It is widely assumed that platform technology markets are inherently prone to monopoly outcomes in which a single firm or a handful of firms enjoy market power due to network effects and switching costs.  This assumption supports dramatic changes, both proposed and enacted, to the application of competition and antitrust law in platform markets.  Remarkably, this assumption rests on weak empirical support.  The history of technology markets shows that incumbent platforms have been repeatedly challenged successfully by innovative entrants.  Consistent with this pattern, a close examination of the cloud computing market finds little evidence to support assertions of platform entrenchment or user lock-in that would justify intervention by competition regulators.

By Jonathan M. Barnett[1]

 

It has become conventional wisdom that incumbent platforms enjoy market power as a result of a combination of network effects and switching costs that lock in users and lock out competitors. This assumption has driven far-reaching changes in competition law and policy in the European Union, the People’s Republic of China, and other significant jurisdictions. In the United States, this assumption underlies urgent calls by legislators, regulators, and some commentators for “reforms” that would shift U.S. antitrust law from a regime based primarily on the balancing analysis embodied in the rule of reason to a regime based substantially on rules of quasi-per se il

...
THIS ARTICLE IS NOT AVAILABLE FOR IP ADDRESS 3.238.250.73

Please sign in or join us
to access premium content!