Reconciling the Matchmaker Economy with Competition Policy

Abstract

There is no doubt that the enforcement of competition law is an important part of global business law and policy. Proper enforcement of competition law increases market efficiencies, allows for innovation and creative destruction, and ensures consumers will be able to access the best products and services. However, over-enforcement or improper enforcement can lead to the opposite results destroying consumer welfare and halting vital innovation. Balancing these concerns have led to many improvements in the application of competition law, especially concerning the use of economics to inform enforcement. Yet, more analysis is needed on how to analyze matchmaker businesses under competition laws, even though we are in the midst of a matchmaker platform renaissance. A matchmaker -- sometimes referred to as a multi-sided platform -- is a “business that helps two or more different kinds of customers find each other and engage in mutually beneficial interactions.” In fact, there have increasingly been calls for enforcement against these business models without an adequate understanding how the economics differ from non-matchmaker models and how matchmaker platforms create consumer welfare. It is important we get enforcement right on these new platforms, which make up “three of the five most valuable companies in the world in 2015” and “seven of the ten start-ups with the highest market values.”