August 2017

Competition policy agencies worldwide are suffering today a sort of middle-age crisis. The advent of the Digital Economy is placing them into a serious conundrum. Despite a decade or so of pro-efficiency rhetoric the policy is largely geared towards challenging bigness in the market. That focus is clearly at odds with the fast growing emergence of innovative digital Collaborative Consumption (e.g. Uber, Airbnb, crowdfunding, and so on). These platforms are quickly rising to dominance due to their feedback loop effects generating increasing returns. The conventional structural analytical tools of market assessment, notably, the “small but significant and non-transitory increase in price” (better known as “SSNIP”) used to measure the size of the antitrust market, seems to be unfit to appraise the fast change brought about by the ubiquitous wave of innovation. This limitation is clearly obvious in the wavering position taken by Competition agencies towards the assessment of Digital Platforms. Collaborative platforms disrupt the industrial organization anywhere they operate, radically transforming the agreed rules of the game, shattering the peaceful coexistence of economic agents. The recent Google decision by the European Commission reveals that the current analytical stock of competition agencies may fall short to understand the radical effects of disruptive innovation.  The rapid growth of these platforms is at odds with the usual predicament of competition agencies to preserve the best possible use of existing economic resources (i.e. economic efficiency) through balanced market structure. I claim that the conventional Competition Policy SSNIP methodology distorts the assessment of dynamic competition, and drives competition authorities into a cognitive dissonance that misleads their understanding of markets. Check the link More information about the increasing animosity of the European Commission competition authority towards US tech digital platforms is here (in Spanish) Like CommentShare ‍