Commentary
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How to Regulate Internet Platforms Without Breaking Them
Anticompetitive practices are quite common in the internet-enabled economy, and lawmakers have struggled to keep up.Authorities must find a balance between regulation and fostering an open, healthy environment for the platform economy to thrive.
The biggest anticompetitive element of platforms is the violation of neutrality. When the platform, such as Amazon, also acts as a player on the very platform, it can lead to a conflict of interest. Once vertically integrated, the platform has an incentive to exclude competitors either directly by delisting competing vendors or indirectly through higher commission fees and manipulating the rankings.
Anticompetitive mergers and acquisitions of platforms also tend to go under the radar, as competition authorities normally make the decision to investigate cases according to a monetary threshold. However, the monetary value of a deal may not always highlight its anticompetitive effects. Stories of big technology firms acquiring small start-ups at bargain prices are quite common. The value of these start-ups could lie in the networks (user bases) or the data they possess. Thus, it would make sense for competition authorities to automatically review any deal that involves an exchange of certain forms (or a certain quantity) of data. If this principle had been in place, Facebook’s acquisitions of WhatsApp and Instagram would have come under greater scrutiny.