Abstract
Because of their multi-sided and dynamic nature, the application of competition law to online platforms may prove challenging. The paper maintains that existing competition concepts are flexible enough to be adequately applied to search engines and social networks. It is argued that, in order to take the fast-moving nature of these industries into account, relevant markets should not be defined along strict product boundaries and that the strength of potential competition constitutes a better indicator for dominance than the size of market share. Such an approach would make competition analysis more conducive to innovation and would better recognise its role in the dynamic online intermediary sector.
Highlights
The evolution of the internet has led to the rise of different types of platforms that act as intermediaries between customer groups
Online platforms raise new challenges for competition enforcement. Because of their multi-sided nature and the predominance of innovation as a parameter of competition, traditional competition analysis may not be sufficiently able to reflect the way in which competition takes place on search engines and social networks
These online platforms have some specific characteristics that have to be taken into account in competition law analysis, the tools that are used to define relevant markets and to assess dominance are flexible enough to be adequately applied to these services
Summary
The evolution of the internet has led to the rise of different types of platforms that act as intermediaries between customer groups. Access to user traffic is sold to advertisers who generate the funding for the platform These advertising-based online intermediaries can be seen as multi-sided platforms. In addition to their multi-sided nature, online search engines and social networks have other distinguishing characteristics. After analysing the multi-sided and dynamic nature of online platforms, the paper discusses how the standard approach towards market definition and assessment of dominance in merger and abuse of dominance cases in EU competition law may have to be adapted to reliably assess potential competition issues with regard to search engines and social networks. It is an empirical question whether and in which circumstances multi-sided aspects are sufficiently substantial to have an influence on the application of competition law (Evans & Noel, 2005, p. 128)
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