June 12, 2019

The problems of regulating digital markets

In this Hindustan Times article, Vikram Sinha discusses the competition regulation of digital markets, "architectural harms" in zero-price markets and the way forward in India. Excerpts:

 

"But something is lost in translation when applying the consumer welfare standard to digital markets. Products like Google’s search engine or Facebook operate in zero-price markets. The user benefits are immense and obvious. And in the absence of a price, there is no quantifiable user harm by the lights of conventional competition logic. Focusing on price, however, ignores what law professor, Daniel Solove, has dubbed “architectural harms” — long term, non-monetary drops in consumer well-being in markets where they surrender excessive data and attention in return for a free product. A small but growing body of jurisprudence and regulatory action is beginning to recognise these costs. The Competition Commission of India, for instance, has noted that users pay an “implicit price in form of personal data” when accessing online platforms.

 

India has an advantage in some ways. The recent vintage of its competition regulation and lack of precedent mean that it has more room for manoeuvre when grappling with such thorny questions. How should pricing dynamics for multisided platforms that undercharge one side and recover costs from the other be assessed? How should relevant product markets and dominance be measured in digital markets? If information is to be considered an implicit cost that users pay for accessing “free” products, how much qualifies as abuse of a dominant market position?"

 

Read the full article here.

Topic : Transitions / In : OP-EDS
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