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TOTM Dirk Auer is a Research Fellow at the Liege Competition and Innovation Institute.
What is antitrust populism? In a deeply insightful paper, Barack Orbach defines it as “the use of thin ideas, exaggerations, and anxieties to advance antitrust theories”. From a policy standpoint, this often leads to the protection of small businesses and the identification of large business size as evil.
Read the full piece here.
TOTM Today’s Google Android decision could severely harm competition and innovation in the digital economy. It ignores the powerful rivalry that exists between Android devices and Apple’s iPhone. To compete against Apple, Google opted for an open-source project which entails a complex governance structure. By meddling with these rules, the Commission’s decision threatens the viability of the Android platform. Consumers will be the biggest losers.
Our story begins on the morning of January 9, 2007. Few people knew it at the time, but the world of wireless communications was about to change forever. Steve Jobs walked on stage wearing his usual turtleneck, and proceeded to reveal the iPhone. The rest, as they say, is history. The iPhone moved the wireless communications industry towards a new paradigm. No more physical keyboards, clamshell bodies, and protruding antennae. All of these were replaced by a beautiful black design, a huge touchscreen (3.5” was big for that time), a rear-facing camera, and (a little bit later) a revolutionary new way to consume applications: the App Store. Sales soared and Apple’s stock started an upward trajectory that would see it become one of the world’s most valuable companies.
Scholarship This paper seeks to ascertain whether Google’s Android licensing terms, which are currently under scrutiny from the European Commission, could be excused under an innovation defense framework. The paper starts by analyzing Google’s business model with regard to its Android OS.
This paper seeks to ascertain whether Google’s Android licensing terms, which are currently under scrutiny from the European Commission, could be excused under an innovation defense framework. The paper starts by analyzing Google’s business model with regard to its Android OS. It then identifies the Commission’s main concerns. It argues that Google is simply pursuing a sensible appropriation strategy. Finally, it puts forward a framework which hinges on the concept of “appropriability”, and tentatively applies it to Google’s behavior.
Read the entire piece here
Popular Media The award of the Nobel Prize in Economics to Professor Jean Tirole in 2014 has generated intense interest about his brainchild theory of two-sided markets. Against this background, this paper explores whether there is such a thing as a unified theory of two-sided markets and whether the two-sided markets literature can readily be applied by antitrust agencies, regulatory authorities and courts.
The award of the Nobel Prize in Economics to Professor Jean Tirole in 2014 has generated intense interest about his brainchild theory of two-sided markets. Against this background, this paper explores whether there is such a thing as a unified theory of two-sided markets and whether the two-sided markets literature can readily be applied by antitrust agencies, regulatory authorities and courts. This paper vindicates caution. The buzz surrounding two-sided markets could mask the fact that, in many cases, the policy implications of the theory are not yet clear, and that divergences among its proponents are often underplayed. In that regard, the paper notably stresses that one of the key conditions of market two-sidedness identified by Rochet and Tirole in their seminal paper of 2003 – the unavailability of Coasian bargaining between both sides of a platform – has often disappeared from subsequent scholarship. This omission threatens the coherent implementation of the theory of two-sided markets. Without this qualification, markets are often mischaracterized as two-sided, as soon as they display prima facie signs of indirect network externalities.
