The formation of consumer expectations for digital products affects competition between digital platforms that offer competing products. Unfair competition may occur if the competitive outcome is influenced my misled expectations, notably if the company that wins the competition either misled consumers or did not affirmatively correct consumer expectations that were incorrect. The ability to exploit customers whose expectations have been misled is particularly strong for networks that have tipped, as outside alternatives for dissatisfied consumers may no longer be realistic or viable alternatives for consumers. Unilateral deviations by a company’s product away from the future product expectations that have been created around their products may be unfair and create anti-competitive outcomes in growing digital markets.
By Sean F. Ennis
This paper focuses on the role of customer expectations in digital markets. For some products, expectations may be crucial in determining consumer adoption of a given supplier of a product. Inaccurate expectations lead them to choose based on an incorrect view of the future features of the product. Decisions made with substantially inaccurate expectations may result in inferior outcomes for consumers, and, to the extent that expectational formation impacts decisions between competing products, could distort competition in ways that are deemed transactionally unfair.
Consumers may select between products toda...