from using third-party commercially sensitive data. Putting aside that these investigations concluded with commitments from the firms, however, their chances of success before a court differ significantly depending on whether they challenge a product-imitation strategy, or any business decision adopted because of the “data delta.”

A. Sherlocking and Unconventional Theories of Harm for Digital Markets

Before analyzing how existing competition-law rules could be applied to the various scenarios involving the use of third-party business data, it is worth providing a brief overview of the framework in which the assessment of sherlocking is conducted. As competition in the digital economy is increasingly a competition among ecosystems,[37] a lively debate has emerged on the capacity of traditional antitrust analysis to adequately capture the peculiar features of digital markets. Indeed, the combination of strong economies of scale and scope; indirect network effects; data advantages and synergies across markets; and portfolio effects all facilitate ecosystem development all contribute to making digital markets highly concentrated, prone to tipping, and not easily contestable.[38] As a consequence, it’s been suggested that addressing these distinctive features of digital markets requires an overhaul of the antitrust regime.

Such discussions require the antitrust toolkit and theories of harm to illustrate whether and how a particular practice, agreement, or merger is anticompetitive. Notably, at issue is whether traditional antitrust theories of harm are fit for purpose or whether novel theories of harm should be developed in response to the emerging digital ecosystems. The latter requires looking at the competitive impact of expanding, protecting, or strengthening an ecosystem’s position, and particularly whether such expansion serves to exploit a network of capabilities and to control access to key inputs and components.[39]

A significant portion of recent discussions around developing novel theories of harm to better address the characteristics of digital-business models and markets has been devoted to the topic of merger control—in part a result of the impressive number of acquisitions observed in recent years.[40] In particular, the focus has been on analyzing conglomerate mergers that involve acquiring a complementary or unrelated asset, which have traditionally been assumed to raise less-significant competition concerns.

In this regard, an ecosystem-based theory seems to have guided the Bundeskartellamt in its assessment of Meta’s acquisition of Kustomer[41] and by the CMA in Microsoft/Activision.[42] A more recent example is the European Commission’s decision to prohibit the proposed Booking/eTraveli merger, where the Commission explicitly noted that the transaction would have allowed Booking to expand its travel-services ecosystem.[43] The Commission’s concerns were related primarily to the so-called “envelopment” strategy, in which a prominent platform within a specific market broadens its range of services into other markets where there is a significant overlap of customer groups already served by the platform.[44]

Against this background, putative self-preferencing harms represent one of the European Commission’s primary (albeit contentious)[45] attempts to develop new theories of harm built on conglomerate platforms’ ability to bundle services or use data from one market segment to inform product development in another.[46] Originally formulated in the Google Shopping decision,[47] the theory of harm of (leveraging through) self-preferencing has subsequently inspired the DMA, which targets different forms of preferential treatment, including sherlocking.

In particular, it is asserting that platform may use self-preferencing to adopt a leveraging strategy with a twofold anticompetitive effect—that is, excluding or impeding rivals from competing with the platform (defensive leveraging) and extending the platform’s market power into associated markets (offensive leveraging). These goals can be pursued because of the unique role that some large digital platforms play. That is, they not only enjoy strategic market status by controlling ecosystems of integrated complementary products and services, which are crucial gateways for business users to reach end users, but they also perform a dual role as both a critical intermediary and a player active in complementors’ markets. Therefore, conflicts of interests may provide incentives for large vertically integrated platforms to favor their own products and services over those of their competitors.[48]

The Google Shopping theory of harm, while not yet validated by the Court of Justice of the European Union (CJEU),[49] has also found its way into merger analysis, as demonstrated by the European Commission’s recent assessment of iRobot/Amazon.[50] In its statement of objections, the Commission argued that the proposed acquisition of iRobot may give Amazon the ability and incentive to foreclose iRobot’s rivals by engaging in several foreclosing strategies to prevent them from selling robot vacuum cleaners (RVCs) on Amazon’s online marketplace and/or at degrading such rivals’ access to that marketplace. In particular, the Commission found that Amazon could deploy such self-preferencing strategies as delisting rival RVCs; reducing rival RVCs’ visibility in both organic and paid results displayed in Amazon’s marketplace; limiting access to certain widgets or commercially attractive labels; and/or raising the costs of iRobot’s rivals to advertise and sell their RVCs on Amazon’s marketplace.[51]

Sherlocking belongs to this framework of analysis and can be considered a form of self-preferencing, specifically because of the lack of reciprocity in accessing sensitive data.[52] Indeed, while gatekeeper platforms have access to relevant nonpublic third-party business data as a result of their role as unavoidable trading partners, they leverage this information exclusively, without sharing it with third-party sellers, thus further exacerbating an already uneven playing field.[53]

III. Sherlocking for Competitive Advantage: Hybrid Business Model, Neutrality Regimes, and Competition on the Merits

Insofar as prohibitions of sherlocking center on the competitive advantages that platforms enjoy because of their dual role—thereby allowing some players to better calibrate their business decisions due to their preferential access to business users’ data—it should be noted that competition law does not impose a general duty to ensure a level playing field.[54] Further, a competitive advantage does not, in itself, amount to anticompetitive foreclosure under antitrust rules. Rather, foreclosure must not only be proved (in terms of actual or potential effects) but also assessed against potential benefits for consumers in terms of price, quality, and choice of new goods and services.[55]

Indeed, not every exclusionary effect is necessarily detrimental to competition.[56] Competition on the merits may, by definition, lead to the departure from the market or the marginalization of competitors that are less efficient and therefore less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation.[57] Automatically classifying any conduct with exclusionary effects were as anticompetitive could well become a means to protect less-capable, less-efficient undertakings and would in no way protect more meritorious undertakings—thereby potentially hindering a market’s competitiveness.[58]

As recently clarified by the CJEU regarding the meaning of “competition on the merits,” any practice that, in its implementation, holds no economic interest for a dominant undertaking except that of eliminating competitors must be regarded as outside the scope of competition on the merits.[59] Referring to the cases of margin squeezes and essential facilities, the CJEU added that the same applies to practices that a hypothetical equally efficient competitor is unable to adopt because that practice relies on using resources or means inherent to the holding of such a dominant position.[60]

Therefore, while antitrust cases on sherlocking set out to ensure a level playing field and platform neutrality, and therefore center on the competitive advantages that a platform enjoys because of its dual role, mere implementing a hybrid business model does not automatically put such practices outside the scope of competition on the merits. The only exception, according to the interpretation provided in Bronner, is the presence of an essential facility—i.e., an input whose access should be considered indispensable, as there are no technical, legal, or economic obstacles capable of making it impossible, or even unreasonably difficult, to duplicate it.[61]

As a result, unless it is proved that the hybrid platform is an essential facility, sherlocking and other forms of self-preferencing cannot be considered prima facie outside the scope of competition on the merits, or otherwise unlawful. Rather, any assessment of sherlocking demands the demonstration of anticompetitive effects, which in turn requires finding an impact on efficient firms’ ability and incentive to compete. In the scenario at-issue, for instance, the access to certain data may allow a platform to deliver new products or services; to improve existing products or services; or more generally to compete more efficiently not only with respect to the platform’s business users, but also against other platforms. Such an increase in both intra-platform and inter-platform competition would benefit consumers in terms of lower prices, better quality, and a wider choice of new or improved goods and services—i.e., competition on the merits.[62]

In Facebook Marketplace, the European Commission and UK CMA challenged the terms and conditions governing the provision of display-advertising and business-tool services to which Meta required its business customers to sign up.[63] In their view, Meta abused its dominant position by imposing unfair trading conditions on its advertising customers, which authorized Meta to use ads-related data derived from the latter in a way that could afford Meta a competitive advantage on Facebook Marketplace that would not have arisen from competition on the merits. Notably, antitrust authorities argued that Meta’s terms and conditions were unjustified, disproportionate, and unnecessary to provide online display-advertising services on Meta’s platforms.

Therefore, rather than directly questioning the platform’s dual role or hybrid business model, the European Commission and UK CMA decided to rely on traditional case law which considers unfair those clauses that are unjustifiably unrelated to the purpose of the contract, unnecessarily limit the parties’ freedom, are disproportionate, or are unilaterally imposed or seriously opaque.[64] This demonstrates that, outside the harm theory of the unfairness of terms and conditions, a hybrid platform’s use of nonpublic third-party business data to improve its own business decisions is generally consistent with antitrust provisions. Hence, an outright ban would be unjustified.

IV. Sherlocking to Mimic Business Users’ Products or Services

The second, and more intriguing, sherlocking scenario is illustrated by the Amazon Marketplace investigations and regards the original meaning of sherlocking—i.e., where a data advantage is used by a hybrid platform to mimic its business users’ products or services.

Where sherlocking charges assert that the practice allows some platforms to use business users’ data to compete against them by replicating their products or services, it should not be overlooked that the welfare effects of such a copying strategy are ambiguous. While the practice could benefit consumers in the short term by lowering prices and increasing choice, it may discourage innovation over the longer term if third parties anticipate being copied whenever they deliver successful products or services. Therefore, the success of an antitrust investigation essentially relies on demonstrating a harm to innovation that would induce business users to leave the market or stop developing their products and services. In other words, antitrust authorities should be able to demonstrate that, by allowing dominant platforms to free ride on their business guests’ innovation efforts, sherlocking would negatively affect rivals’ ability to compete.

A. The Welfare Effects of Copying

The tradeoff between the short- and long-term welfare effects of copying has traditionally been analyzed in the context of the benefits and costs generated by intellectual-property protection.[65] In particular, the economic literature investigating the optimal life of patents[66] and copyrights[67] focuses on the efficient balance between dynamic benefits associated with innovation and the static costs of monopoly power granted by IPRs.

More recently, product imitation has instead been investigated in the different scenario of digital markets, where dominant platforms adopting a hybrid business model may use third-party sellers’ market data to design and promote their own products over their rivals’ offerings. Indeed, some studies report that large online platforms may attempt to protect their market position by creating “kill zones” around themselves—i.e., by acquiring, copying, or eliminating their rivals.[68] In such a novel setting, the welfare effects of copying are assessed regardless of the presence and the potential enforcement of IPRs, but within a strategy aimed at excluding rivals by exploiting the dual role of both umpire and player to get preferential access to sensitive data and free ride on their innovative efforts.[69]

Even in this context, however, a challenging tradeoff should be considered. Indeed, while in the short term, consumers may benefit from the platform’s imitation strategy in terms of lower prices and higher quality, they may be harmed in the longer term if third parties are discouraged from delivering new products and services. As a result, while there is empirical evidence on hybrid platforms successfully entering into third parties’ adjacent market segments, [70] the extant academic literature finds the welfare implications of such moves to be ambiguous.

A first strand of literature attempts to estimate the welfare impact of the hybrid business model. Notably, Andre Hagiu, Tat-How Teh, and Julian Wright elaborated a model to address the potential implications of an outright ban on platforms’ dual mode, finding that such a structural remedy may harm consumer surplus and welfare even where the platform would otherwise engage in product imitation and self-preferencing.[71] According to the authors, banning the dual mode does not restore the third-party seller’s innovation incentives or the effective price competition between products, which are the putative harms caused by imitation and self-preferencing. Therefore, the authors’ evaluation was that interventions specifically targeting product imitation and self-preferencing were preferable.

Germa?n Gutie?rrez suggested that banning the dual model would generate hardly any benefits for consumers, showing that, in the Amazon case, interventions that eliminate either the Prime program or product variety are likely to decrease welfare.[72]

Further, analyzing Amazon’s business model, Federico Etro found that the platform and consumers’ incentives are correctly aligned, and that Amazon’s business model of hosting sellers and charging commissions prevents the company from gaining through systematic self?preferencing for its private-label and first-party products.[73] In the same vein, on looking at its business model and monetization strategy, Patrick Andreoli-Versbach and Joshua Gans argued that Amazon does not have an obvious incentive to self-preference.[74] Indeed, Amazon’s profitability data show that, on average, the company’s operating margin is higher on third-party sales than on first-party retail sales.

Looking at how modeling details may yield different results with regard to the benefits and harms of the hybrid business model, Simon Anderson and O?zlem Bedre-Defoile maintain that the platform’s choice to sell its own products benefits consumers by lowering prices when a monopoly platform hosts competitive fringe sellers, regardless of the platform’s position as a gatekeeper, whether sellers have an alternate channel to reach consumers, or whether alternate channels are perfect or imperfect substitutes for the platform channel.[75] On the other hand, the authors argued that platform product entry might harm consumers when a big seller with market power sells on its own channel and also on the platform. Indeed, in that case, the platform setting a seller fee before the big seller prices its differentiated products introduces double markups on the big seller’s platform-channel price and leaves some revenue to the big seller.

Studying whether Amazon engages in self-preferencing on its marketplace by favoring its own brands in search results, Chiara Farronato, Andrey Fradkin, and Alexander MacKay demonstrate empirically that Amazon brands remain about 30% cheaper and have 68% more reviews than other similar products.[76] The authors acknowledge, however, that their findings do not imply that consumers are hurt by Amazon brands’ position in search results.

Another strand of literature specifically tackles the welfare effects of sherlocking. In particular, Erik Madsen and Nikhil Vellodi developed a theoretical framework to demonstrate that a ban on insider imitation can either stifle or stimulate innovation, depending on the nature of innovation.[77] Specifically, the ban could stimulate innovation for experimental product categories, while reducing innovation in incremental product markets, since the former feature products with a large chance of superstar demand and the latter generate mostly products with middling demand.

Federico Etro maintains that the tradeoffs at-issue are too complex to be solved with simple interventions, such as bans on dual mode, self-preferencing, or copycatting.[78] Indeed, it is difficult to conclude that Amazon entry is biased to expropriate third-party sellers or that bans on dual mode, self-preferencing, or copycatting would benefit consumers, because they either degrade services and product variety or induce higher prices or commissions.

Similar results are provided by Jay Pil Choi, Kyungmin Kim, and Arijit Mukherjee, who developed a tractable model of a platform-run marketplace where the platform charges a referral fee to the sellers for access to the marketplace, and may also subsequently launch its own private-label product by copying a seller.[79] The authors found that a policy to either ban hybrid mode or only prohibit information use for the launch of private-label products may produce negative welfare implications.

Further, Radostina Shopova argues that, when introducing a private label, the marketplace operator does not have incentive to distort competition and foreclose the outside seller, but does have an incentive to lower fees charged to the outside seller and to vertically differentiate its own product in order to protect the seller’s channel.[80] Even when the intermediary is able to perfectly mimic the quality of the outside seller and monopolize its product space, the intermediary prefers to differentiate its offer and chooses a lower quality for the private-label product. Accordingly, as the purpose of private labels is to offer a lower-quality version of products aimed at consumers with a lower willingness to pay, a marketplace operator does not have an incentive to distort competition in favor of its own product and foreclose the seller of the original higher-quality product.

In addition, according to Jean-Pierre Dubé, curbing development of private-label programs would harm consumers and Amazon’s practices amount to textbook retailing, as they follow an off-the-shelf approach to managing private-label products that is standard for many retail chains in the West.[81] As a result, singling out Amazon’s practices would set a double standard.

Interestingly, such findings about predictors and effects of Amazon’s entry in competition with third-party merchants on its own marketplace are confirmed by the only empirical study developed so far. In particular, analyzing the Home & Kitchen department of Germany’s version of Amazon Marketplace between 2016 and 2021, Gregory S. Crawford, Matteo Courthoud, Regina Seibel, and Simon Zuzek’s results suggest that Amazon’s entry strategy was more consistent with making Marketplace more attractive to consumers than expropriating third-party merchants.[82] Notably, the study showed that, comparing Amazon’s entry decisions with those of the largest third-party merchants, Amazon tends to enter low-growth and low-quality products, which is consistent with a strategy that seeks to make Marketplace more attractive by expanding variety, lessening third-party market power, and/or enhancing product availability. The authors therefore found that Amazon’s entry on Amazon Marketplace demonstrated no systematic adverse effects and caused a mild market expansion.

Massimo Motta and Sandro Shelegia explored interactions between copying and acquisitions, finding that the former (or the threat of copying) can modify the outcome of an acquisition negotiation.[83] According to their model, there could be both static and dynamic incentives for an incumbent to introduce a copycat version of a complementary product. The static rationale consists of lowering the price of the complementary product in order to capture more rents from it, while the dynamic incentive consists of harming a potential rival’s prospects of developing a substitute. The latter may, in turn, affect the direction the entrant takes toward innovation. Anticipating the incumbent’s copying strategy, the entrant may shift resources from improvements to compete with the incumbent’s primary product to developing complementary products.

Jingcun Cao, Avery Haviv, and Nan Li analyzed the opposite scenario—i.e., copycats that seek to mimic the design and user experience of incumbents’ successful products.[84] The authors find empirically that, on average, copycat apps do not have a significant effect on the demand for incumbent apps and that, as with traditional counterfeit products, they may generate a positive demand spillover toward authentic apps.

Massimo Motta also investigated the potential foreclosure effects of platforms adopting a copycat strategy committed to non-discriminatory terms of access for third parties (e.g., Apple App Store, Google Play, and Amazon Marketplace).[85] Notably, according to Motta, when a third-party seller is particularly successful and the platform is unable to raise fees and commissions paid by that seller, the platform may prefer to copy its product or service to extract more profits from users, rather than rely solely on third-party sales. The author acknowledged, however, that even though this practice may create an incentive for self-preferencing, it does not necessarily have anticompetitive effects. Indeed, the welfare effects of the copying strategy are a priori ambiguous.[86] While, on the one hand, the platform’s copying of a third-party product benefits consumers by increasing variety and competition among products, on the other hand, copying might be wasteful for society, in that it entails a fixed cost and may discourage innovation if rivals anticipate that they will be systematically copied whenever they have a successful product.[87] Therefore, introducing a copycat version of a product offered by a firm in an adjacent market might be procompetitive.

B. Antitrust Assessment: Competition, Innovation, and Double Standards

The economic literature has demonstrated that the rationale and welfare effects of sherlocking by hybrid platforms are definitively ambiguous. Against concerns about rivals’ foreclosure, some studies provide a different narrative, illustrating that such a strategy is more consistent with making the platform more attractive to consumers (by differentiating the quality and pricing of the offer) than expropriating business users.[88] Furthermore, copies, imitations, and replicas undoubtedly benefit consumers with more choice and lower prices.

Therefore, the only way to consider sherlocking anticompetitive is by demonstrating long-term deterrent effects on innovation (i.e., reducing rivals’ incentives to invest in new products and services) outweigh consumers’ short-term advantages.[89] Moreover, deterrent effects must not be merely hypothetical, as a finding of abuse cannot be based on a mere possibility of harm.[90] In any case, such complex tradeoffs are at odds with a blanket ban.[91]

Moreover, assessments of the potential impact of sherlocking on innovation cannot disregard the role of IPRs—which are, by definition, the main primary to promote innovation. From this perspective, intellectual-property protection is best characterized as another form of tradeoff. Indeed, the economic rationale of IPRs (in particular, of patents and copyrights) involves, among other things, a tradeoff between access and incentives—i.e., between short-term competitive restrictions and long-term innovative benefits.[92]

According to the traditional incentive-based theory of intellectual property, free riding would represent a dangerous threat that justifies the exclusive rights granted by intellectual-property protection. As a consequence, so long as copycat expropriation does not infringe IPRs, it should be presumed legitimate and procompetitive. Indeed, such free riding is more of an intellectual-property issue than a competitive concern.

In addition, to strike a fair balance between restricting competition and providing incentives to innovation, the exclusive rights granted by IPRs are not unlimited in terms of duration, nor in terms of lawful (although not authorized) uses of the protected subject matter. Under the doctrine of fair use, for instance, reverse engineering represents a legitimate way to obtain information about a firm’s product, even if the intended result is to produce a directly competing product that may steer customers away from the initial product and the patented invention.

Outside of reverse engineering, copying is legitimately exercised once IPRs expire, when copycat competitors can reproduce previously protected elements. As a result of the competitive pressure exerted by new rivals, holders of expired IPRs may react by seeking solutions designed to block or at least limit the circulation of rival products. They could, for example, request other IPRs to cover aspects or functionalities different from those previously protected. They could also bring (sometimes specious) legal action for infringement of the new IPR or for unfair competition by slavish imitation. For these reasons, there have been occasions where copycat competitors have received protection from antitrust authorities against sham litigation brought by IPR holders concerned about losing margins due to pricing pressure from copycats.[93]

Finally, within the longstanding debate on the intersection of intellectual-property protection and competition, EU antitrust authorities have traditionally been unsympathetic toward restrictions imposed by IPRs. The success of the essential-facility doctrine (EFD) is the most telling example of this attitude, as its application in the EU has been extended to IPRs. As a matter of fact, the EFD represents the main antitrust tool for overseeing intellectual property in the EU.[94]

After Microsoft, EU courts have substantially dismantled one of the “exceptional circumstances” previously elaborated in Magill and specifically introduced for cases involving IPRs, with the aim of safeguarding a balance between restrictions to access and incentives to innovate. Whereas the CJEU established in Magill that refusal to grant an IP license should be considered anticompetitive if it prevents the emergence of a new product for which there is potential consumer demand, in Microsoft, the General Court considered such a requirement met even when access to an IPR is necessary for rivals to merely develop improved products with added value.

Given this background, recent competition-policy concerns about sherlocking are surprising. To briefly recap, the practice at-issue increases competition in the short term, but may affect incentives to innovate in the long-term. With regard to the latter, however, the practice neither involves products protected by IPRs nor constitutes a slavish imitation that may be caught under unfair-competition laws.

The case of Amazon, which has received considerable media coverage, is illustrative of the relevance of IP protection. Amazon has been accused of cloning batteries, power strips, wool runner shoes, everyday sling bags, camera tripods, and furniture.[95] One may wonder what kind of innovation should be safeguarded in these cases against potential copies. Admittedly, such examples appear consistent with the findings of the already-illustrated empirical study conducted by Crawford et al. indicating that Amazon tends to enter low-quality products in order to expand variety on the Marketplace and to make it more attractive to consumers.

Nonetheless, if an IPR is involved, right holders are provided with proper means to protect their products against infringement. Indeed, one of the alleged targeted companies (Williams-Sonoma) did file a complaint for design and trademark infringement, claiming that Amazon had copied a chair (Orb Dining Chair) sold by its West Elm brand. According to Williams-Sonoma, the Upholstered Orb Office Chair—which Amazon began selling under its Rivet brand in 2018—was so similar that the ordinary observer would be confused by the imitation.[96] If, instead, the copycat strategy does not infringe any IPR, the potential impact on innovation might not be considered particularly worrisome—at least at first glance.

Further, neither the degree to which third-party business data is unavailable nor the degree to which they are relevant in facilitating copying are clear cut. For instance, in the case of Amazon, public product reviews supply a great deal of information[97] and, regardless of the fact that a third party is selling a product on the Marketplace, anyone can obtain an item for the purposes of reverse engineering.[98]

In addition, antitrust authorities are used to intervening against opportunistic behavior by IPR holders. European competition authorities, in particular, have never before seemed particularly responsive to the motives of inventors and creators versus the need to encourage maximum market openness.

It should also be noted that cloning is a common strategy in traditional markets (e.g., food products)[99] and has been the subject of longstanding controversies between high-end fashion brands and fast-fashion brands (e.g., Zara, H&M).[100] Furthermore, brick-and-mortar retailers also introduce private labels and use other brands’ sales records in deciding what to produce.[101]

So, what makes sherlocking so different and dangerous when deployed in digital markets as to push competition authorities to contradict themselves?[102]

The double standard against sherlocking reflects the same concern and pursues the same goal of the various other attempts to forbid any form of self-preferencing in digital markets. Namely, antitrust investigations of sherlocking are fundamentally driven by the bias against hybrid and vertically integrated players. The investigations rely on the assumption that conflicts of interest have anticompetitive implications and that, therefore, platform neutrality should be promoted to ensure the neutrality of the competitive process.[103] Accordingly, hostility toward sherlocking may involve both of the illustrated scenarios—i.e., the use of nonpublic third-party business data either in adopting any business decision, or just copycat strategies, in particular.

As a result, however, competition authorities end up challenging a specific business model, rather than the specific practice at-issue, which brings undisputed competitive benefits in terms of lower prices and wider consumer choice, and which should therefore be balanced against potential exclusionary risks. As the CJEU has pointed out, the concept of competition on the merits:

…covers, in principle, a competitive situation in which consumers benefit from lower prices, better quality and a wider choice of new or improved goods and services. Thus, … conduct which has the effect of broadening consumer choice by putting new goods on the market or by increasing the quantity or quality of the goods already on offer must, inter alia, be considered to come within the scope of competition on the merits.[104]

Further, in light of the “as-efficient competitor” principle, competition on the merits may lead to “the departure from the market, or the marginalization of, competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation.”[105]

It has been correctly noted that the “as-efficient competitor” principle is a reminder of what competition law is about and how it differs from regulation.[106] Competition law aims to protect a process, rather than engineering market structures to fulfill a particular vision of how an industry is to operate.[107] In other words, competition law does not target firms on the basis of size or status and does not infer harm from (market or bargaining) power or business model. Therefore, neither the dual role played by some large online platforms nor their preferential access to sensitive business data or their vertical integration, by themselves, create a competition problem. Competitive advantages deriving from size, status, power, or business model cannot be considered per se outside the scope of competition on the merits.

Some policymakers have sought to resolve these tensions in how competition law regards sherlocking by introducing or envisaging an outright ban. These initiatives and proposals have clearly been inspired by antitrust investigations, but they did so for the wrong reasons. Instead of taking stock of the challenging tradeoffs between short-term benefits and long-term risks that an antitrust assessment of sherlocking requires, they blamed competition law for not providing effective tools to achieve the policy goal of platform neutrality.[108] Therefore, the regulatory solution is merely functional to bypass the traditional burden of proof of antitrust analysis and achieve what competition-law enforcement cannot provide.

V. Conclusion

The bias against self-preferencing strikes again. Concerns about hybrid platforms’ potential conflicts of interest have led policymakers to seek prohibitions to curb different forms of self-preferencing, making the latter the symbol of the competition-policy zeitgeist in digital markets. Sherlocking shares this fate. Indeed, the DMA outlaws any use of business users’ nonpublic data and similar proposals have been advanced in the United States, Australia, and Japan. Further, like other forms of self-preferencing, such regulatory initiatives against sherlocking have been inspired by previous antitrust proceedings.

Drawing on these antitrust investigations, the present research shows the extent to which an outright ban on sherlocking is unjustified. Notably, the practice at-issue includes two different scenarios: the broad case in which a gatekeeper exploits its preferential access to business users’ data to better calibrate all of its business decisions and the narrow case in which such data is used to adopt a copycat strategy. In either scenario, the welfare effects and competitive implications of sherlocking are unclear.

Indeed, the use of certain data by a hybrid platform to improve business decisions generally should be classified as competition on the merits, and may yield an increase in both intra-platform (with respect to business users) and inter-platform (with respect to other platforms) competition. This would benefit consumers in terms of lower prices, better quality, and a wider choice of new or improved goods and services. In a similar vein, if sherlocking is used to deliver replicas of business users’ products or services, the anti-competitiveness of such a strategy may only result from a cumbersome tradeoff between short-term benefits (i.e., lower prices and wider choice) and negative long-term effects on innovation.

An implicit confirmation of the difficulties encountered in demonstrating the anti-competitiveness of sherlocking comes from the recent complaint issued by the FTC against Amazon.[109] Current FTC Chairwoman Lina Khan devoted a significant portion of her previous academic career to questioning Amazon’s practices (including the decision to introduce its own private labels inspired by third-party products)[110] and to supporting the adoption of structural-separation remedies to tackle platforms’ conflicts of interest that induce them to exploit their “systemic informational advantage (gleaned from competitors)” to thwart rivals and strengthen their own position by introducing replica products.[111] Despite these premises and although the FTC’s complaint targets numerous practices belonging to what has been described as an interconnected strategy to block off every major avenue of competition, however, sherlocking is surprisingly off the radar.

Regulatory initiatives to ban sherlocking in order to ensure platform neutrality with respect to business users and a level playing field among rivals would sacrifice undisputed procompetitive benefits on the altar of policy goals that competition rules are not meant to pursue. Sherlocking therefore appears to be a perfect case study of the side effects of unwarranted interventions in digital markets.

[1] Giuseppe Colangelo, Antitrust Unchained: The EU’s Case Against Self-Preferencing, 72 GRUR International 538 (2023).

[2] Jacques Cre?mer, Yves-Alexandre de Montjoye, & Heike Schweitzer, Competition Policy for the Digital Era (2019), 7, https://op.europa.eu/en/publication-detail/-/publication/21dc175c-7b76-11e9-9f05-01aa75ed71a1/language-en (all links last accessed 3 Jan. 2024); UK Digital Competition Expert Panel, Unlocking Digital Competition, (2019) 58, available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785547/unlocking_digital_competition_furman_review_web.pdf.

[3] You’ve Been Sherlocked, The Economist (2012), https://www.economist.com/babbage/2012/07/13/youve-been-sherlocked.

[4] Regulation (EU) 2022/1925 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act) (2022), OJ L 265/1, Article 6(2).

[5] U.S. S. 2992, American Innovation and Choice Online Act (AICOA) (2022), Section 3(a)(6), available at https://www.klobuchar.senate.gov/public/_cache/files/b/9/b90b9806-cecf-4796-89fb-561e5322531c/B1F51354E81BEFF3EB96956A7A5E1D6A.sil22713.pdf. See also U.S. House of Representatives, Subcommittee on Antitrust, Commercial, and Administrative Law, Investigation of Competition in Digital Markets, Majority Staff Reports and Recommendations (2020), 164, 362-364, 378, available at https://democrats-judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf.

[6] Australian Competition and Consumer Commission, Digital Platform Services Inquiry Report on Regulatory Reform (2022), 125, https://www.accc.gov.au/about-us/publications/serial-publications/digital-platform-services-inquiry-2020-2025/digital-platform-services-inquiry-september-2022-interim-report-regulatory-reform.

[7] Japan Fair Trade Commission, Market Study Report on Mobile OS and Mobile App Distribution (2023), https://www.jftc.go.jp/en/pressreleases/yearly-2023/February/230209.html.

[8] European Commission, 10 Nov. 2020, Case AT.40462, Amazon Marketplace; see Press Release, Commission Sends Statement of Objections to Amazon for the Use of Non-Public Independent Seller Data and Opens Second Investigation into Its E-Commerce Business Practices, European Commission (2020), https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2077.

[9] Press Release, CMA Investigates Amazon Over Suspected Anti-Competitive Practices, UK Competition and Markets Authority (2022), https://www.gov.uk/government/news/cma-investigates-amazon-over-suspected-anti-competitive-practices.

[10] European Commission, 16 Jun. 2020, Case AT.40716, Apple – App Store Practices.

[11] Press Release, Commission Sends Statement of Objections to Meta over Abusive Practices Benefiting Facebook Marketplace, European Commission (2022), https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7728; Press Release, CMA Investigates Facebook’s Use of Ad Data, UK Competition and Markets Authority (2021), https://www.gov.uk/government/news/cma-investigates-facebook-s-use-of-ad-data.

[12] DMA, supra note 4, Recital 10 and Article 1(6).

[13] GWB Digitalization Act, 18 Jan. 2021, Section 19a. On risks of overlaps between the DMA and the competition law enforcement, see Giuseppe Colangelo, The European Digital Markets Act and Antitrust Enforcement: A Liaison Dangereuse, 47 European Law Review 597.

[14] GWB, supra note 13, Section 19a (2)(4)(b).

[15] Press Release, Commission Sends Statement of Objections to Apple Clarifying Concerns over App Store Rules for Music Streaming Providers, European Commission (2023), https://ec.europa.eu/commission/presscorner/detail/en/ip_23_1217.

[16] European Commission, 20 Dec. 2022, Case AT.40462; Press Release, Commission Accepts Commitments by Amazon Barring It from Using Marketplace Seller Data, and Ensuring Equal Access to Buy Box and Prime, European Commission (2022), https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7777; UK Competition and Markets Authority, 3 Nov. 2023, Case No. 51184, https://www.gov.uk/cma-cases/investigation-into-amazons-marketplace.

[17] UK Competition and Markets Authority, 3 Nov. 2023, Case AT.51013, https://www.gov.uk/cma-cases/investigation-into-facebooks-use-of-data.

[18] See, e.g., Gil Tono & Lewis Crofts (2022), Amazon Data Commitments Match DMA Obligations, EU’s Vestager Say, mLex (2022), https://mlexmarketinsight.com/news/insight/amazon-data-commitments-match-dma-obligation-eu-s-vestager-says (reporting that Commissioner Vestager stated that Amazon’s data commitments definitively appear to match what would be asked within the DMA).

[19] DMA, supra note 4, Recital 46.

[20] Id., Article 6(2) (also stating that, for the purposes of the prohibition, non-publicly available data shall include any aggregated and non-aggregated data generated by business users that can be inferred from, or collected through, the commercial activities of business users or their customers, including click, search, view, and voice data, on the relevant core platform services or on services provided together with, or in support of, the relevant core platform services of the gatekeeper).

[21] AICOA, supra note 5.

[22] U.S. House of Representatives, supra note 5; see also Lina M. Khan, The Separation of Platforms and Commerce, 119 Columbia Law Review 973 (2019).

[23] U.S. Federal Trade Commission, et al. v. Amazon.com, Inc., Case No. 2:23-cv-01495 (W.D. Wash., 2023).

[24] Australian Competition and Consumer Commission, supra note 6, 125.

[25] Id., 124.

[26] Japan Fair Trade Commission, supra note 7, 144.

[27] European Commission, supra note 8. But see also Amazon, Supporting Sellers with Tools, Insights, and Data (2021), https://www.aboutamazon.eu/news/policy/supporting-sellers-with-tools-insights-and-data (claiming that the company is just using aggregate (rather than individual) data: “Just like our third-party sellers and other retailers across the world, Amazon also uses data to run our business. We use aggregated data about customers’ experience across the store to continuously improve it for everyone, such as by ensuring that the store has popular items in stock, customers are finding the products they want to purchase, or connecting customers to great new products through automated merchandising.”)

[28] European Commission, supra note 16.

[29] UK Competition and Markets Authority, supra notes 9 and 16.

[30] Bundeskartellamt, 5 Jul. 2022, Case B2-55/21, paras. 493, 504, and 518.

[31] Id., para. 536.

[32] European Commission, supra note 10.

[33] European Commission, supra note 11; UK Competition and Markets Authority, supra note 11.

[34] European Commission, supra note 16. In a similar vein, see also UK Competition and Markets Authority, supra note 16, paras. 4.2-4.7.

[35] European Commission, supra note 16, para. 111.

[36] Id., para. 123.

[37] Cre?mer, de Montjoye, & Schweitzer, supra note 2, 33-34.

[38] See, e.g., Marc Bourreau, Some Economics of Digital Ecosystems, OECD Hearing on Competition Economics of Digital Ecosystems (2020), https://www.oecd.org/daf/competition/competition-economics-of-digital-ecosystems.htm; Amelia Fletcher, Digital Competition Policy: Are Ecosystems Different?, OECD Hearing on Competition Economics of Digital Ecosystems (2020).

[39] See, e.g., Cristina Caffarra, Matthew Elliott, & Andrea Galeotti, ‘Ecosystem’ Theories of Harm in Digital Mergers: New Insights from Network Economics, VoxEU (2023), https://cepr.org/voxeu/columns/ecosystem-theories-harm-digital-mergers-new-insights-network-economics-part-1 (arguing that, in merger control, the implementation of an ecosystem theory of harm would require assessing how a conglomerate acquisition can change the network of capabilities (e.g., proprietary software, brand, customer-base, data) in order to evaluate how easily competitors can obtain alternative assets to those being acquired); for a different view, see Geoffrey A. Manne & Dirk Auer, Antitrust Dystopia and Antitrust Nostalgia: Alarmist Theories of Harm in Digital Markets and Their Origins, 28 George Mason Law Review 1281(2021).

[40] See, e.g., Viktoria H.S.E. Robertson, Digital merger control: adapting theories of harm, (forthcoming) European Competition Journal; Caffarra, Elliott, & Galeotti, supra note 39; OECD, Theories of Harm for Digital Mergers (2023), available at www.oecd.org/daf/competition/theories-of-harm-for-digital-mergers-2023.pdf; Bundeskartellamt, Merger Control in the Digital Age – Challenges and Development Perspectives (2022), available at https://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Diskussions_Hintergrundpapiere/2022/Working_Group_on_Competition_Law_2022.pdf?__blob=publicationFile&v=2; Elena Argentesi, Paolo Buccirossi, Emilio Calvano, Tomaso Duso, Alessia Marrazzo, & Salvatore Nava, Merger Policy in Digital Markets: An Ex Post Assessment, 17 Journal of Competition Law & Economics 95 (2021); Marc Bourreau & Alexandre de Streel, Digital Conglomerates and EU Competition Policy (2019), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3350512.

[41] Bundeskartellamt, 11 Feb. 2022, Case B6-21/22, https://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Fallberichte/Fusionskontrolle/2022/B6-21-22.html;jsessionid=C0837BD430A8C9C8E04D133B0441EB95.1_cid362?nn=4136442.

[42] UK Competition and Markets Authority, Microsoft / Activision Blizzard Merger Inquiry (2023), https://www.gov.uk/cma-cases/microsoft-slash-activision-blizzard-merger-inquiry.

[43] See European Commission, Commission Prohibits Proposed Acquisition of eTraveli by Booking (2023), https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4573 (finding that a flight product is a crucial growth avenue in Booking’s ecosystem, which revolves around its hotel online-travel-agency (OTA) business, as it would generate significant additional traffic to the platform, thus allowing Booking to benefit from existing customer inertia and making it more difficult for competitors to contest Booking’s position in the hotel OTA market).

[44] Thomas Eisenmann, Geoffrey Parker, & Marshall Van Alstyne, Platform Envelopment, 32 Strategic Management Journal 1270 (2011).

[45] See, e.g., Colangelo, supra note 1, and Pablo Iba?n?ez Colomo, Self-Preferencing: Yet Another Epithet in Need of Limiting Principles, 43 World Competition 417 (2020) (investigating whether and to what extent self-preferencing could be considered a new standalone offense in EU competition law); see also European Commission, Digital Markets Act – Impact Assessment Support Study (2020), 294, https://op.europa.eu/en/publication-detail/-/publication/0a9a636a-3e83-11eb-b27b-01aa75ed71a1/language-en (raising doubts about the novelty of this new theory of harm, which seems similar to the well-established leveraging theories of harm of tying and bundling, and margin squeeze).

[46] European Commission, supra note 45, 16.

[47] European Commission, 27 Jun. 2017, Case AT.39740, Google Search (Shopping).

[48] See General Court, 10 Nov. 2021, Case T-612/17, Google LLC and Alphabet Inc. v. European Commission, ECLI:EU:T:2021:763, para. 155 (stating that the general principle of equal treatment obligates vertically integrated platforms to refrain from favoring their own services as opposed to rival ones; nonetheless, the ruling framed self-preferencing as discriminatory abuse).

[49] In the meantime, however, see Opinion of the Advocate General Kokott, 11 Jan. 2024, Case C-48/22 P, Google v. European Commission, ECLI:EU:C:2024:14, paras. 90 and 95 (arguing that the self-preferencing of which Google is accused constitutes an independent form of abuse, albeit one that exhibits some proximity to cases involving margin squeezing).

[50] European Commission, Commission Sends Amazon Statement of Objections over Proposed Acquisition of iRobot (2023), https://ec.europa.eu/commission/presscorner/detail/en/IP_23_5990.

[51] The same concerns and approach have been shared by the CMA, although it reached a different conclusion, finding that the new merged entity would not have incentive to self-preference its own branded RVCs: see UK Competition and Markets Authority, Amazon / iRobot Merger Inquiry – Clearance Decision (2023), paras. 160, 188, and 231, https://www.gov.uk/cma-cases/amazon-slash-irobot-merger-inquiry.

[52] See European Commission, supra note 45, 304.

[53] Id., 313-314 (envisaging, among potential remedies, the imposition of a duty to make all data used by the platform for strategic decisions available to third parties); see also Désirée Klinger, Jonathan Bokemeyer, Benjamin Della Rocca, & Rafael Bezerra Nunes, Amazon’s Theory of Harm, Yale University Thurman Arnold Project (2020), 19, available at https://som.yale.edu/sites/default/files/2022-01/DTH-Amazon.pdf.

[54] Colangelo, supra note 1; see also Oscar Borgogno & Giuseppe Colangelo, Platform and Device Neutrality Regime: The New Competition Rulebook for App Stores?, 67 Antitrust Bulletin 451 (2022).

[55] See Court of Justice of the European Union (CJEU), 12 May 2022, Case C-377/20, Servizio Elettrico Nazionale SpA v. Autorità Garante della Concorrenza e del Mercato, ECLI:EU:C:2022:379; 19 Apr. 2018, Case C-525/16, MEO v. Autoridade da Concorrência, ECLI:EU:C:2018:270; 6 Sep. 2017, Case C-413/14 P, Intel v. Commission, ECLI:EU:C:2017:632; 6 Oct. 2015, Case C-23/14, Post Danmark A/S v. Konkurrencerådet (Post Danmark II), ECLI:EU:C:2015:651; 27 Mar. 2012, Case C-209/10, Post Danmark A/S v Konkurrencera?det (Post Danmark I), ECLI: EU:C:2012:172; for a recent overview of the EU case law, see also Pablo Iba?n?ez Colomo, The (Second) Modernisation of Article 102 TFEU: Reconciling Effective Enforcement, Legal Certainty and Meaningful Judicial Review, SSRN (2023), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4598161.

[56] CJEU, Intel, supra note 55, paras. 133-134.

[57] CJEU, Servizio Elettrico Nazionale, supra note 55, para. 73.

[58] Opinion of Advocate General Rantos, 9 Dec. 2021, Case C?377/20, Servizio Elettrico Nazionale SpA v. Autorità Garante della Concorrenza e del Mercato, ECLI:EU:C:2021:998, para. 45.

[59] CJEU, Servizio Elettrico Nazionale, supra note 55, para. 77.

[60] Id., paras. 77, 80, and 83.

[61] CJEU, 26 Nov.1998, Case C-7/97, Oscar Bronner GmbH & Co. KG v. Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co. KG, Mediaprint Zeitungsvertriebsgesellschaft mbH & Co. KG and Mediaprint Anzeigengesellschaft mbH & Co. KG, ECLI:EU:C:1998:569.

[62] CJEU, Servizio Elettrico Nazionale, supra note 55, para. 85.

[63] European Commission, supra note 11; UK Competition and Markets Authority, supra note 17, paras. 2.6, 4.3, and 4.7.

[64] See, e.g., European Commission, Case COMP D3/34493, DSD, para. 112 (2001) OJ L166/1; affirmed in GC, 24 May 2007, Case T-151/01, DerGru?nePunkt – Duales System DeutschlandGmbH v. European Commission, ECLI:EU:T:2007:154 and CJEU, 16 Jul. 2009, Case C-385/07 P, ECLI:EU:C:2009:456; European Commission, Case IV/31.043, Tetra Pak II, paras. 105–08, (1992) OJ L72/1; European Commission, Case IV/29.971, GEMA III, (1982) OJ L94/12; CJUE, 27 Mar. 1974, Case 127/73, Belgische Radio en Televisie e socie?te? belge des auteurs, compositeurs et e?diteurs v. SV SABAM and NV Fonior, ECLI:EU:C:1974:25, para. 15; European Commission, Case IV/26.760, GEMA II, (1972) OJ L166/22; European Commission, Case IV/26.760, GEMA I, (1971) OJ L134/15.

[65] See, e.g., Richard A. Posner, Intellectual Property: The Law and Economics Approach, 19 The Journal of Economic Perspectives 57 (2005).

[66] See, e.g., Richard Gilbert & Carl Shapiro, Optimal Patent Length and Breadth, 21 The RAND Journal of Economics 106 (1990); Pankaj Tandon, Optimal Patents with Compulsory Licensing, 90 Journal of Political Economy 470 (1982); Frederic M. Scherer, Nordhaus’ Theory of Optimal Patent Life: A Geometric Reinterpretation, 62 American Economic Review 422 (1972); William D. Nordhaus, Invention, Growth, and Welfare: A Theoretical Treatment of Technological Change, Cambridge, MIT Press (1969).

[67] See, e.g., Hal R. Varian, Copying and Copyright, 19 The Journal of Economic Perspectives 121 (2005); William R. Johnson, The Economics of Copying, 93 Journal of Political Economy 158 (1985); Stephen Breyer, The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs, 84 Harvard Law Review 281 (1970).

[68] Sai Krishna Kamepalli, Raghuram Rajan, & Luigi Zingales, Kill Zone, NBER Working Paper No. 27146 (2022), http://www.nber.org/papers/w27146; Massimo Motta & Sandro Shelegia, The “Kill Zone”: Copying, Acquisition and Start-Ups’ Direction of Innovation, Barcelona GSE Working Paper Series Working Paper No. 1253 (2021), https://bse.eu/research/working-papers/kill-zone-copying-acquisition-and-start-ups-direction-innovation; U.S. House of Representatives, Subcommittee on Antitrust, Commercial, and Administrative Law, supra note 8, 164; Stigler Committee for the Study of Digital Platforms, Market Structure and Antitrust Subcommittee (2019) 54, https://research.chicagobooth.edu/stigler/events/single-events/antitrust-competition-conference/digital-platforms-committee; contra, see Geoffrey A. Manne, Samuel Bowman, & Dirk Auer, Technology Mergers and the Market for Corporate Control, 86 Missouri Law Review 1047 (2022).

[69] See also Howard A. Shelanski, Information, Innovation, and Competition Policy for the Internet, 161 University of Pennsylvania Law Review 1663 (2013), 1999 (describing as “forced free riding” the situation occurring when a platform appropriates innovation by other firms that depend on the platform for access to consumers).

[70] See Feng Zhu & Qihong Liu, Competing with Complementors: An Empirical Look at Amazon.com, 39 Strategic Management Journal 2618 (2018).

[71] Andrei Hagiu, Tat-How Teh, and Julian Wright, Should Platforms Be Allowed to Sell on Their Own Marketplaces?, 53 RAND Journal of Economics 297 (2022), (the model assumes that there is a platform that can function as a seller and/or a marketplace, a fringe of small third-party sellers that all sell an identical product, and an innovative seller that has a better product in the same category as the fringe sellers and can invest more in making its product even better; further, the model allows the different channels (on-platform or direct) and the different sellers to offer different values to consumers; therefore, third-party sellers (including the innovative seller) can choose whether to participate on the platform’s marketplace, and whenever they do, can price discriminate between consumers that come to it through the marketplace and consumers that come to it through the direct channel).

[72] See Germa?n Gutie?rrez, The Welfare Consequences of Regulating Amazon (2022), available at http://germangutierrezg.com/Gutierrez2021_AMZ_welfare.pdf (building an equilibrium model where consumers choose products on the Amazon platform, while third-party sellers and Amazon endogenously set prices of products and platform fees).

[73] See Federico Etro, Product Selection in Online Marketplaces, 30 Journal of Economics & Management Strategy 614 (2021), (relying on a model where a marketplace such as Amazon provides a variety of products and can decide, for each product, whether to monetize sales by third-party sellers through a commission or become a seller on its platform, either by commercializing a private label version or by purchasing from a vendor and resell as a first party retailer; as acknowledged by the author, a limitation of the model is that it assumes that the marketplace can set the profit?maximizing commission on each product; if this is not the case, third-party sales would be imperfectly monetized, which would increase the relative profitability of entry).

[74] Patrick Andreoli-Versbach & Joshua Gans, Interplay Between Amazon Store and Logistics, SSRN (2023) https://ssrn.com/abstract=4568024.

[75] Simon Anderson & O?zlem Bedre-Defolie, Online Trade Platforms: Hosting, Selling, or Both?, 84 International Journal of Industrial Organization 102861 (2022).

[76] Chiara Farronato, Andrey Fradkin, & Alexander MacKay, Self-Preferencing at Amazon: Evidence From Search Rankings, NBER Working Paper No. 30894 (2023), http://www.nber.org/papers/w30894.

[77] See Erik Madsen & Nikhil Vellodi, Insider Imitation, SSRN (2023) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3832712 (introducing a two-stage model where the platform publicly commits to an imitation policy and the entrepreneur observes this policy and chooses whether to innovate: if she chooses not to, the game ends and both players earn profits normalized to zero; otherwise, the entrepreneur pays a fixed innovation cost to develop the product, which she then sells on a marketplace owned by the platform).

[78] Federico Etro, The Economics of Amazon, SSRN (2022), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4307213.

[79] Jay Pil Choi, Kyungmin Kim, & Arijit Mukherjee, “Sherlocking” and Information Design by Hybrid Platforms, SSRN (2023), https://ssrn.com/abstract=4332558 (the model assumes that the platform chooses its referral fee at the beginning of the game and that the cost of entry is the same for both the seller and the platform).

[80] Radostina Shopova, Private Labels in Marketplaces, 89 International Journal of Industrial Organization 102949 (2023), (the model assumes that the market structure is given exogenously and that the quality of the seller’s product is also exogenous; therefore, the paper does not investigate how entry by a platform affects the innovation incentives of third-party sellers).

[81] Jean-Pierre Dube?, Amazon Private Brands: Self-Preferencing vs Traditional Retailing, SSRN (2022) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4205988.

[82] Gregory S. Crawford, Matteo Courthoud, Regina Seibel, & Simon Zuzek, Amazon Entry on Amazon Marketplace, CEPR Discussion Paper No. 17531 (2022), https://cepr.org/publications/dp17531.

[83] Motta & Shelegia, supra note 68.

[84] Jingcun Cao, Avery Haviv, & Nan Li, The Spillover Effects of Copycat Apps and App Platform Governance, SSRN (2023), https://ssrn.com/abstract=4250292.

[85] Massimo Motta, Self-Preferencing and Foreclosure in Digital Markets: Theories of Harm for Abuse Cases, 90 International Journal of Industrial Organization 102974 (2023).

[86] Id.

[87] Id.

[88] See, e.g., Crawford, Courthoud, Seibel, & Zuzek, supra note 82; Etro, supra note 78; Shopova, supra note 80.

[89] Motta, supra note 85.

[90] Servizio Elettrico Nazionale, supra note 55, paras. 53-54; Post Danmark II, supra note 55, para. 65.

[91] Etro, supra note 78; see also Herbert Hovenkamp, The Looming Crisis in Antitrust Economics, 101 Boston University Law Review 489 (2021), 543, (arguing that: “Amazon’s practice of selling both its own products and those of rivals in close juxtaposition almost certainly benefits consumers by permitting close price comparisons. When Amazon introduces a product such as AmazonBasics AAA batteries in competition with Duracell, prices will go down. There is no evidence to suggest that the practice is so prone to abuse or so likely to harm consumers in other ways that it should be categorically condemned. Rather, it is an act of partial vertical integration similar to other practices that the antitrust laws have confronted and allowed in the past.”)

[92] On the more complex economic rationale of intellectual property, see, e.g., William M. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law, Cambridge, Harvard University Press (2003).

[93] See, e.g., Italian Competition Authority, 18 Jul. 2023 No. 30737, Case A538 – Sistemi di sigillatura multidiametro per cavi e tubi, (2023) Bulletin No. 31.

[94] See CJEU, 6 Apr. 1995, Joined Cases C-241/91 P and 242/91 P, RTE and ITP v. Commission, ECLI:EU:C:1995:98; 29 Apr. 2004, Case C-418/01, IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. GH, ECLI:EU:C:2004:257; General Court, 17 Sep. 2007, Case T-201/04, Microsoft v. Commission, ECLI:EU:T:2007:289; CJEU, 16 Jul. 2015, Case C-170/13, Huawei Technologies Co. Ltd v. ZTE Corp., ECLI:EU:C:2015:477.

[95] See, e.g., Dana Mattioli, How Amazon Wins: By Steamrolling Rivals and Partners, Wall Street Journal (2022), https://www.wsj.com/articles/amazon-competition-shopify-wayfair-allbirds-antitrust-11608235127; Aditya Kalra & Steve Stecklow, Amazon Copied Products and Rigged Search Results to Promote Its Own Brands, Documents Show, Reuters (2021), https://www.reuters.com/investigates/special-report/amazon-india-rigging.

[96] Williams-Sonoma, Inc. v. Amazon.Com, Inc., Case No. 18-cv-07548 (N.D. Cal., 2018). The suit was eventually dismissed, as the parties entered into a settlement agreement: Williams-Sonoma, Inc. v. Amazon.Com, Inc., Case No. 18-cv-07548-AGT (N.D. Cal., 2020).

[97] Amazon Best Sellers, https://www.amazon.com/Best-Sellers/zgbs.

[98] Hovenkamp, supra note 91, 2015-2016.

[99] Nicolas Petit, Big Tech and the Digital Economy, Oxford, Oxford University Press (2020), 224-225.

[100] For a recent analysis, see Zijun (June) Shi, Xiao Liu, Dokyun Lee, & Kannan Srinivasan, How Do Fast-Fashion Copycats Affect the Popularity of Premium Brands? Evidence from Social Media, 60 Journal of Marketing Research 1027 (2023).

[101] Lina M. Khan, Amazon’s Antitrust Paradox, 126 Yale Law Journal 710 (2017), 782.

[102] See Massimo Motta &Martin Peitz, Intervention Triggers and Underlying Theories of Harm, in Market Investigations. A New Competition Tool for Europe? (M. Motta, M. Peitz, & H. Schweitzer, eds.), Cambridge, Cambridge University Press (2022), 16, 59 (arguing that, while it is unclear to what extent products or ideas are worth protecting and/or can be protected from sherlocking and whether such cloning is really harmful to consumers, this is clearly an area where an antitrust investigation for abuse of dominant position would not help).

[103] Khan, supra note 101, 780 and 783 (arguing that Amazon’s conflicts of interest tarnish the neutrality of the competitive process and that the competitive implications are clear, as Amazon is exploiting the fact that some of its customers are also its rivals).

[104] Servizio Elettrico Nazionale, supra note 55, para. 85.

[105] Post Danmark I, supra note 55, para. 22.

[106] Iba?n?ez Colomo, supra note 55, 21-22.

[107] Id.

[108] See, e.g., DMA, supra note 4, Recital 5 (complaining that the scope of antitrust provisions is “limited to certain instances of market power, for example dominance on specific markets and of anti-competitive behaviour, and enforcement occurs ex post and requires an extensive investigation of often very complex facts on a case by case basis.”).

[109] U.S. Federal Trade Commission, et al. v. Amazon.com, Inc., supra note 23.

[110] Khan, supra note 101.

[111] Khan, supra note 22, 1003, referring to Amazon, Google, and Meta.

Go big or go home, they say. It’s not really an either-or choice: one can go big, and then go home. Not infrequently, an attempt to go big is what gets one sent home.

The Federal Trade Commission (FTC) swung for the fences in April 23’s open meeting. On purely partisan lines, the commission voted 3-2 to adopt a competition regulation that bans the use of noncompete agreements (NCAs) across much of the U.S. economy. With a few small wrinkles, it’s just what the FTC had proposed to do—also by a purely partisan vote—in its January 2023 notice of proposed rulemaking (NPRM).

Read the full piece here.

Resumen Ejecutivo

Agradecemos la oportunidad de presentar nuestros comentarios al Informe Preliminar (en adelante, el Informe[1]) publicado por la Autoridad Investigadora (AI) de la Comisión Federal de Competencia Económica (COFECE), luego de culminada su investigación sobre la competencia en el mercado de comercio electrónico. El International Center for Law and Economics (“ICLE”) es un think-tank global de políticas públicas e investigación, no partidista y sin fines de lucro, fundado con el objetivo de construir las bases intelectuales para políticas sensatas y económicamente fundamentadas. ICLE promueve el uso de las metodologías del Análisis Económico del Derecho para informar los debates de política pública, y tiene una larga experiencia en la evaluación de leyes y políticas de competencia. El interés de ICLE es garantizar que la aplicaciones de las leyes de competencia y el impacto de la regulación sobre la competencia se base en reglas claras, precedentes establecidos, evidencia y un análisis económico sólido.

El Informe ha sido emitido en el marco de un procedimiento contemplado en la Ley de Competencia de México, conocido como “Investigaciones para Determinar Facilidades Esenciales o Barreras a la Competencia”, en virtud del cual COFECE iniciará una investigación “cuando existan elementos que sugieran que no existen condiciones efectivas de competencia en un mercado”. La AI es responsable de emitir un informe de investigación preliminar y proponer medidas correctivas. El Pleno de la COFECE podrá posteriormente adoptar o rechazar la propuesta.

Nuestros comentarios sugieren respetuosamente a los Comisionados de la COFECE no seguir las recomendaciones de la AI en lo que se refiere a la competencia en el mercado de comercio electrónico. Si bien el Informe es un esfuerzo loable por comprender el mercado de marketplaces y proteger la competencia en él —competencia que ha sido beneficiosa para los consumidores mexicanos—sus conclusiones y recomendaciones no siguen la evidencia ni los métodos y principios generalmente aceptados del Derecho de la Libre Competencia.

En primer lugar, de acuerdo con la Ley de Competencia mexicana, cualquier investigación debe apuntar a eliminar “restricciones al funcionamiento eficiente de los mercados”. Sin embargo, según información disponible públicamente, Amazon y Mercado Libre (MeLi), las dos empresas identificadas como “dominantes” en el informe, debe su éxito al hecho de que gozan de la preferencia de los consumidores, y cuentan la confianza de éstos, antes que a la existencia de “barreras a la competencia”. El informe también parece ignorar los beneficios para el consumidor que ofrecen los modelos de negocio de Amazon y MeLi (es decir, productos y servicios más baratos, entrega rápida, acceso más fácil a la información para comparar productos, etc.).

En segundo lugar, el Informe define un mercado relevante irrazonablemente “estrecho”, que incluye sólo “mercados en línea en múltiples categorías de productos y que operan a nivel nacional”. Esta definición de mercado ignora a otros minoristas en línea (como Shein o Temu) porque venden una selección menos amplia de productos, agregadores de comercio electrónico (como Google Shopping)  porque son “meros intermediarios” que conectan compradores y vendedores, sitios propios de vendedores (como Apple o Adidas) porque no operan en diversas categorías, así como tiendas físicas. Esta definición, artificialmente estrecha, distorsiona drásticamente la participación de mercado de Amazon y MeLi, haciéndola parecer mucho mayor de lo que realmente es.

En tercer lugar, esta distorsionada definición del mercado relevante conduce hacia la errada conclusión de que Amazon y MeLi ostentan una posición dominante, un requisito previo para la adopción de medidas aplicables a dichas empresas. Esta conclusión es errada porque el Informe utiliza un concepto de “barreras a la entrada” que parece considerar cualquier costo que enfrenten los nuevos participantes como una barrera a la entrada que protege a Amazon y MeLi de la competencia. Como explicamos más adelante, estos costos son costos comerciales regulares, no barreras específicas del mercado que impiden la entrada de nuevos actores. En efecto, la evidencia muestra que, efectivamente, han estado entrando regularmente nuevas empresas en el mercado.

Finalmente, el informe sugiere remedios que perjudicarían a los consumidores en lugar de beneficiarlos. El Informe sugiere obligar a Amazon y MeLi a separar sus servicios de streaming (como Amazon Prime) de sus programas de fidelización. Esto perjudicaría a los consumidores que actualmente disfrutan de beneficios combinados a un precio más bajo. Además, exigir que las plataformas sean interoperables conlas otros proveedores de logística sofocaría la innovación y la inversión, ya que estas plataformas no aprovecharían los beneficios de su infraestructura digital. Esta interoperabilidad obligatoria también podría perjudicar a los consumidores, quienes pueden atribuir fallas relacionadas con la entrega a los marketplaces, en lugar de a los proveedores de logística responsables de ellas, creando así un típico problema de “free-riding”.

I. Introducción

El Informe ha sido emitido en el marco de un procedimiento contemplado en el artículo 94 de la Ley de Competencia de México, conocido como “Investigaciones para Determinar Facilidades Esenciales o Barreras a la Competencia”. Según esta disposición, la COFECE iniciará una investigación “cuando existan elementos que sugieran que no existen condiciones de competencia efectiva en un mercado”. La investigación debería apuntar a determinar la existencia de “barreras a la competencia y al libre acceso a los mercados” o de “facilidades esenciales”.

La AI es responsable de emitir un informe de investigación preliminar y proponer medidas correctivas. El Informe deberá identificar el mercado objeto de la investigación con el fin de que cualquier persona interesada aporte elementos durante la investigación. Una vez finalizada la investigación, la AI emitirá un Informe, incluyendo las medidas correctivas que se consideren necesarias para eliminar las restricciones al funcionamiento eficiente del mercado. Los agentes económicos potencialmente afectados por las medidas correctivas propuestas tienen la oportunidad de comentar y aportar evidencia. El Pleno de la COFECE puede posteriormente adoptar o rechazar las propuestas.

Entendemos y elogiamos las preocupaciones de la COFECE sobre la competencia en los mercados, pero cualquier investigación debe apuntar a eliminar “las restricciones al funcionamiento eficiente de los mercados”, el propósito de la Ley de Competencia de México, según su Artículo 2. Las conclusiones y recomendaciones del Informe no parecen considerar las eficiencias generadas por los marketplaces líderes, lo que puede explicar por qué gozan de la preferencia de los consumidores.

De hecho, según información públicamente disponible, Amazon y MeLi, las dos empresas identificadas como “dominantes” en el informe, son debe su éxito a la preferencia y confianza de los consumidores. Según una fuente[2], por ejemplo:

La popularidad del marketplace de Amazon en México se basa en gran medida en la satisfacción del cliente. Amazon es la segunda plataforma de comercio electrónico más apreciada en México, según  una encuesta de Kantar, con un índice de satisfacción de 8.5 sobre 10. El feedback de los consumidores también es esencial para el éxito del mercado de Amazon, ya que permite a los compradores realizar compras exitosas. . Las reseñas de los consumidores también son esenciales para el éxito del marketplace de Amazon, ya que permiten a los compradores realizar compras informadas. Las buenas críticas destacan la velocidad y confiabilidad de Amazon (el énfasis es nuestro).

Según un estudio publicado por el Instituto Federal de Telecomunicaciones (IFT) sobre el uso de plataformas digitales durante la pandemia de Covid-19, el 75.8% de los usuarios afirma estar satisfecho o muy satisfecho con las aplicaciones y páginas web que utiliza para comprar en línea. Precisamente MeLi y Amazon fueron las plataformas más mencionadas con un 67,3% y un 30,3% de menciones, respectivamente.[3]

El informe también parece ignorar los beneficios para el consumidor que ofrecen los modelos de negocio de Amazon MeLi (es decir, productos y servicios más baratos, entrega rápida, acceso más fácil a la información para comparar productos, etc.).

El Informe encuentra evidencia preliminar de que “no existen condiciones de competencia efectiva en el Mercado Relevante de Vendedores y en el Mercado Relevante de Compradores”, así como la existencia de tres “Barreras a la Competencia” que generan restricciones al funcionamiento eficiente de dichos mercados.

Las supuestas barreras consisten en:

1. “Artificialidad” en algunos componentes de los programas de fidelización de los mercados, ya que los servicios integrados en programas de fidelización que, sin estar directamente vinculados a la capacidad del mercado para llevar a cabo o facilitar transacciones entre compradores y vendedores, y que, conjuntamente con los “efectos de red” que se generan en las plataformas, afectan el comportamiento de los compradores;
2. “Opacidad” en el Buy Box[4], considerando que los vendedores en los mercados no tienen acceso a las formas en que Amazon y MeLi eligen los productos colocados en el Buy Box; y
3. Soluciones logísticas, ya que Amazon y MeLi no permiten que todos los proveedores de servicios logísticos accedan a las interfaces de programación de aplicaciones (APIs, por sus siglas en inglés) de sus plataformas, sino que “atan” los servicios de sus marketplaces con sus propios servicios de entrega.

Para eliminar estas supuestas barreras, el Informe propone tres remedios que se aplicarían a Amazon y MeLi:

1. La obligación de “desasociar” los servicios de streaming de los programas de membresía y/o fidelización (por ejemplo, Amazon Prime), así como de cualquier otro servicio no relacionado con servicio de marketplace (por ejemplo, juegos y música, entre otros);
2. La obligación de realizar todas las acciones que sean “necesarias y suficientes” para permitir a los vendedores ajustar libremente sus estrategias comerciales con pleno conocimiento de los procesos de selección del Buy Box; y
3. La obligación de permitir que empresas de logística de terceros se integren en las plataformas de Amazon y MeLi a través de sus respectivas API, y de garantizar que la selección de Buy Box no dependa de la elección del proveedor de logística a menos que afecte los “criterios de eficiencia y rendimiento”.

No estamos de acuerdo con las conclusiones y recomendaciones del Informe por las razones que se exponen a continuación:

II. Una definición del mercado relevante artificialmente restrictiva

Antes que un procedimiento de “abuso de posición dominante”, la investigación de mercado que condujo a la emisión del Informe fue el “procedimiento cuasi-regulatorio” descrito líneas arriba. Pero la redacción del artículo 94 de la Ley Federal de Competencia Económica de México (bajo la cual se autorizó la investigación) sugiere contundentemente que la COFECE tiene que establecer (no simplemente afirmar que existe) una “ausencia de competencia efectiva”. Esto implicaría que existe una “falla del mercado” que impide la competencia, o que existe un agente económico con una posición dominante. El informe intenta mostrar esto último, pero lo hace de manera poco convincente.

Para determinar si una determinada empresa tiene una “posición dominante” (poder monopólico), las agencias de competencia deben primero definir un “mercado relevante” en el que la conducta o modelo de negocio cuestionado tenga un efecto. Aunque es común que las autoridades antimonopolio definan de manera restrictiva los mercados relevantes (a menudo, cuanto más pequeño es el mercado, más fácil es descubrir que el hipotético monopolista es, de hecho, un monopolista), creemos que el Informe va demasiado lejos en el caso que nos ocupa.

El Informe parece seguir el (mal) ejemplo de su homólogo estadounidense, la Comisión Federal de Comercio (FTC). Como explica Geoffrey Manne en un informe sobre la reciente denuncia[5] por monopolización de la FTC contra Amazon:

La denuncia de la FTC contra Amazon describe dos mercados relevantes en los que supuestamente se han producido daños anticompetitivos: (1) el “mercado de los grandes supermercados en línea” y (2) el “mercado de servicios de marketplaces en línea”.

… la demanda de la FTC limita el mercado de los supermercados en línea únicamente a las tiendas en línea, y lo limita aún más a las tiendas que tienen una “gran amplitud y profundidad” de productos. Esto último significa tiendas en línea que venden prácticamente todas las categorías de productos (“como artículos deportivos, artículos de cocina, indumentaria y electrónica de consumo”) y que también tienen una amplia variedad de marcas dentro de cada categoría (como Nike, Under Armour, Adidas , etc.). En la práctica, esta definición excluye los canales privados de marcas líderes (como la tienda en línea de Nike), así como las tiendas en línea que se centran en una categoría particular de productos (como el enfoque de Wayfair en muebles). También excluye las tiendas físicas que todavía representan la gran mayoría de las transacciones minoristas. Las empresas con importantes ventas en línea y físicas podrían contar, pero sólo sus ventas en línea se considerarían parte del mercado.[6]

El Informe hace algo similar. Define dos mercados relevantes;

1. Mercado Relevante de Vendedores: consiste en el servicio de marketplaces para vendedores, con dimensión geográfica nacional.
2. Mercado Relevante de Compradores: consiste en el servicio de marketplaces y tiendas en línea multicategoría para compradores en el territorio nacional, que incluye modelos de negocio de marketplaces (híbridos y no híbridos) y tiendas en línea con múltiples categorías de productos.

Ambos mercados, sin embargo, están definidos de forma irrazonablemente restrictiva. Al alegar que los grandes mercados en línea “se han posicionado como una importante opción”, la agencia ignora la competencia de otros minoristas, tanto on-line como off-line. El Informe ignora otras plataformas de comercio electrónico, como Shein[7] y Temu[8] de China, que han ganado tanto popularidad como participación en el mercado publicitario. El Informe tampoco menciona los agregadores de comercio electrónico como Google Shopping, que permiten a los consumidores buscar casi cualquier producto, compararlos y encontrar ofertas competitivas; así como la competencia de sitios web de comercio electrónico propiedad de los propios vendedores, como Apple o Adidas.

Esta exclusión es, por decir lo menos, discutible. Para competir con una “super-tienda online”, las tiendas online no tienen que contar necesariamente con la misma gama de productos que tienen Amazon o MeLi, porque “los consumidores compran productos, no tipos de tiendas”[9]:

De hecho, parte de la supuesta ventaja de las compras en línea (cuando es una ventaja) es que los consumidores no tienen que agrupar las compras para minimizar los costos de transacción de visitar físicamente a un minorista tradicional. Mientras tanto, otra parte de la ventaja de las compras en línea es la facilidad de comparar precios: los consumidores ni siquiera tienen que cerrar una ventana de Amazon en sus computadoras para verificar alternativas, precios y disponibilidad en otros lugares. Todo esto socava la afirmación de que el “one-stop shopping” es una característica definitoria del supuesto mercado relevante.[10]

El Informe también parece ignorar la competencia que representan por los minoristas tradicionales, que disciplinarían cualquier intento de Amazon o Meli de explotar su poder de mercado. Por supuesto, cuántos consumidores podrían cambiar de proveedor y en qué medida eso afectaría a los marketplaces en cuestión son cuestiones empíricas. Pero no hay duda de que al menos algunos consumidores podrían cambiarse. Sobre el particular, es importante recordar que la competencia se produce en los márgenes. En consecuencia, no es necesario que todos los consumidores cambien para afectar las ventas y las ganancias de una empresa.

El informe hace mención a las ventas a través de las redes sociales, pero no las incluye en el mercado relevante. Desde nuestro punto de vista las redes sociales como canal de ventas deben considerarse como un sustituto razonable de Amazon y Meli, considerando que el 85% de las pequeñas y medianas empresas recurrieron a Facebook, Instagram y WhatsApp durante la pandemia de Covid-19 para publicitar y vender sus productos.[11] La Guía Comercial publicada por la Administración de Comercio Internacional del Departamento de Comercio de Estados Unidos para México informa que “los compradores mexicanos están muy influenciados por las redes sociales a la hora de realizar compras. El cuarenta y tres por ciento de los compradores de comercio electrónico han comprado a través de comercio conversacional o comercio electrónico (ventas a través de Facebook o WhatsApp) y el 29 por ciento a través de “lives” o transmisiones en vivo”.[12]

También hay evidencia empírica de que Amazon no sólo compite, sino que compite intensamente con otros canales de distribución, y tiene un efecto neto positivo en el bienestar de los consumidores mexicanos. Un artículo[13] de 2022 encontró que:

1. El comercio electrónico y los minoristas tradicionales en México operan en un único mercado minorista, altamente competitivo; y,
2. La entrada de Amazon ha generado un importante efecto procompetitivo al reducir los precios minoristas de las tiendas físicas y aumentar la selección de productos para los consumidores mexicanos.

El mismo documento concluye que la entrada al mercado de productos vendidos y entregados por Amazon dio lugar a reducciones de precios de hasta un 28%.[14] A la luz de esta evidencia, creemos que es un error suponer que mercados como Amazon y MeLi no compiten con otros minoristas. Por tanto, estos últimos deberían incluirse en el mercado relevante.

Por si esta estrecha definición del mercado relevante no fuera suficiente, el informe combina las cuotas de mercado de Amazon y MeLi, para concluir que, ambas empresas ostentan más del 85% de las ventas y transacciones en el Mercado Relevante de Vendedores durante el periodo analizado, y el Índice Herfindahl-Hirschman (HHI) supera los dos mil puntos (por tanto, el mercado sería “altamente concentrado”). Asimismo, en el “Mercado Relevante de Compradores” el HHI se estimó, para 2022, en 1614 unidades, y los tres principales participantes concentran el 61% (sesenta y uno por ciento) del mercado. En ambos mercados, los demás participantes tienen una participación significativamente menor.

Pero ¿por qué combinar la cuota de mercado de Amazon y MeLi, como si actuaran como una sola empresa? Dada la definición de mercado de la AI, Amazon y MeLi (por lo menos) estarían compitiendo entre sí. El continuo crecimiento del mercado y la evolución de las respectivas cuotas de mercado de las empresas indican que así es. Un artículo de 2020, por ejemplo, informa que:

Cadenas de autoservicios, departamentales y nativas digitales tienen un objetivo en común: ser quien acapare más mercado en el comercio electrónico en México. En esta batalla, Amazon y Mercado Libre se ponen a la cabeza, pues son las dos firmas que concentran casi un cuarto del total de mercado de este rubro.

Al cierre de 2019, Amazon contaba con un cuota de mercado del 13.4%, que lo colocaba al frente de los demás competidores. Ese mismo año, con 11.4% se encontraba Mercado Libre”.[15]

También es inconsistente con la hipótesis de un mercado con “barreras a la competencia” el hecho de que el mercado de comercio electrónico está creciendo continuamente en México, que ahora es el segundo mercado de comercio electrónico más grande de América Latina.[16]

Es sólo sobre la base de una descripción distorsionada del mercado relevante que puede arribarse a la conclusión de que Amazon y MeLi tienen “el poder de fijar precios” (otra forma de decir “poder de monopolio”). Teniendo en cuenta lo explicado líneas arriba, esa conclusión debe rechazarse.

III. Una injustificada determinación de la existencia de una “posición dominante”

Incluso si se acepta la definición de mercado del Informe y, por lo tanto, se considera que Amazon y MeLi tienen una participación de mercado significativa, ambas empresas aún podrían enfrentar la competencia de nuevos participantes, atraídos al mercado por los precios más altos (u otras condiciones “explotativas”) que cobrarían a los consumidores. Según el Informe, sin embargo, existen varias barreras que obstaculizan “la entrada y la expansión” en ambos mercados relevantes. Entre ellos, el Informe menciona, por ejemplo:

1. Barreras de entrada relacionadas con los altos montos de inversión para el desarrollo del mercado, así como para el desarrollo de herramientas tecnológicas integradas al mismo…. Además, se requieren altos montos de inversión relacionados con el desarrollo de infraestructura logística y en capital de trabajo relacionado con fondos necesarios para cubrir gastos operativos, inventarios, cuentas por cobrar y otros pasivos corrientes; y,
2. Barreras de entrada relacionadas con inversiones considerables en publicidad, marketing y relaciones públicas. Para atraer un número importante de compradores y vendedores a la plataforma que garantice el éxito del negocio, es imperativo contar con una marca bien posicionada, reconocida y con buena reputación.

Sin embargo, y contrariamente a lo que afirma el Informe, estos son costos de hacer negocios, no “barreras de entrada”. Como explicó convincentemente Richard Posner, el término “barrera de entrada” se utiliza comúnmente para describir cualquier obstáculo o costo que enfrentan los entrantes al mercado[17]. Pero según esta definición (aparentemente adoptada por el Informe), cualquier costo es una barrera de entrada. Basándose en la definición más precisa de George Stigler, Posner sugirió definir una barrera de entrada como “una condición que impone a un nuevo entrante costos de producción a largo plazo más altos que los que soportan las empresas que ya están en el mercado”.[18] En otras palabras, bien entendida, una barrera a la entrada es un costo asumido por los nuevos participantes, que no fue asumido por los ya actores establecidos.

La definición de “barreras de entrada” de la AI también contradice la definición dada por la sección IV del artículo 3 de la Ley de Competencia de México, según la cual una barrera a la competencia es:

Cualquier característica estructural del mercado, acto o hecho realizado por Agentes Económicos con el propósito o efecto de impedir el acceso a competidores o limitar su capacidad para competir en los mercados; que impida o distorsione el proceso de competencia y libre acceso a los mercados, así como cualquier disposición legal emitida por cualquier nivel de gobierno que impida o distorsione indebidamente el proceso de competencia y libre acceso a los mercados.

Por supuesto, Amazon y MeLi tienen algunas ventajas sobre otras empresas en términos de infraestructura, conocimientos, escala y goodwill. Pero esas ventajas no cayeron del cielo. Amazon y MeLi los construyeron con el tiempo, invirtiendo (y continuando invirtiendo) a menudo enormes cantidades para lograrlo. Incluso los “efectos de red”, a menudo considerados como una fuente inevitable de monopolio, no son un obstáculo definitivo para la competencia. Como han señalado Evans y Schmalensee:

la investigación sistemática sobre plataformas en línea realizada por varios autores, incluido uno de nosotros, muestra una considerable rotación en el liderazgo de las plataformas en línea en períodos inferiores a una década. luego está la colección de plataformas muertas o marchitas que salpican este sector, incluidas blackberry y windows en los sistemas operativos de teléfonos inteligentes, aol en mensajería, orkut en redes sociales y yahoo en medios masivos en línea.[19]

La idea de que Amazon y MeLi están protegidas por barreras de entrada también se contradice con la entrada de nuevos rivales, como Shein y Temu.

Como se explicó anteriormente, el Informe también combina erróneamente las participaciones de mercado de Mercado Libre y Amazon, para alcanzar una participación de mercado combinada del 85% (ochenta y cinco por ciento) de las ventas y transacciones en el Mercado Relevante de Vendedores; y luego combina la participación de mercado de los tres principales participantes del mercado en el Mercado Relevante para Compradores para alcanzar una participación de mercado del 61% (sesenta y uno por ciento) del mercado. Esto es muy problemático, ya que esas empresas no son una sola entidad económica y, por lo tanto, presumiblemente (a falta de evidencia de colusión) debe asumirse que compiten entre sí.

En todo caso, las cuotas de mercado producidas por el Informe sólo conducen a un IHH alto, lo que a su vez muestra que el mercado está “altamente concentrado” (si se acepta la estrecha definición de mercado del Informe). Pero la concentración es un pobre indicador del poder de mercado. Los economistas han estudiado la relación entre la concentración y diversos indicios potenciales de efectos anticompetitivos (precio, margen, ganancias, tasa de rendimiento, etc.) durante décadas, y la evidencia empírica es más que suficiente para decir que la concentración podría conducir a problemas de competencia.[20] No es per se una prueba de falta de competencia, y mucho menos de una posición dominante.

Como resumió recientemente Chad Syverson:

Quizás el problema conceptual más profundo de la concentración como medida del poder de mercado es que es un resultado, no un determinante central inmutable de cuán competitivo es una industria o un mercado… Como resultado, la concentración es peor que un simple barómetro poco preciso del poder de mercado. En realidad, ni siquiera podemos saber en general en qué dirección está orientado el barómetro.[21]

IV. Los remedios propuestos van a perjudicar al consumidor antes que beneficiarlo

Incluso si aceptáramos la definición de mercado relevante sugerida por el Informe y su determinación de la existencia de una posición dominante, los remedios propuestos —que podrían resumirse en la separación obligatoria de los servicios de streaming de Amazon y MeLi de sus programas de fidelización (como Prime de Amazon) y hacer que (al menos parte de) sus plataformas sean “interoperables” con otros servicios logísticos—perjudicaría a los consumidores, en lugar de beneficiarlos.

Amazon Prime, por ejemplo, ofrece a los consumidores muchos beneficios atractivos: acceso a streaming de vídeo y música; ofertas y descuentos especiales; y, por último, pero no menos importante, envío gratuito en dos días. Según el Informe, estos “son una estrategia artificial que atrae y retiene a los compradores, a la vez que reduce que los compradores y vendedores usen marketplaces alternativos.”

No está del todo claro qué significa el término “artificial” en este contexto, pero parece implicar algo fuera de los límites de la competencia “natural”. Sin embargo, la estrategia de negocio que describe el Informe es la definición misma de competencia. Las empresas que compiten en un mercado siempre eligen un “paquete” de atributos que combinan en un solo producto. En cierta medida “apuestan” por un conjunto de características (funcionalidad, materiales, términos y condiciones) que implican asumir determinado costos, que luego ofrecen a un precio determinado, que puede ser asumido por clientes dispuestos (o no). Incluso con información imperfecta, los mercados (es decir, los vendedores y los consumidores) son los agentes mejor calificados para “decidir” el nivel apropiado de “agrupación” de un producto, no las agencias de competencia o los tribunales.

Un mandato para desagregar los servicios de streaming en realidad degradaría la experiencia de los consumidores online, quienes tendrían que contratar y pagar esos servicios por separado[22]. La prestación independiente de dichos servicios no se beneficiaría de las economías de escala y alcance de Amazon o MeLi y, por tanto, sería más cara. Ofrecer más beneficios a los consumidores a un precio determinado es lo precisamente lo que queremos que hagan los competidores. Tratar el beneficio para el consumidor como un daño es un contrasentido para el Derecho y las políticas de competencia (y, de hecho, para la noción misma de competencia).

Por otro lado, el informe también propone ordenar la apertura del Buy Box y modificar sus reglas, a fin de que sea neutral para todos los proveedores de logística. Exigir que se permita a dichos proveedores ofrecer sus servicios en Amazon o Mercado Libre equivale a considerar estas plataformas como “operadores comunes”, tal como los legisladores y reguladores hicieron con las antiguas redes de telefonía del siglo XX. Sin embargo, esta clasificación y las reglas que de ella se derivan (neutralidad y regulación de precios, entre otras) fueron diseñadas para mercados con monopolios naturales, donde la competencia no es posible, o incluso indeseable.[23] Pero no hay evidencia de que este sea el caso de los marketplaces de comercio electrónico. Por el contrario, las plataformas digitales son mucho más competitivas. En este contexto, el aplicara éstas las normas del tipo “common carrier” sólo crearía “free-riding” e incentivos negativos para la inversión y la innovación (tanto por parte de los actuales participantes del mercado como de los nuevos entrantes). Los vendedores y proveedores de logística tienen muchas otras opciones para acceder a los consumidores. No existe ninguna justificación económica o legal para ordenar su acceso mandatorio a las plataformas de Amazon o MeLi.

En resumen, las conclusiones erróneas del Informe conducen a soluciones aún peores. Tales soluciones no promoverían la competencia en México ni beneficiarían a los consumidores.

[1] El texto completo de el Informe (en su versión pública) está disponible en el siguiente enlace: https://www.cofece.mx/wp-content/uploads/2024/02/Dictamen_Preliminar_Version_Publica.pdf.

[2] La Patria, ¿Qué tan popular es el marketplace de Amazon en México? (23 Apr. 2023), https://www.lapatria.com/publirreportaje/que-tan-popular-es-el-marketplace-de-amazon-en-mexico.

[3] Instituto Federal de Telecomunicaciones, Adopción, Uso y satisfacción de las aplicaciones y herramientas digitales para compras y banca en línea, videollamadas, redes sociales, salud y trámites gubernamentales en tiempos de Covid-19 (Jan 19, 2022), https://www.ift.org.mx/sites/default/files/contenidogeneral/usuarios-y-audiencias/aplicacionesyherramientasdigitalesentiemposdecovid19.pdf.

[4] El “Buy Box” o, traduciendo literalmente el “Recuadro de compra” es un cuadro que normalmente se encuentra en el lado derecho de la página web del marketplace cuando los clientes buscan un producto. Estar en esta casilla es una ventaja para el vendedor porque no solo resalta su producto, sino que también facilita el proceso de pago. Por supuesto, esto también es una ventaja para los consumidores, que pueden encontrar y comprar productos más rápido.

[5] Ver: https://www.ftc.gov/legal-library/browse/cases-proceedings/1910129-1910130-amazoncom-inc-amazon-ecommerce.

[6] Geoffrey A. Manne, Gerrymandered Market Definitions in FTC v. Amazon (Jan. 26, 2024), https://laweconcenter.org/resources/gerrymandered-market-definitions-in-ftc-v-amazon.

[7] Ver, por ejemplo: Krystal Hu y Arriana McLymore, Exclusive: Fast-fashion giant Shein plans Mexico factory, Reuters (Mayo 24, 2023), https://www.reuters.com/business/retail-consumer/fast-fashion-giant-shein-plans-mexico-factory-sources-2023-05-24.

[8] Ver, por ejemplo: Rising E-commerce Star: The Emergence of Temu in Mexico, BNN (Sep. 25, 2023), https://bnnbreaking.com/finance-nav/rising-e-commerce-star-the-emergence-of-temu-in-mexico.

[9] Geoffrey A. Manne, Ibid.

[10] Ibid.

[11] Expansión, El 85% de las Pymes usa redes sociales para vender en línea (28 Jul. 2021), https://expansion.mx/tecnologia/2021/07/28/el-85-de-las-pymes-usa-redes-sociales-para-vender-en-linea.

[12] International Trade Organization, Mexico – Country Commercial Guide, (Nov. 5, 2023), https://www.trade.gov/country-commercial-guides/mexico-ecommerce.

[13] Raymundo Campos Vázquez et al., Amazon’s Effect on Prices: The Case of Mexico, Centro de Estudios Económicos, Documentos de Trabajo, Nro. II (2022), https://cee.colmex.mx/dts/2022/DT-2022-2.pdf.

[14] Ibid, p. 23.

[15] El CEO, Amazon y Mercado Libre se disputan la corona del comercio electrónico en México (Mar 17, 2020), https://elceo.com/negocios/amazon-y-mercado-libre-se-discuten-la-corona-del-comercio-electronico-en-mexico.

[16] “Over the last few years, online buying and selling have gained considerable ground in Mexico, so much so that the country has positioned itself as the second largest e-commerce market in Latin America. With a rapidly increasing online buying population, it was forecast that nearly 70 million Mexicans would be shopping on the internet in 2023, a figure that would grow by over 26 percent by 2027.”). Stephanie Chevalier, E-commerce market share in Latin American and the Caribbean 2023, by country, Statista, March 25, 2024, https://www.statista.com/statistics/434042/mexico-most-visited-retail-websites.

[17] Richard Posner, Antitrust Law (2nd. Ed. 2001), pp.73-74.

[18] Ibid., p. 74.

[19] David S.Evans and Richard Schmalensee, Debunking the “network effects” bogeyman, Regulation (Winter 2017-2018), at 39, https://www.cato.org/sites/cato.org/files/serials/files/regulation/2017/12/regulation-v40n4-1.pdf.

[20] Sólo para citar alguos de los ejemplos más relevante de una amplia literatura, ver: Steven Berry, Martin Gaynor, & Fiona Scott Morton, Do Increasing Markups Matter? Lessons from Empirical Industrial Organization, 33J. Econ. Perspectives 44 (2019); Richard Schmalensee, Inter-Industry Studies of Structure and Performance, in 2 Handbook of Industrial Organization 951-1009 (Richard Schmalensee & Robert Willig, eds., 1989); William N. Evans, Luke M. Froeb, & Gregory J. Werden, Endogeneity in the Concentration-Price Relationship: Causes, Consequences, and Cures, 41 J. Indus. Econ. 431 (1993); Steven Berry, Market Structure and Competition, Redux, FTC Micro Conference (Nov. 2017), available at https://www.ftc.gov/system/files/documents/public_events/1208143/22_-_steven_berry_keynote.pdf; Nathan Miller, et al., On the Misuse of Regressions of Price on the HHI in Merger Review, 10 J. Antitrust Enforcement 248 (2022).

[21] Chad Syverson, Macroeconomics and Market Power: Context, Implications, and Open Questions 33 J. Econ. Persp. 23, (2019) at 26.

[22] Ver, sobre el particular: Alden Abbott, FTC’s Amazon Complaint: Perhaps the Greatest Affront to Consumer and Producer Welfare in Antitrust History, Truth on the Market (September 27, 2023), https://truthonthemarket.com/2023/09/27/ftcs-amazon-complaint-perhaps-the-greatest-affront-to-consumer-and-producer-welfare-in-antitrust-history.

[23] Ver, por ejemplo: Giuseppe Colangelo y Oscar Borgogno, App Stores as Public Utilities?, Truth on the Market (January 19, 2022), https://truthonthemarket.com/2022/01/19/app-stores-as-public-utilities.

Executive Summary

We are thankful for the opportunity to submit our comments to the Preliminary Report (hereinafter, the Report)[1] published by the Investigative Authority (IA) of the Federal Economic Competition Commission (COFECE, after its Spanish acronym) following its investigation of competition in the retail electronic-commerce market. The International Center for Law & Economics (“ICLE”) is a nonprofit, nonpartisan global research and policy center founded with the goal of building the intellectual foundations for sensible, economically grounded policy. ICLE promotes the use of law & economics methodologies to inform public-policy debates and has longstanding expertise in the evaluation of competition law and policy. ICLE’s interest is to ensure that competition law remains grounded in clear rules, established precedent, a record of evidence, and sound economic analysis.

The Report stems from a procedure included in the Mexican Competition Act, known as “Investigations to Determine Essential Facilities or Barriers to Competition”. COFECE can initiate such investigations “when there are elements suggesting there are no effective competition conditions in a market.” The IA is responsible for issuing a preliminary investigative report and proposing corrective measures. COFECE’s Board of Commissioners can later adopt or reject the proposal.

Our comments respectfully suggest to COFECE Commissioners not to follow the recommendations of the IA concerning competition in the retail electronic-commerce market. While the Report is a laudable effort to understand the market and to protect the competition upon it—competition that has been beneficial to Mexican consumers—its conclusions and recommendations do not follow the evidence and the generally accepted methods and principles of Antitrust laws and best practices.

In first place, under the Mexican Competition Act, investigations should aim to eliminate only “restrictions to the efficient operation of markets”, the purpose of According to publicly available information, however, Amazon and Mercado Libre (MeLi), the two companies identified as “dominant” in the report, owe their success to consumer preferences and trust, rather than “barriers to competition”. Indeed, if these were present, they would lead to consumer dissatisfaction that is simply not the case here. The report also ignores the consumer benefits provided by Amazon and MeLi’s business models (i.e., cheaper products and services, fast delivery, easier access to information to compare products, etc.).

Second, the Report defines an unreasonably narrow relevant market that includes only “online marketplaces in multiple product categories and operating at the national level”. This market definition ignores other online retailers (like Shein or Temu) because they sell a narrower selection of goods?, e-commerce aggregators (like Google Shopping) because they are merely intermediaries that connect buyers and sellers, seller-owned websites (like Apple or Adidas) because they do not sell as many distinct product categories, as well as brick-and-mortar stores. By artificially narrowing the market in this way, the report drastically overstates Amazon and MeLi’s market shares.

Third, this gerrymandered relevant market leads to an artificial finding that Amazon and MeLi are “dominant” marketplaces—a key requirement for subsequent enforcement. This finding is problematic because the Report considers any costs faced by new entrants as “barriers to entry” that insulate the two marketplaces from competition. As we argue below, however, these “barriers” are merely regular business costs that do not prevent new players from entering. To wit, the record shows that new firms regularly enter the market.

Finally, the proposed remedies would harm rather than benefit consumers. The Report suggests forcing Amazon and MeLi to separate their streaming services (like Amazon Prime) from their loyalty programs. This would hurt consumers who currently enjoy bundled benefits at a lower price. Additionally, requiring the platforms to interoperate with other logistics providers would stifle innovation and investment as these platforms wouldn’t reap the benefits of their digital infrastructure. This mandated interoperability could also harm consumers who may attribute delivery-related failings to the marketplaces rather than logistics providers responsible for them, thereby creating a standard free-rider problem.

I. Introduction

The Report has been issued in the context of a procedure contemplated in Article 94 of the Mexican Competition Act, known as “Investigations to Determine Essential Facilities or Barriers to Competition”. According to this provision, COFECE shall initiate an investigation “when there are elements suggesting there are no effective competition conditions in a market”. The investigation should aim to determine the existence of “barriers to competition and free market access” or of “essential facilities”.

An IA is responsible for issuing a preliminary investigative report and to propose corrective measures. The Report must identify the market subject to the investigation with the purpose of allowing any person to provide elements during the investigation. Once the investigation is finished, the IA shall issue a Report, including corrective measures deemed necessary to eliminate the restrictions to the efficient operation of the market. Economic agents potentially affected by corrective measures proposed have the opportunity to comment and provide evidence. COFECE’s Board of Commissioners can later adopt or reject the proposals.

We understand and commend COFECE’s concerns for competition in the marketplaces market, but any investigation should aim to eliminate “restrictions to the efficient operation of markets”, the purpose of the Mexican Competition Act, according to its Article 2[2]. The conclusions and recommendations of the Report do not appear to consider the efficiency of the leading marketplaces, which may explain why consumers routinely choose them over rivals.

Indeed, according to publicly available information, Amazon and MeLi, the two companies identified as “dominant” in the report, owe their success to consumer preferences and trust.  According to one source[3], for instance:

The popularity of the Amazon marketplace in Mexico is largely based on customer satisfaction. Amazon is the second most appreciated e-commerce platform in Mexico, according to a Kantar survey, with a satisfaction index of 8.5 out of 10. Consumer feedback is also essential to the success of the Amazon marketplace, as it allows buyers to make successful purchases. Consumer reviews are also essential to the success of the Amazon marketplace, allowing buyers to make informed purchases. Good reviews highlight Amazon’s speed and reliability [emphasis added].

According to a study published by the Federal Institute of Telecommunications (IFT, after its Spanish acronym) about the use of digital platforms during the Covid-19 pandemic, 75.8% of users claim to be satisfied or very satisfied with the applications and webpages they use to buy online. Moreover, MeLi and Amazon were the most mentioned platforms with 67.3% and 30.3% of mentions, respectively.[4]

The report also appears to ignore the consumer benefits provided by Amazon MeLi’s business models (i.e., cheaper products and services, fast delivery, easier access to information to compare products, etc.).

The Report finds preliminary evidence to support the notion that “there are no conditions of effective competition in the Relevant Market of Sellers and in the Relevant Market of Buyers,” as well as the existence of “three Barriers to Competition” that generate restrictions on the efficient functioning of said markets.

The alleged barriers consist of:

1. “Artificiality” in some components of the marketplaces’ loyalty programs (services embedded in loyalty programs that—without being directly linked to the marketplace’s ability to carry out or facilitate transactions between buyers and sellers, and coupled with “network effects”—affect buyers’ behavior);

2. “Buy Box opacity”[5] (sellers on the marketplaces don’t have access to the ways that Amazon and MeLi choose the products placed into the Buy Box); and

1. “Logistic solutions foreclosure,” because Amazon and MeLi don’t allow all logistics providers to access their platforms’ Application Programming Interfaces (APIs), but rather bundle marketplace services with their own fulfillment services.

To eliminate these alleged barriers, the Report proposes three remedies, to be applied to Amazon and MeLi:

1. An obligation to “disassociate” streaming services from membership and/or loyalty programs (e.g., Amazon Prime), as well as any other service unrelated to use of the marketplace (e.g., games and music, among others);
2. An obligation to carry out all actions that are “necessary and sufficient” to allow sellers to freely adjust their commercial strategies with full knowledge of the Buy Box selection processes; and
3. An obligation to allow third-party logistics companies to integrate into the platform through their respective APIs, and to ensure that Buy Box selection doesn’t depend on the choice of logistics provider unless it affects “efficiency and performance criteria.”

We disagree with the findings and recommendations of the Report for the reasons stated below:

II. An Unreasonably Narrow Market Definition

Rather than an “abuse of dominance” procedure, the market investigation that led to the report was a “quasi-regulatory procedure.” But the wording of Article 94 of the Mexican Federal Economic Competition Act (under which the investigation was authorized) strongly suggests that COFECE has to establish (not simply assert) an “absence of effective competition.” This would entail either that there is a “market failure” that impedes competition, or that there is an economic agent with a dominant position. The report unconvincingly tries to show the latter.

To determine if any given company has a “dominant position” (monopoly power), competition agencies must first define a “relevant market” in which the challenged conduct or business model has an effect. Although it is common for antitrust enforcers to define relevant markets narrowly (often, the smaller the market, the easier it is to find that the hypothetical monopolist is, in fact, a monopolist), we think the Report goes too far in the case at hand.

The Report appears to follow the bad example of its American counterpart, the Federal Trade Commission (FTC). As Geoffrey Manne explains in an Issue Brief about the FTC’s recent monopolization complaint[6] against Amazon the agency:

The FTC’s complaint against Amazon describes two relevant markets in which anticompetitive harm has allegedly occurred: (1) the “online superstore market” and (2) the “online marketplace services market.”

… the FTC’s complaint limits the online-superstore market to online stores only, and further limits it to stores that have an “extensive breadth and depth” of products. The latter means online stores that carry virtually all categories of products (“such as sporting goods, kitchen goods, apparel, and consumer electronics”) and that also have an extensive variety of brands within each category (such as Nike, Under Armor, Adidas, etc.). In practice, this definition excludes leading brands’ private channels (such as Nike’s online store), as well as online stores that focus on a particular category of goods (such as Wayfair’s focus on furniture). It also excludes the brick-and-mortar stores that still account for the vast majority of retail transactions. Firms with significant online and brick-and-mortar sales might count, but only their online sales would be considered part of the market. [7]

The Report does something similar. It defines two relevant markets;

1. Sellers Relevant Market: consists of the marketplace service for sellers, with a national geographical dimension.
2. Buyers Relevant Market: consists of the service of marketplaces and multi-category online stores for buyers in the national territory, which includes marketplace business models (hybrid and non-hybrid) and online stores with multiple categories of products.

Both markets, however, are defined in an unreasonably narrow way. By alleging that large online marketplaces “have positioned themselves as an important choice,” the agency ignores competition from other online and offline retailers. The Report ignores other e-commerce platforms—like China’s Shein[8] and Temu[9]—that have gained both popularity and advertising-market share. The report also neglects to mention e-commerce aggregators like Google Shopping, which allow consumers to search for almost any product, compare them, and find competitive offers; as well as competition from e-commerce websites owned by sellers, such as Apple or Adidas.

This exclusion seems wrong. To compete with and “online superstores”, online stores do not need the scope of products that Amazon or MeLi have, because “consumers buy products, not store types”[10]:

Indeed, part of the purported advantage of online shopping—when it’s an advantage—is that consumers don’t have to bundle purchases together to minimize the transaction costs of physically visiting a brick-and-mortar retailer. Meanwhile, another part of the advantage of online shopping is the ease of comparison shopping: consumers don’t even have to close an Amazon window on their computers to check alternatives, prices, and availability elsewhere. All of this undermines the claim that one-stop shopping is a defining characteristic of the alleged market.[11]

The Report also appears to ignore the competitive constraints imposed by brick-and-mortar retailers, especially if Amazon or MeLi tried to exploit their market power. Of course, how many consumers might switch, and the extent to which that would affect the marketplaces, are empirical questions. But there is no question that some consumers might switch. In that respect, it is important to remember that competition takes place on the margins. Accordingly, it is not necessary for all consumers to switch to affect a company’s sales and profits.

The report does mention selling through social media but does not include such sales in the relevant market. We think that social media should as a sales channel should be considered as reasonable substitute for Amazon and MeLi, considering the fact that 85% of small and medium enterprises turned to Facebook, Instagram, and WhatsApp during the Covid-19 pandemic to advertise and sell their products.[12] The Commercial Guide for Mexico published by the U.S. Department of Commerce’s International Trade Administration reports that “Mexican buyers are highly influenced by social networks when making purchases. Forty-three percent of eCommerce buyers have bought via Conversational Commerce or C-commerce (selling via Facebook or WhatsApp), and 29 percent through “lives” or livestreams”.[13]

There is also empirical evidence that Amazon not only competes, but competes intensively with other distribution channels, and has a net-positive welfare effect on Mexican consumers. A 2022 paper[14] found that:

1. E-commerce and brick-and-mortar retailers in Mexico operate in a single, highly competitive retail market; and
2. Amazon’s entry has generated a significant pro-competitive effect by reducing brick-and-mortar retail prices and increasing product selection for Mexican consumers.

The paper finds the market entry of products sold and delivered by Amazon gave rise to price reductions of up to 28%.[15] In light of this evidence, we think that is wrong to assume that marketplaces like Amazon and MeLi do not compete with other retailers. The latter should thus be included in the relevant market.

As if this narrow definition were not enough, the report conflates Amazon and MeLi’s market shares, to conclude that, together, both hold more than 85% of the sales and transactions in the Relevant Seller Market during the period analyzed and the Herfindahl-Hirschman Index (HHI) exceeds two thousand points (therefore, the market is highly concentrated). Likewise, in the “Relevant Buyers Market,” the HHI was estimated, for 2022, at 1,614 units and the main three participants concentrate 61% (sixty-one percent) of the market. In both markets, the other participants have a significantly smaller share.

But why combine the market share of Amazon and MeLi, as if they were acting as a single firm? Given the IO’s market definition, it must at least be the case that Amazon and MeLi at least competing with each other. The market’s continuous growth and the evolution of the companies’ respective market shares indicate that they do. A news article from 2020, for instance, reports that:

Supermarkets, department stores and digital-native chains have a common goal: to be the one that captures the most market in electronic commerce in Mexico. In this battle, Amazon and Mercado Libre take the lead, as they are the two firms that concentrate almost a quarter of the total market in this area.

At the end of 2019, Amazon had a market share of 13.4%, which placed it ahead of other competitors. That same year, Mercado Libre was with 11.4%.[16]

Also inconsistent with the hypothesis of a market with “barriers to competition” is the fact that the e-commerce market is continuously growing (and adding market players) in Mexico, which is now the second-largest e-commerce market in Latin America.[17]

It is only on the basis of this distorted depiction of the market that the Report reaches the conclusion that Amazon and MeLi have “the power to fix prices” (another form of saying “monopoly power”). Given what precedes, that conclusion should be rejected.

III. An Unwarranted Finding of a ‘Dominant Position’

Even if one accepts the Report’s market definition, and Amazon and MeLi thus have a significant market share, both firms could still face competition from new entrants, attracted to the market by the higher prices (or other “exploitative” conditions) charged to consumers. According to the Report, alas, there are various barriers to hinder “the entry and expansion” in both relevant markets. Among them, the Report mentions, for instance:

1. Barriers to entry related to the high amounts of investment for the development of the marketplace, as well as for the development of technological tools integrated into it…. In addition, high investment amounts are required related to the development of logistics infrastructure and in working capital related to funds necessary to cover operating expenses, inventories, accounts receivable and other current liabilities; and
2. Barriers to entry related to considerable investments in advertising, marketing and public relations. To attract a significant number of buyers and sellers to the platform that guarantees the success of the business, it is imperative to have a well-positioned, recognized brand with a good reputation.

Contrary to what the report claims, however, these are costs, not “barriers to entry.” As Richard Posner convincingly explained, the term “barrier to entry” is commonly used to describe any obstacle or cost faced by entrants. [18] But by this definition (embraced by the Report, apparently), any cost is a barrier to entry. Relying on George Stigler’s more precise definition, Posner suggested defining a barrier to entry as “a condition that imposes higher long-run costs of production on a new entrant than are borne by the firms already in the market.”[19] In other words, properly understood, a barrier to entry is a cost borne by new entrants that was not borne by incumbents.

The authority’s definition of barriers to entry is also at odds with the definition given by the Section IV of Article 3 of the Mexican Competition Act, according to which a barrier to competition is:

Any structural market characteristic, act or deed performed by Economic Agents with the purpose or effect of impeding access to competitors or limit their ability to compete in the markets; which impedes or distorts the process of competition and free market access, as well as any legal provision issued by any level of government that unduly impedes or distorts the process of competition and free market access.

Of course, Amazon and MeLi have some advantages over other firms in terms of their infrastructure, know-how, scale, and goodwill. But those advantages didn’t fall from the sky. Amazon and MeLi built them over time, investing (and continuing to invest) often enormous amounts to do so. Even “network effects” often considered as an inevitable source of monopoly, are not a definite obstacle to competition. As Evans and Schmalensee, have pointed out:

Systematic research on online platforms by several authors, including one of us, shows considerable churn in leadership for online platforms over periods shorter than a decade. Then there is the collection of dead or withered platforms that dot this sector, including Blackberry and Windows in smartphone operating systems, AOL in messaging, Orkut in social networking, and Yahoo in mass online media.^[20]

The notion that Amazon and MeLi are shielded by barriers to entry is also contradicted by the entry of new rivals, such as Shein and Temu.

As explained above, the Report also erroneously conflates the market shares of Mercado Libre and Amazon, to reach a combined market share of 85% (eighty-five percent) of sales and transactions in the Sellers Relevant Market; and then combines the market share of the main three market participants in the Buyers Relevant Market to reach a market share of 61% (sixty-one percent) of the market. This is highly problematic as those firms are not a single economic entity, they thus presumably compete against each other.

If anything, the market shares produced by the Report only lead to a high HHI, which in turn shows that the market is “highly concentrated” (if one accepts the Report’s narrow market definition). But concentration is a poor proxy for market power. Economists have been studying the relationship between concentration and various potential indicia of anticompetitive effects—price, markup, profits, rate of return, etc.—for decades, and the empirical evidence is more than enough to say that concentration could lead to competition problems. ^[21] It is not per se evidence of a lack of competition, let alone a dominant position.

As Chad Syverson recently summarized:

Perhaps the deepest conceptual problem with concentration as a measure of market power is that it is an outcome, not an immutable core determinant of how competitive an industry or market is… As a result, concentration is worse than just a noisy barometer of market power. Instead, we cannot even generally know which way the barometer is oriented.[22]

IV. The Proposed Remedies Would Harm, Rather than Benefit, Consumers

Even if one accepts the Report’s suggested market definition and its assessment of market power, the report’s proposed remedies—which could be summarized as the mandated unbundling of Amazon’s and MeLi’s streaming services from their loyalty programs (like Amazon’s Prime) and to make (at least part of) their platforms “interoperable” with other logistic services—would harm consumers, rather than benefit them.

Amazon Prime, for instance, provides consumers with many attractive benefits: access to video and music streaming; special deals and discounts; and last, but not least, two-day free shipping. According to the Report, “this is an artificial strategy that attracts and retains buyers and, at the same time, hinders buyers and sellers from using alternative marketplaces.”

It’s not entirely clear what “artificial” means in this context, but it appears to imply something outside of the bounds of “normal” competition. Yet what the Report describes is the very definition of competition. Firms competing in a market always choose to combine a “bundle” of features into a single product. They to some extent “bet” on a bundle of features (functionality, materials, terms and conditions) that imply assuming some costs, that they later offer at a given price, that may be met by willing customers (or not). Even with imperfect information, markets (that is, sellers and customers) are the best qualified agents to “decide” the appropriate level of “bundling” on a product, not competition agencies or courts.

A mandate to unbundle streaming services would degrade the online experience of consumers, who would instead have to contract and pay for those services separately.[23] The independent provision of such services would not benefit from Amazon’s or MeLi’s economies of scale and scope and would, therefore, be more expensive. And providing more benefits for consumers at a given price is what we want competitors to do. Treating consumer benefit as a harm turns competition enforcement—and, indeed, the very notion of competition itself—on its head.

The report also proposes to open the Buy Box and modifying its rules so as to be neutral to all logistics providers. This effectively amounts to treating Amazon and MeLi as “common carriers,” like regulators did with telephone networks from the 20^th century onwards. Unfortunately, this classification and the rules that follow from it (neutrality and price regulation, among others) was designed for markets with natural monopolies—where competition is not possible or even undesirable[24]—but there is no evidence to suggest this is the case in the case at hand. Instead, Digital platform markets are far more competitive. Given this, common-carrier rules would only foster free riding and dampen incentives to invest and innovate (for both incumbents and new entrants). Sellers and logistics providers have many other options to access consumers. There is no economic or legal justification to mandate their access to Amazon or MeLi’s platforms.

In sum, the Report’s flawed findings lead to even worse remedies. Such remedies would neither promote competition in Mexico nor benefit consumers.

[1] The full text of the report (public version), available at https://www.cofece.mx/wp-content/uploads/2024/02/Dictamen_Preliminar_Version_Publica.pdf.

[2] Mexican Competition Act. Article 2. “The purpose of this Law is to promote, protect and guarantee free market access and economic competition, as well as to prevent, investigate, combat, prosecute effectively, severely punish and eliminate monopolies, monopolistic practices, unlawful concentrations, barriers to entry and to economic competition, as well as other restrictions to the efficient operation of markets.”

[3] ¿Qué Tan Popular es el Marketplace de Amazon en México?, La Patria (Apr. 23, 2023), https://www.lapatria.com/publirreportaje/que-tan-popular-es-el-marketplace-de-amazon-en-mexico. Free translation of the following text in Spanish: “La popularidad del mercado de Amazon en México se basa en gran medida en la satisfacción de los clientes. Amazon es la segunda plataforma de comercio electrónico más apreciada en México, según una encuesta de Kantar, con un índice de satisfacción de 8,5 sobre 10. Los comentarios de los consumidores también son esenciales para el éxito del mercado de Amazon, ya que permiten a los compradores realizar compras acertadas. Las opiniones de los consumidores también son esenciales para el éxito del mercado de Amazon, ya que permiten a los compradores realizar compras acertadas. Las buenas opiniones ponen de relieve la rapidez y fiabilidad de Amazon.”

[4] Instituto Federal de Telecomunicaciones, Uso y Satisfacción de las Aplicaciones y Herramientas Digitales para Compras y Banca en Línea, Videollamadas, Redes Sociales, Salud y Trámites Gubernamentales en Tiempos de Covid-19, Adopción (Jan 19, 2022), available at https://www.ift.org.mx/sites/default/files/contenidogeneral/usuarios-y-audiencias/aplicacionesyherramientasdigitalesentiemposdecovid19.pdf.

[5] The “Buy Box” is a box, normally found on the right side of a marketplace product page after the clients search for a product. Being in this box is an advantage for the seller because it not only highlights its product, but also makes the payment process easier. This is, of course, also an advantage for consumers, who can find and buy products faster.

[6] See https://www.ftc.gov/legal-library/browse/cases-proceedings/1910129-1910130-amazoncom-inc-amazon-ecommerce.

[7] Geoffrey A. Manne, Gerrymandered Market Definitions in FTC v. Amazon,  (Jan. 26, 2024), https://laweconcenter.org/resources/gerrymandered-market-definitions-in-ftc-v-amazon.

[8] See, e.g., Krystal Hu & Arriana McLymore, Exclusive: Fast-Fashion Giant Shein Plans Mexico Factory, Reuters (May 24, 2023), https://www.reuters.com/business/retail-consumer/fast-fashion-giant-shein-plans-mexico-factory-sources-2023-05-24.

[9] See, e.g., Rising E-commerce Star: The Emergence of Temu in Mexico, BNN (Sep. 25, 2023), https://bnnbreaking.com/finance-nav/rising-e-commerce-star-the-emergence-of-temu-in-mexico.

[10] Manne, supra note 7.

[11] Id.

[12] El 85% de las Pymes USA Redes Sociales para Vender en Línea, Expansión (Jul. 28, 2021), https://expansion.mx/tecnologia/2021/07/28/el-85-de-las-pymes-usa-redes-sociales-para-vender-en-linea.

[13] Mexico – Country Commercial Guide, International Trade Organization (Nov. 5, 2023), https://www.trade.gov/country-commercial-guides/mexico-ecommerce.

[14] Raymundo Campos Vázquez et al., Amazon’s Effect on Prices: The Case of Mexico, Centro de Estudios Económicos, Documentos de Trabajo, Nro. II (2022), available at https://cee.colmex.mx/dts/2022/DT-2022-2.pdf.

[15] Id., at 23.

[16] Amazon y Mercado Libre se Disputan la Corona del Comercio Electrónico en México, El CEO (Mar 17, 2020), https://elceo.com/negocios/amazon-y-mercado-libre-se-discuten-la-corona-del-comercio-electronico-en-mexico. Free translation of the following text, in Spanish: “Cadenas de autoservicios, departamentales y nativas digitales tienen un objetivo en común: ser quien acapare más mercado en el comercio electrónico en México. En esta batalla, Amazon y Mercado Libre se ponen a la cabeza, pues son las dos firmas que concentran casi un cuarto del total de mercado de este rubro. Al cierre de 2019, Amazon contaba con un cuota de mercado del 13.4%, que lo colocaba al frente de los demás competidores. Ese mismo año, con 11.4% se encontraba Mercado Libre.”

[17] Stephanie Chevalier, E-commerce Market Share in Latin American and the Caribbean 2023, By Country, Statista (Mar. 25, 2024), https://www.statista.com/statistics/434042/mexico-most-visited-retail-websites (“Over the last few years, online buying and selling have gained considerable ground in Mexico, so much so that the country has positioned itself as the second largest e-commerce market in Latin America. With a rapidly increasing online buying population, it was forecast that nearly 70 million Mexicans would be shopping on the internet in 2023, a figure that would grow by over 26 percent by 2027.”).

[18] Richard Posner, Antitrust Law (2nd. Ed. 2001), at 73-74.

[19] Id., at 74.

[20] David S. Evans & Richard Schmalensee, Debunking the “Network Effects” Bogeyman, Regulation (Winter 2017-2018), at 39, available at https://www.cato.org/sites/cato.org/files/serials/files/regulation/2017/12/regulation-v40n4-1.pdf.

[21] For a few examples from a very large body of literature, see, e.g., Steven Berry, Martin Gaynor, & Fiona Scott Morton, Do Increasing Markups Matter? Lessons from Empirical Industrial Organization, 33J. Econ. Perspectives 44 (2019); Richard Schmalensee, Inter-Industry Studies of Structure and Performance, in 2 Handbook of Industrial Organization 951-1009 (Richard Schmalensee & Robert Willig, eds., 1989); William N. Evans, Luke M. Froeb, & Gregory J. Werden, Endogeneity in the Concentration-Price Relationship: Causes, Consequences, and Cures, 41 J. Indus. Econ. 431 (1993); Steven Berry, Market Structure and Competition, Redux, FTC Micro Conference (Nov. 2017), available at https://www.ftc.gov/system/files/documents/public_events/1208143/22_-_steven_berry_keynote.pdf; Nathan Miller, et al., On the Misuse of Regressions of Price on the HHI in Merger Review, 10 J. Antitrust Enforcement 248 (2022).

[22] Chad Syverson, Macroeconomics and Market Power: Context, Implications, and Open Questions 33 J. Econ. Persp. 23 (2019), at 26.

[23] See, relatedly, Alden Abbott, FTC’s Amazon Complaint: Perhaps the Greatest Affront to Consumer and Producer Welfare in Antitrust History, Truth on the Market (Sep. 27, 2023), https://truthonthemarket.com/2023/09/27/ftcs-amazon-complaint-perhaps-the-greatest-affront-to-consumer-and-producer-welfare-in-antitrust-history.

[24] See, e.g., Giuseppe Colangelo & Oscar Borgogno, App Stores as Public Utilities?, Truth on the Market (Jan. 19, 2022), https://truthonthemarket.com/2022/01/19/app-stores-as-public-utilities.

A year after it was created by the Government of India’s Ministry of Corporate Affairs to examine the need for a separate law on competition in digital markets, India’s Committee on Digital Competition Law (CDCL) in February both published its report[1] recommending adoption of such rules and submitted the draft Digital Competition Act (DCA), which is virtually identical to the European Union’s Digital Markets Act (DMA).[2]

The EU has touted its new regulation as essential to ensure “fairness and contestability” in digital markets. And since it entered into force early last month,[3] the DMA has imposed strict pre-emptive rules on so-called digital “gatekeepers,”[4] a cohort of mostly American tech giants like Google, Amazon, Apple, Meta, and Microsoft.

But despite the impressive public-relations campaign[5] that the DMA’s proponents have been able to mount internationally, India should be wary of reflexively importing these ready-made and putatively infallible solutions that promise to “fix” the world’s most successful digital platforms at little or no cost.

I. Not So Fast

The first question India should ask itself is why?[6] Echoing the European Commission, the CDCL argues that strict ex-ante rules are needed because competition-law investigations in digital markets are too time-consuming. But this could be a feature, not a bug, of competition law. Digital markets often involve novel business models and zero or low-price products, meaning that there is nearly always a plausible pro-competitive explanation for the impugned conduct.

When designing rules and presumptions in a world of imperfect information, the general theme is that, as confidence in public harm goes up, the evidentiary burden must go down. This is why antitrust law tilts the field in the enforcer’s favor in cases involving practices that are known to always, or almost always, be harmful. But none of the conduct covered by the DCA falls into this category. Unlike with, say, price-fixing cartels or territorial divisions, there is currently no consensus that the practices the DMA would prohibit are generally harmful or anticompetitive. To the contrary, when assessing a self-preferencing case against Google in 2018, the Competition Commission of India (CCI) found important consumer benefits[7] that outweighed any inconveniences they may impose on competitors.

By imposing per se rules with no scope for consumer-welfare or efficiency exemptions, the DCA could capture swaths of procompetitive conduct. This is a steep—and possibly irrational—price to pay for administrative expediency. Rather than adopt a “speed-at-all-costs” approach, India should design its rules to minimize error costs and ensure the system’s overall efficiency.

II. The Costs of Ignoring Cost-Benefit Analysis

But this cannot be done, or it cannot be done rationally, unless India is crystal clear about what the costs and benefits of digital-competition regulation are. As things stand, it is unclear whether this question has been given sufficient thought.

For one, the DCA’s goals do not seem to align well with competition law. While competition law protects competition for the ultimate benefit of consumers, the DCA—like the DMA—is concerned with aiding rivals, rather than benefiting consumers. Unmooring digital competition regulation from consumer welfare is ill-advised. It opens the enforcer to aggressive rent seeking by private parties with a vested interest in never being satisfied,[8] who may demand far-reaching product-design changes that don’t jibe with what consumers—i.e., the public at-large—actually want.

Indeed, when the system’s lodestar shifts from benefiting consumers to facilitating competitors, there is a risk that the only tangible measure of the law’s success will be the extent to which rivals are satisfied[9] with gatekeepers’ product-design changes, and their relative market-share fluctuations. Sure enough, the European Commission recently cited stakeholders’ dissatisfaction[10] as one of the primary reasons to launch five DMA noncompliance investigations, mere weeks after the law’s entry into force. In the DCA’s case, the Central Government’s ability to control CCI decisions further exacerbates the risk of capture and political decision making.

While digital-competition regulation’s expected benefits remain unclear and difficult to measure, there are at least three concrete types of costs that India can, and should, consider.

First, there is the cost of harming consumers and diminishing innovation. Mounting evidence from the EU demonstrates this to be a very real risk. For example, Meta’s Threads was delayed[11] in the EU block due to uncertainties about compliance with the DMA. The same happened with Gemini, Google’s AI program.[12] Some product functionalities have also been degraded. For instance, in order to comply with the DMA’s strict self-preferencing prohibitions, maps that appear in Google’s search results no longer link to Google Maps, much to the chagrin of European users.[13]

Google has also been forced to remove[14] features like hotel bookings and reviews from its search results. Until it can accommodate competitors who offer similar services (assuming that is even possible), these specialized search results will remain buried several clicks away from users’ general searches. Not only is this inconvenient for consumers, but it has important ramifications for business users.

Early estimates suggest that clicks from Google ads to hotel websites decreased by 17.6%[15]as a result of the DMA. Meanwhile, on iOS, rivals like Meta[16] and Epic Games[17] are finding it harder than they expected to offer competing app stores or payment services. At least some of this is due to the reality that offering safe online services is a costly endeavour. Apple reviews millions of apps every year[18] to weed out bad actors, and replicating this business is easier said than done. In other words, the DMA is falling short even on its own terms.

In other cases, consumers are likely to be saddled with a litany of pointless choices, as well as changes in product design that undermine user experience. For example, the European Commission appears to believe that the best way to ensure that Apple doesn’t favor its own browser on iOS is by requiring consumers to sift through 12 browser offerings[19] presented on a choice screen.[20] But consumers haven’t asked for this “choice.” The simple explanation for the policy’s failure is that, despite the DMA’s insistence to the contrary, users were always free to choose their preferred browser.

Supporters of digital-competition regulation will no doubt retort that India should also consider the costs of inaction. This is certainly true. But it should do so against the background of the existing legal framework, not a hypothetical legal and regulatory vacuum. Digital platforms are already subject to general (and fully functional) competition law, as well as to a range of other sector-specific regulations.

For instance, Amazon and Flipkart are precluded by India’s foreign-direct-investment (FDI) policy from offering first-party sales[21] to end-users on their e-commerce platforms. In addition, the CCI has launched several investigations of digital-platform conduct that would presumably be caught by the DCA, including by Google,[22] Amazon,[23] Meta,[24] Apple,[25] and Flipkart.[26]

The facile dichotomy made between digital-competition regulation and “the digital wild west”[27] is essentially a red herring. Nobody is saying that digital platforms should be above the law. Rather, the question is whether a special competition law is necessary and justified considering the costs such a law would engender, as well as the availability of other legal and regulatory instruments to tackle the same conduct.

This is particularly the case when these legal and regulatory instruments incorporate time-honed analytical tools, heuristics, and procedural safeguards. In 2019, India’s Competition Law Review Committee[28] concluded that a special law was unnecessary. In a report titled “Competition Policy for the Digital Era,”[29] a panel of experts retained by the European Commission reached the same conclusion.

Complicating the question further still is that the DCA would mark a paradigm shift for Indian competition policy. In 2000, the Raghavan Committee Report was crucial in aligning Indian competition law with international best practices, including by moving analysis away from blunt structural presumptions and toward the careful observance of economic effects. As such, it paved the way for the 2002 Competition Act—a milestone of Indian law.

The DCA, by contrast, would overturn these advancements to target companies based on size, obviating any effects analysis. This would amount to taking Indian competition law back to the era of the Monopolies and Restrictive Trade Practices Act of 1969 (MRTP). Again, is the hodgepodge of products and services known collectively as “digital markets” sufficiently unique to warrant such a drastic deviation from well-established antitrust doctrine?

The third group of costs that the government must consider are the DCA’s enforcement costs. The five DMA noncompliance investigations launched recently by the European Commission have served to dispel the once-common belief that the law would be “self-executing”[30] and that its enforcement would be collaborative, rather than adversarial. With just 80 dedicated staff,[31] many believe the Commission is understaffed[32] to enforce the DMA (initially, the most optimistic officials asked for 220 full-time employees).[33] If the EU—a sprawling regulatory superstate[34]—struggles to find the capacity to deploy digital-competition rules, can India expect to fare any better?

Enforcing the DCA would require expertise in a range of fields, including competition law, data privacy and security, telecommunications, and consumer protection, among others. Either India can produce these new experts, or it will have to siphon them from somewhere else. This raises the question of opportunity costs. Assuming that India even can build a team to enforce the DCA, the government would also need to be reasonably certain that, given the significant overlaps in expertise, these resources wouldn’t yield better returns if allocated elsewhere—such as, for example, in the fight against cartels or other more obviously nefarious conduct.

In short, if the government cannot answer the question of how much the Indian public stands to gain for every Rupee of public money invested into enforcing the DCA, it should go back to the drawing board and either redesign or drop the DCA altogether.

III. India Is Not Europe

When deciding whether to adopt digital-competition rules, India should consider its own interests and play to its strengths. These need not be the same as Europe’s and, indeed, it would be surprising if they were. Despite the European Commission’s insistence to the contrary, the DMA is not a law that enshrines general or universal economic truths. It is, and always has been, an industrial policy tool,[35] designed to align with the EU’s strengths, weaknesses, and strategic priorities. One cannot just assume that these idiosyncrasies translate into the Indian context.

As International Center for Law & Economics President Geoffrey Manne has written,[36] promotion of investment in the infrastructure required to facilitate economic growth and provision of a secure environment for ongoing innovation are both crucial to the success of developing markets like India’s. Securing these conditions demands dynamic and flexible competition policymaking.

For young, rapidly growing industries like e-commerce and other digital markets, it is essential to attract consistent investment and industry know-how in order to ensure that such markets are able to innovate and evolve to meet consumer demand. India has already witnessed a few leading platforms help build the necessary infrastructure during the nascent stages of sectoral development; continued investment along these lines will be essential to ensure continued consumer benefits.

In the above context, emulating the EU’s DMA approach could be a catastrophic mistake. Indian digital platforms are still not as mature as the EU’s, and a copy and paste of the DMA may prove unfit for the particular attributes of India’s market. The DCA could potentially capture many Indian companies. Paytm, Zomato, Ola Cabs, Nykaa, AllTheRooms, Squeaky, FlipCarK, MakeMyTrip, and Meesho (among others) are some of the companies that could be stifled by this new regulatory straitjacket.

This would not only harm India’s competitiveness, but would also deny consumers important benefits. Despite India’s remarkable economic growth over the last decade, it remains underserved by the most powerful consumer and business technologies, relative to its peers in Europe and North America. The priority should be to continue to attract and nurture investment, not to impose regulations that may further slow the deployment of critical infrastructure.

Indeed, this also raises the question of whether the EU’s objectives with the DMA are even ones that India would want to emulate. While the DMA’s effects are likely to be varied, it is clear that one major impetus for the law is distributional: to ensure that platform users earn a “fair share” of the benefits they generate. Such an approach could backfire, however, as using competition policy to reduce profits may simply lead to less innovation and significantly reduced benefits for the very consumers it is supposed to help. This risk is significantly magnified in India, where the primary need is to ensure the introduction and maintenance of innovative technology, rather than fine tuning the precise distribution of its rewards.

A DMA-like approach could imperil the domestic innovation that has been the backbone of initiatives like Digital India[37] and Startup India.[38] Implementation of a DMA-like regime would discourage growing companies that may not be able to cope with the increased compliance burden. It would also impose enormous regulatory burdens on the government and great uncertainty for businesses, as a DMA-like regime would require the government to define and quantify competitive benchmarks for industries that have not yet even grown out of their nascent stages. At a crucial juncture when India is seen as an investment-friendly nation,[39] implementation of a DMA-like regime could create significant roadblocks to investment—all without any obligation on the part of the government to ensure that consumers benefit.

This is because ex-ante regimes impose preemptive constraints on digital platforms, with no consideration of possible efficiencies that benefit consumers. While competition enforcement in general may tend to promote innovation, jurisdictions that do not allow for efficiency defenses tend to produce relatively less innovation, as careful, case-by-case competition enforcement is replaced with preemptive prohibitions that impede experimentation.

Regulation of digital markets that have yet to reach full maturity is bound to create a more restrictive environment that will harm economic growth, technological advancement, and investment. For India, it is crucial that a nuanced approach is taken to ensure that digital markets can sustain their momentum, without being bogged down by various and unnecessary compliance requirements that are likely to do more harm than good.

IV. Conclusion

In a multi-polar world, developing countries can no longer be expected to mechanically adopt the laws and regulations demanded of them by senior partners to trade agreements and international organizations. Nor should they blindly defer to foreign legislatures, who may (and likely do) have vastly different interests and priorities than their own.

Nobody is denying that the EU has provided many useful legal and regulatory blueprints in the past, many of which work just as well abroad as they do at home. But based on what we know so far, the DMA is not poised to become one of them. It is overly stringent, ignores efficiencies, is indifferent about effects on consumers, incorporates few procedural safeguards, is lukewarm on cost-benefit analysis, and risks subverting well-established competition-law principles. These notably include that the law should ultimately protect competition, not competitors.

Rather than instinctively playing catch up, India could ask the hard questions that the EU eschewed for the sake of a quick political victory against popular bogeymen. What is this law trying to achieve? What are the DCA’s supposed benefits? What are its potential costs? Do those benefits outweigh those costs? If the answer to these questions is ambivalent or negative, India’s digital future may well lay elsewhere.

[1] Report of the Committee on Digital Competition Law, Government of India Ministry of Corporate Affairs (Feb. 27, 2024), https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open.

[2] Regulation (EU) 2022/1925 of the European Parliament and of the Council, on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act) (Text with EEA relevance), Official Journal of the European Union, available at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R1925.

[3] Press Release, Designated Gatekeepers Must Now Comply With All Obligations Under the Digital Markets Act, European Commission (Mar. 7, 2024), https://digital-markets-act.ec.europa.eu/designated-gatekeepers-must-now-comply-all-obligations-under-digital-markets-act-2024-03-07_en.

[4] Press Release, Digital Markets Act: Commission Designates Six Gatekeepers, European Commission (Sep. 6, 2023), https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4328.

[5] Press Release, Cade and European Commission Discuss Collaboration on Digital Market Agenda Ministério da Justiça e Segurança Pública (Mar. 29, 2023), https://www.gov.br/cade/en/matters/news/cade-and-european-commission-discuss-collaboration-on-digital-market-agenda.

[6] Summary of Remarks by Jean Tirole, Analysis Group (Sep. 27, 2018), available at https://www.analysisgroup.com/globalassets/uploadedimages/content/insights/ag_features/summary-of-remarks-by-jean-tirole_english.pdf.

[7] Geoffrey A. Manne, Google’s India Case and a Return to Consumer-Focused Antitrust, Truth on the Market (Feb. 8, 2018), https://truthonthemarket.com/2018/02/08/return-to-consumer-focused-antitrust-in-india.

[8] Adam Kovacevich, The Digital Markets Act’s “Statler & Waldorf” Problem, Chamber of Progress, Medium (Mar. 7, 2024), https://medium.com/chamber-of-progress/the-digital-markets-acts-statler-waldorf-problem-2c9b6786bb55.

[9] Id.

[10] Remarks by Executive-Vice President Vestager and Commissioner Breton on the Opening of Non-Compliance Investigations Under the Digital Markets Act, European Commission (Mar. 25, 2024), https://ec.europa.eu/commission/presscorner/detail/en/speech_24_1702.

[11] Makena Kelly, Here’s Why Threads Is Delayed in Europe, The Verge (Jul. 10, 2023), https://www.theverge.com/23789754/threads-meta-twitter-eu-dma-digital-markets.

[12] Andrew Grush, Did You Know Google Gemini Isn’t Available in Europe Yet?, Android Authority (Dec. 7, 2023), https://www.androidauthority.com/did-you-know-google-gemini-isnt-available-in-europe-yet-3392451.

[13] Edith Hancock, ‘Severe Pain in the Butt’: EU’s Digital Competition Rules Make New Enemies on the Internet, Politico (Mar. 25, 2024), https://www.politico.eu/article/european-union-digital-markets-act-google-search-malicious-compliance.

[14] Oliver Bethell, An Update on Our Preparations for the DMA, Google Blog (Jan. 17, 2024), https://blog.google/around-the-globe/google-europe/an-update-on-our-preparations-for-the-dma.

[15] Mirai, Linkedin (Apr. 17, 2024), https://www.linkedin.com/feed/update/urn:li:activity:7161330551709138945.

[16] Alex Heath, Meta Says Apple Has Made It ‘Very Difficult’ To Build Rival App Stores in the EU, The Verge (Feb. 2, 2024), https://www.theverge.com/2024/2/1/24058572/zuckerberg-meta-apple-app-store-iphone-eu-sideloading.

[17] Id.

[18] 2022 App Store Transparency Report, Apple Inc. (2023), available at https://www.apple.com/legal/more-resources/docs/2022-App-Store-Transparency-Report.pdf.

[19] About the Browser Choice Screen in iOS 17, Apple Developer, (Feb. 2024), https://developer.apple.com/support/browser-choice-screen.

[20] Remarks by Executive-Vice President Vestager and Commissioner Breton on the Opening of Non-Compliance Investigations Under the Digital Markets Act, EUROPEAN COMMISSION, https://ec.europa.eu/commission/presscorner/detail/en/speech_24_1702.

[21] Saheli Roy Choudhury, If You Hold Amazon Shares, Here’s What You Need to Know About India’s E-Commerce Law, CNBC (Feb. 4, 2019), https://www.cnbc.com/2019/02/05/amazon-how-india-ecommerce-law-will-affect-the-retailer.html.

[22] Press Release, CCI Imposes a Monetary Penalty of Rs.1337.76 Crore on Google for Anti-Competitive Practices in Relation to Android Mobile Devices, Competition Commission of India (Oct. 20, 2022), https://www.cci.gov.in/antitrust/press-release/details/261/0; CCI Orders Probe Into Google’s Play Store Billing Policies, The Economic Times, (Sep. 7, 2023), https://economictimes.indiatimes.com/tech/startups/competition-watchdog-orders-probe-into-googles-play-store-billing-policies/articleshow/108528079.cms.

[23] Why Competition Commission of India Is Investigating Amazon, Outlook, (May. 1, 2022), https://business.outlookindia.com/news/explained-why-is-competition-commission-of-india-probing-amazon-news-194362.

[24] HC Dismisses Facebook India’s Plea Challenging CCI Probe Into Whatsapp’s 2021 Privacy Policy, The Economic Times (Sep. 7, 2023), https://economictimes.indiatimes.com/tech/technology/women-participation-in-tech-roles-in-non-tech-sectors-to-grow-by-24-3-by-2027-report/articleshow/109374509.cms.

[25] Case No. 24 of 2021, Competition Commission of India, (Dec. 31, 2021), https://www.cci.gov.in/antitrust/orders/details/32/0.

[26] Supra note 23.

[27] Anne C. Witt, The Digital Markets Act: Regulating the Wild West, 60(3) Common Market Law Review 625 (2023).

[28] Report of Competition Law Review Committee, Indian Economic Service (Jul. 2019), available at https://www.ies.gov.in/pdfs/Report-Competition-CLRC.pdf.

[29] Jacques Crémer, Yves-Alexandre de Montjoye, & Heike Schweitzer, Competition Policy for the Digital Era, European Commission Directorate-General for Competition (2019), https://data.europa.eu/doi/10.2763/407537.

[30] Strengthening the Digital Markets Act and Its Enforcement, Bundesministerium für Wirtschaft und Klimaschutz (Sep. 7, 2021), available at https://www.bmwk.de/Redaktion/DE/Downloads/XYZ/zweites-gemeinsames-positionspapier-der-friends-of-an-effective-digital-markets-act.pdf.

[31] Meghan McCarty Carino, A New EU Law Aims to Tame Tech Giants. But Enforcing It Could Turn out to Be Tricky Marketplace (Mar. 7, 2024), https://www.marketplace.org/2024/03/07/a-new-eu-law-aims-to-tame-tech-giants-but-enforcing-it-could-turn-out-to-be-tricky.

[32] Id.

[33] Luca Bertuzzi & Molly Killeen, Digital Brief: DSA Fourth Trilogue, DMA Diverging Views, France’s Fine for Google, EurActiv (Apr. 1, 2022), https://www.euractiv.com/section/digital/news/digital-brief-dsa-fourth-trilogue-dma-diverging-views-frances-fine-for-google.

[34] Anu Bradford, The Brussels Effect: The Rise of a Regulatory Superstate in Europe, Columbia Law School (Jan. 8, 2013), https://www.law.columbia.edu/news/archive/brussels-effect-rise-regulatory-superstate-europe.

[35] Lazar Radic, Gatekeeping, the DMA, and the Future of Competition Regulation, Truth on the Market (Nov. 8, 2023), https://truthonthemarket.com/2023/11/08/gatekeeping-the-dma-and-the-future-of-competition-regulation.

[36] Geoffrey A. Manne, European Union’s Digital Markets Act Not Suitable for Developing Economies, Including India, The Times of India (Feb. 14, 2023), https://timesofindia.indiatimes.com/blogs/voices/european-unions-digital-markets-act-not-suitable-for-developing-economies-including-india.

[37] Digital India, Common Services Centre (Apr. 18, 2024), https://csc.gov.in/digitalIndia.

[38] Startup India, Government of India (Apr. 16, 2024), https://www.startupindia.gov.in.

[39] Invest India, Government of India (Mar. 20, 2024), https://www.investindia.gov.in/why-india.

 

In an April 17 address to United Steelworkers in Pittsburgh, President Joe Biden vowed that his administration would “thwart the acquisition of U.S. Steel by a Japanese company,” Nippon Steel, telling the assembled union members that U.S. Steel “has been an iconic American company for more than a century and it should remain totally American.”

Aside from the impropriety of apparently prejudging a proposed combination currently under investigation by the U.S. Justice Department (DOJ), would blocking this merger make any sense on national security or economic grounds? The answer is no.

Read the full piece here.

Last week was the occasion of the “spring meeting”; that is, the big annual antitrust convention in Washington, D.C. hosted by the American Bar Association (ABA) Antitrust Section. To engage in a bit of self-plagiarism (efficient for me, at least), I had this to say about it last year…

Read the full piece here.