How to fix competition in a market owned by Google, Facebook, Amazon and other digital platforms

Platform economies which abuse their dominant power and favour their retail segments has the potential to cause harm to both producers and other consumers. Smaller retailers, cab drivers or restaurateurs will find it difficult to compete against the might of the internet giants. Many have in fact shut shop and had to lay off its employees. Consumers tend to lose out as well, either in the form of increased prices, as with Google’s case; reduced choice with Google or Amazon making it harder to find results from rival companies; or with the fear of future monopoly pricing.

India does not presently have a comprehensive competition law framework to look at the specific problems caused by the new age digital two-sided markets. In its absence, the potential for harm is as great or even bigger than what is observed in the US or Europe. It also serves an opportunity, however, to approach the problem in a fresh light.

The answer to regulation in these cases should first start with taking a completely fresh approach towards competition law in the 21st-century marketplace. Competition in marketplaces cannot be judged using a narrow set of outcomes such as pricing, output and “consumer harm” that is currently used in most other sectors. Most of the above cases would fail these tests. Pricing would become a redundant criterion when judging Facebook or Google, who mostly provide their services for free (consumers pay through watching ads). Instead, the law should include “producer harm” as a criterion when judging marketplaces.

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