The Digital Economy

Luigi Zingales argues that Elon Musk is right to sue OpenAI and CEO Sam Altman, given the economic principles at stake.

In new research, Monika Leszczyńska explores how consumers’ ideas of morality should inform government agencies and courts as they seek to update and enforce consumer protection laws. The focus is on adapting these laws to address modern business practices in the digital age. These practices involve behavioral manipulation of consumers, resulting in non-monetary damages, such as the invasion of privacy.

At the heart of the United States Google Search case is the monopolizing effect of Google securing for its own search offering the status of default search engine on a web browser, such as Safari, Chrome, or Firefox. The authors review the behavioral economics and empirical evidence of this effect and suggest several conduct and structural remedies to open up the search market to competition.

In new research, Giovanna Massarotto explains how collusion manifests differently in the digital economy. She argues that antitrust regulators, scholars, and courts need to incorporate lessons from computer science to update how they monitor markets and identify algorithmic collusion.

Following the Federal Trade Commission’s 2021 publication of “Nixing the Fix: An FTC Report to Congress on Repair Restrictions,” private “right to repair” cases have multiplied against companies that leverage their market power in a “primary equipment market” (e.g., tractors) to force their customers also to purchase their offerings in “aftermarkets” (e.g., tractor repairs) that otherwise would be competitive. Daniel McCuaig argues that the application of the 1992 Supreme Court decision in Eastman Kodak Co. v. Image Technical Services, Inc. to these cases misunderstands that case and improperly shields monopolists from competitive pressures, including in Epic’s recent case against Apple.

Three artificial intelligence experts at the University of Chicago disclose the trends and issues regarding AI that they'll be watching for in 2024.

The following is an excerpt from Ignacio Cofone’s new book, “The Privacy Fallacy: Harm and Power in the Information Economy,” out now.

The European Union’s Digital Markets Act (DMA), designed to regulate Big Tech, supplements current antitrust laws that pursue case-by-case analyses of business conduct with general rules to block potentially anticompetitive behaviors. Detractors criticize the DMA for its lack of nuance. Supporters applaud its general principles as a necessary bulwark against Big Tech’s market powers, which current case-by-case analysis has been unable to rein in. However, neither side appreciates the true complexity of the DMA or how its principles interact to prevent anticompetitive behavior, writes Alba Ribera Martínez.

Recent antitrust interventions have put forward behaviorally informed theories of harm. However, they have adopted a deterministic model of behavior, missing the nuances that allow behavioral economics to provide a richer picture of people’s conduct. The recently concluded Google trial, grounded on the stickiness of defaults, is a good example. A more careful application of behavioral economics would have shown how Google’s purchase of default search engine status was a part of a broader monopolization plan. It would also show why the dominant remedy, forced choice, would have negligible effects.

Large digital platforms have evolved into vast multimarket/multiproduct conglomerates, both organically and through a decade-long acquisition spree. Conduct and mergers can no longer be evaluated “market-by-market.” Yet the antitrust assessment of these “ecosystems” is still in its infancy, and regulators seeking to explore harm arising from the control of multiple assets and capabilities are falling back on traditional theories of harm that are more likely to resonate with judges. Substantive progress is unlikely to emerge spontaneously from consultants or academia, and regulators will need to harness interest in this space by motivating and coordinating relevant policy research, argues Cristina Caffarra.