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Antitrust Alone Is Not Enough to Combat the Problems Associated With Digital Platforms

 |  May 17, 2019

By Fiona Scott Morton

When it comes to digital platforms, antitrust enforcement is rife with difficulties. Digital platform market structures tend to be concentrated due to network effects and very strong economies of scale and scope, made even stronger than in the past by the role of data.

This challenge to enforcement—a challenge that requires all the resources and commitment of both agencies and courts—arises after 40 years of the United States effectively walking backwards on antitrust enforcement. The share of GDP spent on enforcement has been declining steadily; agency activity has been falling; the ideology that less enforcement is better has been marketed to the judiciary as good; measured markups charged by companies have been rising; the share of profits in GDP has been rising, while the labor share has been falling.

So even before the rise of digital platforms, we already had a competition problem in ordinary industries where enforcement tools are well developed. Now, in order to catch up with our own economy, we need to develop tools and standards for a new area while we are on the back foot.

The white paper by the market structure subcommittee of the Stigler Center’s Digital Platforms Project contains specific changes to both antitrust tools and standards that would help with effective enforcement. In addition, it is probably necessary for Congress to pass a new antitrust law—one that is very close in spirit to the current law, but explains to courts more exactly how Congress thinks decisions over the last few decades have failed to protect competition and directs courts how to do better. A specialist Competition Court would also likely speed up the adjustment to enforcing a new law consistently as well as vigorously. But despite proposing all of these reforms, the report makes clear that there are many social and economic harms attached to digital platforms that require action beyond antitrust laws.

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