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Android and Antitrust: Attempts at a ‘More Technological Approach’

 |  May 28, 2015

Posted by Social Science Research Network

Android and Antitrust: Attempts at a ‘More Technological Approach’ Simonetta Vezzoso (University of Trento)

Abstract: Scholars in the tradition of industrial economics have developed a comprehensive theory of multi-sided markets that is increasingly influential also in competition policy circles. This type of economic analysis is potentially significant in cases where the fundamental defining characteristic of multi-sided businesses, namely the fact that they supply multiple customer groups whose demands are interdependent, is critical for the assessment of competition effects. A good example of this already influential approach, and of what it could imply for competition policy, is provided by recent discussions with regard to possible allegations of anticompetitive practices by Google in connection with Android, the Internet search giant’s successful software platform for mobile devices. Some aspects of Android’s governance system have attracted the interest of competition policy enforcers. Grounded in the logic of indirect network effects, the economics of two sided markets is capable of providing a comprehensive and enticingly manageable framework for the analysis of many of Android’s practices under increased antitrust scrutiny. In particular, the economics of two-sided markets suggests that alleged anticompetitive practices by platform owners like Google should be better presumed to be procompetitive efforts to harness externalities for the platform. It is still open for debate, however, whether the economic theory of multisided markets provides the type of economic analysis which looks most promising in dealing with allegations of anticompetitive conduct by multi-sided businesses in high-tech industries. In fact, the economics of two sided market understates the technological nature of platforms (all platform participants are considered consumers), and focuses mainly on the transactional side (chicken and egg problem). It follows that the same economic insights are conveniently applied both to heterosexual dating clubs and to software platforms. Hence, the mechanics of technological platforms, and the reasons behind some practices by platform owners, are only partially elucidated. One way of improving the current understanding of software platforms for the purpose of competition enforcement in high-tech markets is by bringing together the transactional and the technological views of platforms.