Defining Markets for Multi-Sided Platforms: The Case of Search Engines

Posted by Social Science Research Network

Defining Markets for Multi-Sided Platforms: The Case of Search Engines

By Thomas Hoppner (Technical University Wildau)

Abstract:     Despite the rise of two- or multi-sided platforms in the digital sector, there is not yet an established antitrust policy for defining relevant markets that involve such platforms. Difficulties arise in particular where services are granted for free to some users. This article explains which platform user groups form separate (sub-)markets and with which quantitative and qualitative methods substitution relationships can be assessed for each sub-market. Considering the need to take account of the interactions between all user groups of a multi-sided platform, it is suggested that separate relevant markets should be recognized for each user group with differing demands that individually interacts with the platform in order to procure a service. Such interaction requires direct contact and an exchange between user and platform. It does not, however, pre-suppose any payment stream as users may also ‘pay’ with personal data, their attention or the granting of usage rights. Consequently, search engines, for instance, form a three-sided market consisting of i) a market for online search advertising existing between search providers and advertisers, ii) a market for web search services existing between search providers and Internet users, and iii) a market for indexing content existing between search providers and website operators.

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