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Abstract

Conceived as a theory of competitive harm, self-preferencing has been at the core of recent European landmark cases (e.g., Google Android, Google Shopping). In the context of EU competition law, beyond the anti-competitive leveraging effect, self-preferencing may lead to vertical and horizontal exclusionary abuses, encourage exploitation abuses, and generate economic dependence abuses. In this paper, we aim at characterizing the various forms of self-preferencing, investigating platforms’ capacity and incentives to do so through their dual role, by shedding light on the economic assessment of these practices in an effects-based approach. We analyze the different options for remedies in this context, by insisting on their necessity, adequacy, and proportionality.

It’s always fun to see what names politicians come up with for their legislative proposals. Take, for example, the American Innovation and Choice Online Act, which is co-sponsored by Sens. Amy Klobuchar (D-Minnesota) and Chuck Grassley (R-Iowa) and just cleared the Senate Judiciary Committee. Should it pass, it would promote neither innovation nor choice, but would in fact give the Federal Trade Commission and the Department of Justice a mandate to squash innovation.

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ICLE Director of Law & Economics Programs Gus Hurwitz joined Steptoe & Johnson’s The Cyberlaw Podcast to discuss the American Innovation and Choice Online Act, just voted out of the Senate Judiciary Committee. The full episode is embedded below.

In policy discussions about the digital economy, a background assumption that frequently underlies the discourse is that intermediaries and centralization always and only serve as a cost to consumers, and to society more generally. Thus, one commonly sees arguments that consumers would be better off if they could freely combine products from different trading partners. According to this logic, bundled goods, walled gardens, and other intermediaries are always to be regarded with suspicion, while interoperability, open source, and decentralization are laudable features of any market.

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Early last month, the Italian competition authority issued a record 1.128 billion euro fine against Amazon for abuse of dominance under Article 102 of the Treaty on the Functioning of the European Union (TFEU). In its order, the Agenzia Garante della Concorrenza e del Mercato (AGCM) essentially argues that Amazon has combined its Amazon.it marketplace and Fulfillment by Amazon (FBA) services to exclude logistics rivals such as FedEx, DHL, UPS, and Poste Italiane.

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Abstract

Among the numerous legislative initiatives implemented around the globe on digital platforms, some of these provisions are explicitly directed towards app stores. As they have all the distinctive features of multi-sided markets, app store owners represent the prototype of digital gatekeepers, controlling access to mobile ecosystems and competing with business users operating on the platforms. In light of the rule-setting and dual role of these gateway players, regulatory interventions are required in order to ensure that large app stores are treated like common carriers or public utilities, thereby imposing upon them a neutrality regime vis-à-vis new entrants. For the very same reasons, dominant app store providers have been subject to an increasing number of antitrust investigations attempting to ensure equal treatment and to avoid self-preferencing at the expense of rivals’ services. Against this background, the article investigates whether antitrust provisions are flexible enough to curb anti-competitive practices carried out by app stores and the extent to which regulatory interventions could, on the other hand, be necessary in order to address the seemingly unique features of the app economy.

Even as delivery services work to ship all of those last-minute Christmas presents that consumers bought this season from digital platforms and other e-commerce sites, the U.S. House and Senate are contemplating Grinch-like legislation that looks to stop or limit how Big Tech companies can “self-preference” or “discriminate” on their platforms.

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The Autorità Garante della Concorenza e del Mercato (AGCM), Italy’s competition and consumer-protection watchdog, on Nov. 25 handed down fines against Google and Apple of €10 million each—the maximum penalty contemplated by the law—for alleged unfair commercial practices. Ultimately, the two decisions stand as textbook examples of why regulators should, wherever possible, strongly defer to consumer preferences, rather than substitute their own.

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Last month, a bipartisan group led by Senators Amy Klobuchar of Minnesota and Chuck Grassley of Iowa announced a bill that would, in many cases, ban one of the most common practices of large tech platforms like Google, Amazon, Apple, Microsoft, and Facebook (which now wishes to be known as Meta). The bill is being touted as a way to protect consumers from the power of Big Tech, but it would actually make things worse for users. It would undermine the trial-and-error process that has built the Internet we know today.

Read the full piece here.