Letter in support of the American Innovation and Choice Online Act
TAP@Yale seeks to improve our understanding of how digital platforms—and the different economic models that sustain them—impact both the nature of economic competition and the benefits accruing to consumers in price terms, but also in variety and quality of content, and in innovation. This understanding will help us develop new analysis that can lead to effective antitrust enforcement that protects consumers and content providers in these markets, and also to advance the thinking on regulatory solutions that would lay the foundations for competitive markets and also monitor conduct to sustain competition.
TAP disseminates research and analysis conducted by Yale faculty, its own Fellows, students, and research assistants, and also by the partner organizations that house some of our Fellows. Below we present a selection of publications by this group, along with other resources for those hoping to examine the conduct of digital platforms through the lens of antitrust, competition policy, and regulation.
TAP Digital Tech Acquisition Datasets
TAP research assistants scoured resources in the Yale library and public resources to identify all acquisitions made by Google and Facebook over the last ten years. As much information about each one as we could find is included in the spreadsheet. Many thanks to Maria Casasnovas and Mark Rosenberg for their work and to the Washington Center for Equitable Growth for providing a grant for creation of these datasets.
Digital Tech Reports
The Omidyar Network provided a grant to Public Knowledge, a public interest think tank in Washington DC, to create antitrust and regulatory policy work related to digital platforms, particularly those that appear to be able to exercise market power. A team from Public Knowledge, led by TAP Fellow Gene Kimmelman, assembled a collection of experts to write on different topics. The range of output from this grant, thus far, is posted below. TAP Director Professor Scott Morton, along with Omidyar Network senior advisor David Dinielli, wrote the final three of these. They used the U.K. Competition and Markets Authority (CMA) report to trace out how the facts the CMA disclosed and discussed would shape a U.S. antitrust case against Facebook, and then two related antitrust cases against Google.
This is the first of several papers prepared by or forthcoming from the Digital Regulation Project, a collaborative effort of experts in economics and regulation in the United States, the UK, and the European Union, who have studied, and are committed to the improvement of, competition in digital markets.
- Paper #1: Consumer Protection for Online Markets and Large Digital Platforms (2021)
- Paper #2: More Competitive Search Through Regulation (2021)
- Paper #3: Fairness and Contestability in the Digital Markets Act (2021)
- Paper #4: Equitable Interoperability: The "Super Tool" of Digital Platform Governance (2021)
- Paper #5: International Coherence in Digital Platform Regulation: An Economic Perspective on the US And EU Proposals (2021)
The Program on Democracy and the Internet at Stanford University convened a working group in January 2020 to consider the scale, scope, and power exhibited by the digital platforms, study the potential harms they cause, and, if appropriate, recommend remedial policies. The group included a diverse and interdisciplinary group of scholars, some of whom had spent many years dealing with antitrust and technology issues. This report is the result of these conversations.
The incoming administration and the 117th Congress present an important opportunity to rethink fundamental questions surrounding U.S. antitrust laws and their enforcement. Growing market power across the United States disrupts the operation of free and fair markets, and harms consumers, businesses, and workers. Market power indirectly exacerbates inequality and compounds the harms of structural racism. Addressing this problem requires action across the federal government. This report calls for the next administration to seek new antitrust legislation, revitalize antitrust enforcement with a focus on strengthening deterrence, and commit to a “whole government” approach to competition policy.
Over the past five years, antitrust regulators around the world have opened many investigations on digital platforms and issued and/or commissioned dozens of studies or expert reports that are focused on understanding the general competitive dynamics of markets such as online search, social media, e-commerce/marketplaces, and mobile operating systems. These studies and reports represent the forefront of our current understanding of how to adapt antitrust policy to the digital era. However, much of their wealth of knowledge is lost because these documents, which add up to thousands of pages of texts, figures and tables, have been scattered around the websites of different competition agencies. This literature review consolidates the knowledge of 21 reports and studies on topics related to competition in digital markets issued by 17 different authorities and expert panels around the world over the past five years.
This report addresses problems in the app store market, and includes recommendations to make app stores more responsive to consumers and competition. The report suggests specific measures, particularly sideloading, that should be implemented by dominant app stores—including the Apple and Android app stores—to promote consumer rights, the public interest, and broader economic benefits.
Mind Your Own Business: Protecting Proprietary Third-Party Information From Digital Platforms (2020)
The report explains the particular privacy concern posed by Amazon and other e-commerce platforms. The paper argues that digital platforms are a unique sector of the economy that requires sector specific regulation. Because the experience in regulating the telecommunications sector can provide useful insight into what problems and solutions we must address to regulate digital platforms to promote competition and the public interest, this paper, expands on one remedy: Customer Proprietary Network Information (CPNI).
This is one of three antitrust “roadmaps” co-authored by Prof. Fiona Scott Morton and David Dinielli with substantial research assistance from Public Knowledge. The paper relies in large part on public information gathered by the U.K.’s Competition and Markets Authority (CMA). The report lays out what it calls a pattern of conduct that Google has engaged in to entrench its dominance in online search over the past 10 years—from acquiring rival upstarts to signing exclusive contracts to changing its platform in ways that disadvantage competitors. And it outlines how the Justice Department and the states could address those actions by bringing an antitrust case accusing the company of monopolistic behavior.
This is a second paper by the same two authors, also based on public information gathered by the CMA, as well as U.K’s House of Commons Report on Disinformation and Fake News, and other public sources, this policy paper describes a clear theory of how Facebook may have potentially violated antitrust laws in the US, assuming that the facts mirror those found in the UK. The paper explains three types of anticompetitive conduct Facebook engaged in to create and sustain its monopoly.
This paper presents robust evidence from the U.K.‘s Competition and Markets Authority (CMA) to support a potential antitrust case against Google based on its apparent dominant position and alleged anticompetitive conduct in the digital advertising market. Building upon public information, the paper shows that Google appears to have abused the apparent monopoly power of its search engine as a springboard to obtain unprecedented control and ownership at multiple points in the digital advertising “tech stack.”
Other TAP-affiliated digital research and policy
Addictive Technology and its Implications for Antitrust Enforcement North Carolina Law Review, 2021.
This article argues that any evidence based on quantity (often minutes) consumed that defendants might raise as an efficiency defense cannot be applied in digital markets given the strong possibility that more output causes harm, not benefit. Indeed, arguing that more consumption of oxycontin on the part of consumers who have become addicted to oxycontin is a demonstration of an increase in consumer welfare violates common sense; but it does not violate standard antitrust arguments. These authors argue that standard antitrust arguments must be adjusted and updated to correctly handle addictive products, including social media platforms. A digital business asserting that its conduct is procompetitive would need to either have a business model that does not rely on addictive or exploitative content, or show that consumer welfare gains, rather than exploitation, are the consequence of the behavior.
Essential Platforms Stanford Technology Law Review, 2021.
Nikolas Guggenberger argues that digital platforms are the railroads of the modern era. In the early twentieth century, a vast railroad network stretched from coast to coast, forming the back-bone of commerce in the United States. Bridges and tunnels were essential to reach certain destinations and, sometimes, entire regions. Control over these bottlenecks in railroad networks enabled gatekeeping monopolists to exclude competitors from crucial markets. In response, the Supreme Court imposed a novel remedy by granting competitors access to this critical infrastructure under the Sherman Act—an approach known as the ‘essential facilities’ doctrine. He argues it is high time to revive, renew, and expand the essential facilities doctrine in the digital economy. As with railroads, the doctrine can once again open markets while preserving network-based efficiencies. Building on these notions from IP, he suggest a two-tiered remedy: At its first level, regulators and courts must bar platforms from discriminating and self-preferencing. At its second level, after an appropriate amortization period, anti-trust enforcers must upend platform-monopolies entirely, by forcing interoperability between platforms.
In this article the authors argue addressing entry barriers created by network effects is critical to remedying a monopolization violation in a social network market (e.g. Facebook). For a social network, interoperability is likely a necessary, but not necessarily a sufficient, condition for an effective remedy. Mandatory interoperability based on robust and effective rules could overcome the network effects that protect the incumbent from entry, maximizing the potential for new entrants to enter at minimal cost, compete in the market, and take share from the incumbent. This remedy could be ordered in addition to other relief such as a divestiture, and indeed could be complementary to it, or stand on its own.
Why Google Dominates Advertising Markets Stanford Technology Law Journal, December 2020.
This article, written by Dina Srinivasan, explains how Google has over time come to occupy the entirety of the “ad tech stack” through which publishers their supply of advertising space to advertisers, while at the same time selling its own space on search results pages and controlling much of the data that allows advertisers to target their ads to be shown to valuable consumers.
(informally known as the Stigler Report)
A committee of scholars chaired by Professor Fiona Scott Morton issued a report in May 2019 outlining consumer harms caused by the market power of various of the digital platforms, and proposing updated antitrust enforcement and regulation to address them.
Antitrust in Digital Markets Vanderbilt Law Review, October 2019.
In this article, TAP Fellow John New argues that antitrust has largely failed to address the challenges posed by digital markets. Far from being self-correcting, digital markets facilitate the creation and maintenance of uniquely durable market power. Digital markets are conducive to complex anticompetitive strategies that have largely escaped regulatory scrutiny. Perhaps most importantly, digital-market conduct tends to lack significant offsetting efficiencies. As a result, the consensus view is ripe for rejection. Digital markets do require a different approach, but it must be uniquely interventionist, not unusually laissez-faire. This Article concludes by offering a set of doctrinal and policy proposals aimed at creating a more robust, vigilant, and welfare-enhancing digital antitrust enterprise.
Platforms, American Express, and the Problem of Complexity in Antitrust Nebraska Law Review, March 2019.
In this article, TAP Fellow Professor Chris Sagers writes about the Ohio v. American Express case, where the Supreme Court adopted “platform” or “two-sided market” theory. He discusses the “anti-steering” rules protected in the Amex case and how they were made hard to challenge as well as the issue of network effects in antitrust analysis.
Antitrust Limits on Startup Acquisitions Review of Industrial Organization, March 2019.
Authors Erik Hovenkamp (TAP Fellow) and Kevin Bryan undertake economic analysis of the appropriate rules for acquisition of startups by dominant firms. Efficiency requires that startups sell their technology to the right incumbents, that they develop the right technology, and that they invest the right amount in R&D. Without limits imposed by antitrust, the authors show inefficiencies result.
The Antitrust Case Against Facebook Berkeley Business Law Journal, February 2019.
This article, written by TAP Fellow Dina Srinivasan, lays out an argument that Facebook engaged in illegal conduct in obtaining its dominance, including through acquisitions and manipulations of APIs to disable potential competitors from accessing Facebook users.
Additional Reports and Resources
Innovation Under Section 2 of the Sherman Act Antitrust Law Journal, forthcoming.
The authors identify circumstances in which structural conditions warrant a presumption that anticompetitive conduct by a dominant firm is likely to harm or promote innovation and describe various ways in which consideration of likely innovation effects might support finding an antitrust violation or provide a defense of otherwise anticompetitive conduct.
Common ownership exists when investors concurrently hold partial and significant shares in competing firms. This paper compiles, documents, and taxonomizes 30 separate cases of intervention to demonstrate how common owners influence firm behavior. Anticompetitive concerns arise when horizontal shareholders use such interventions to reduce competition between commonly-owned firms. Critics have challenged the plausibility of a common owner's capacity and incentive to do so. This paper provides clear evidence from media coverage and investigations that common owners frequently engage in such practices.
U. K. Competition and Markets Authority: Online Platforms and Digital Advertising Market Study Final Report (2020)
Publication of final report and conclusions re: markets supported by digital advertising, with recommendations for regulatory interventions.
New Competition Framework for the Digital Economy: Report by the (German) Commission ‘Competition Law 4.0’ (2019)
This commission was set up by the Federal Minister for Economic Affairs and Energy in September 2018, and tasked with drawing up recommendations for the further development of EU competition law in light of the new challenges of the digital economy.
(informally known as the Furman Report)
This expert panel was asked to consider the potential opportunities and challenges the emerging digital economy may pose for competition and pro-competition policy, and to make recommendations on any changes that may be needed.
Commissioner Vestager has asked Jacques Crémer, Yves-Alexandre de Montjoye, and Heike Schweitzer to explore how competition policy should evolve to continue to promote pro-consumer innovation in the digital age.
ELI Project Team has drawn up a set of Model Rules that is meant as a contribution to the ongoing debate and provides a “visualization” of how a balanced approach could look, if regulatory action is considered necessary.
Modernising the Law on Abuse of Market Power: Report for the (German) Federal Ministry for Economic Affairs and Energy (2018)
This report looks at whether a modernization of the (European and German) rules on the abuse of market power is needed.
These plaintiffs bring this action on behalf of themselves, and as a class action, seeking damages and injunctive relief pursuant to federal law and pursuant to various state antitrust, unfair competition, unjust enrichment, and consumer protection laws of the states against Amazon.
Brave, a free and open-source web browser, filed a formal GDPR complaint against Google for infringing the GDPR “purpose limitation” principle. Enforcement would be tantamount to a functional separation of Google’s business.
Williams-Sonoma, a retail company that sells kitchenware and home furnishings, filed a formal complaint accusing Amazon.com of selling unauthorized Williams-Sonoma merchandise on its website. It also claimed the retail giant “unfairly and deceptively engaged in a widespread campaign of copying” designs of its West Elm furniture for its own furniture line, Rivet.
An online merchant has accused Amazon.com Inc. of forcing him and other sellers to use the company’s expensive logistics services, which in turn forces them to raise prices for consumers.
This lawsuit, which stems from the Cambridge Analytica scandal, is about Facebook’s practice of sharing its users’ personal information with third parties. The plaintiffs are current and former Facebook users who believe that their information was compromised by the company.