Interoperability between the products and services of different firms promotes competition by lowering switching costs. Requiring dominant firms to make their products interoperable, or reducing barriers to interoperability, are important components of competition policy for the digital age. This article makes the case for interoperability remedies in antitrust enforcement actions against Internet services. It explains the problem of “gatekeeper” firms in Internet-related markets, and describes the ways that Internet services can interoperate with one another, including through “competitive compatibility” achieved without permission from an incumbent firm. The article then lays out a spectrum of remedies that antitrust enforcers or private litigants can pursue to promote interoperability, from mandates on an incumbent firm to bans on interfering with a bona fide interoperator. Finally, the article explains how interoperability can be reconciled with the protection of users’ privacy.

By Mitch Stoltz[1]

 

Interoperability has always been a powerful pro-competitive tool in high-tech markets. The ability to build new products and services that are compatible with established products gives consumers more choices and helps competitors avoid entry barriers. That’s why so many iconic exercises of competition policy can be seen as interoperability remedies, from the Federal Communications Commission’s 1965 Carterfone order, to the conditions imposed on Microsoft

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