Quality Considerations in Digital Zero-Price Markets: OECD Background Paper

Abstract

Most consumers are offered products at a price of zero on a daily basis. Business models centred around the zero-price products are not new. However, in the digital economy, new zero-price markets have arisen with their own unique characteristics and vast scope. This paper sets out the potential dimensions of quality competition in zero-price markets and the business models associated with them, including privacy and data security, advertising content, ease of switching, and choice in complement markets, among others. While there is a conceptual basis for identifying competition problems in zero-price markets, there are numerous practical analytical and legal challenges that may arise. However, these challenges may be surmountable by competition authorities in many cases. When competition may not be functioning as expected in a zero-price market but competition enforcement tools cannot remedy the situation, there are numerous opportunities for consumer or data protection authorities to act. In any event, competition, data, and consumer protection authorities have a complementary role in promoting competitive zero-price markets, and so cooperation between them is essential, particularly with respect to advocacy and regulatory solutions.