Challenges Associated with the Market Definition Process on E-commerce Platforms: Why Bother with a Market Definition?

Abstract

For the traditional single-sided market, the most significant indicator of the market power is the market shares of the relevant undertaking. Since this is the only objective and easily accessible data, competition authorities, in practice, tend to rely significantly on market shares. Thus, it is most of the case, necessary to have a precise market definition to calculate the market shares of a given undertaking. Nevertheless, when it comes to multi-sided markets, there are two basic problem. Firstly, market definition process for multi-sided markets is quite burdensome due to structural characteristics of multi-sided markets including but not limited to network effects, feedback loops and customer groups’ multi-homing. Secondly, measuring market shares in multi-sided markets is challenging as it is, most of the time, unclear how shares should be calculated to take account of the multi-sided nature of the market. Thus, relying solely on the market shares may result in inaccurate evaluation of the market power.