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Digital Data, Platforms and the Usual [Antitrust] Suspects: Network Effects, Switching Costs, Essential Facility

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Abstract

This paper asks whether the large amounts of digital data that are typically observed on large technology platforms—such as Google, Facebook, Uber and Amazon—typically give rise to structural conditions that would lead to antitrust concerns. In particular, I evaluate whether digital data augments or decreases concerns with regard to network effects and switching costs. I also evaluate whether data should be thought of as an ‘essential facility’.

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Notes

  1. United States v. Terminal Railroad Association, 224 U.S. 383 (1912). Economists have questioned whether even this example was an essential facility, or was instead a horizontal monopoly (Reiffen and Kleit 1990).

  2. For an example of such a platform see https://www.codenameone.com/blog/port-native-android-app-ios-iphone-guide.html.

  3. https://cordova.apache.org/.

  4. https://www.apple.com/shop/product/HK2Z2LL/A/office-365-personal-1-year-subscription-1-license and https://www.microsoft.com/en-us/p/office-365-personal/cfq7ttc0k5bf.

  5. https://www.android.com/switch/.

  6. Turbotax, which owns Itsdeductible, is only loosely a platform, based on the fact that it may be an intermediary for interactions between me and my tax professional.

  7. There is a small increase in page latency - that is, how quickly it loads - if there are too many cookies, which is why data aggregators can be a helpful tool.

  8. https://aws.amazon.com/s3/pricing/.

  9. http://www.smsmt.com/resources/the-cost-of-the-cloud-the-race-to-zero.

  10. https://qz.com/213900/the-nine-companies-that-know-more-about-you-than-google-or-facebook/.

  11. https://www.ftc.gov/news-events/press-releases/2014/05/ftc-recommends-congress-require-data-broker-industry-be-more?utm_source=govdelivery.

  12. https://www.acxiom.com/what-we-do/infobase/.

  13. Neumann et al. (2018) also suggests that sometimes these insights may not be accurate; it is the scope and size of the data itself that drives value in these markets.

  14. http://www.nielsen.com/us/en/press-room/2017/nielsen-and-comcast-agree-to-incorporate-set-top-box-viewing-data.html.

  15. https://www.wsj.com/articles/how-europes-new-privacy-rules-favor-google-and-facebook-1524536324?mod=article_inline.

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Tucker, C. Digital Data, Platforms and the Usual [Antitrust] Suspects: Network Effects, Switching Costs, Essential Facility. Rev Ind Organ 54, 683–694 (2019). https://doi.org/10.1007/s11151-019-09693-7

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