By: Ariel Ezrachi & Gene Kimmelman (ProMarket)
After years of timid enforcement against powerful online platforms, and silence from Congress, we are witnessing the awakening of antitrust in the United States. At last, antitrust enforcers have accepted that digital market dynamics are imperfect and justify closer scrutiny. Congress has also woken up to its responsibility to update competition policy.
These changes in attitude mark a departure from the past approach to antitrust and competition policy, which was firmly embedded in the belief that markets will self-correct and that disruptive innovation and competition dynamism will be enough to protect consumer interest. While true in many market settings, those beliefs have lost much of their shine in the platform economy. Many now acknowledge that alongside the efficiencies delivered by platforms, they have also amassed significant power that has enabled them to distort competition.
Measured antitrust intervention and a more comprehensive regulatory regime can ensure that we continue to benefit from the digital environment, and that companies continue to invest in innovation, while safeguarding consumer interests. They bring hope for a more transparent and fairer digital environment and open online markets in which small and medium-sized companies can flourish and are not quashed by giant platforms leveraging their power.
But while there is hope that the revival of enforcement and scrutiny will help increase the competitiveness of online markets, two key challenges remain…