Digital Platforms and Concentration
On April 19 and 20, 2018, the Stigler Center dedicated its annual Antitrust and Competition conference to the topic of “Digital Platforms and Concentration.” The invitation-only conference brought together economists, law scholars, intellectuals, venture capitalists, and business people for two days of discussion. Ahead of the conference, we published an ebook featuring advance analysis from ten conference presenters. This is the editor’s introduction to the ebook, written by Guy Rolnik.
Last year we embarked here on a project to reinvigorate the discussion on the questions of concentration and monopoly in the United States—a discourse that has ebbed in the last decades. For two days scholars from various disciplines debated the question of whether we have enough empirical evidence to support the notion that concentration and monopoly are growing problems.
Given the University of Chicago’s unique position and role in economics in general and specifically in antitrust, the discussion here drew considerable interest—enough to get more people engaged in these questions. In the year that has passed since our “Is There a Concentration Problem in America?” conference further studies and research have engaged with questions of concentration and monopoly and potential influence on inequality wages and prices.
Some of last year’s participants argued that market power has become a dominant phenomenon in 21st-century capitalism, others focused on the role that horizontal shareholding may have in the debate, and more radical voices called for reviving the political criteria that have at times played a role in antitrust in the past. Others argued that the antitrust toolbox is not the answer for the challenges to democracy posed by concentration of political power among large corporations.
While most scholars and experts agree that the current antitrust toolbox is sufficient to tackle most questions of market power and competition in the traditional product and service industries, this is not the necessarily the case with the digital platform giants that have emerged in the last decade.
Winner-take-all dynamics, network externalities, and two-sided markets where most consumers are on the “free” side, combined with vast accumulation of data among just a few firms, may force us to enlarge or amend the antitrust toolbox—or complement it with other policy levers—if we want to address.
When we announced in summer 2017 that the second antitrust and concentration conference would focus on the digital platforms, discussion of these questions in the United States was mostly limited to experts. That has changed markedly: just two weeks before the conference we witnessed ten hours of testimony by Facebook CEO Mark Zuckerberg before Congress. While most of the discussion dealt with the recent Cambridge Analytica data breach, the challenges and concerns associated with the dominance of Facebook and the nature of its business model also started to get much attention.
What is probably clear today is that the discussion of the dominance of the digital platforms cannot be limited to users welfare; it must also address the systemic risks and harms that concentration of data can wreak on our democracy.
Political considerations and threats have always loomed behind the antitrust and competition debate, but clearly do even more so with the digital monopolies. It will be hard to separate economic considerations from politics given the outsized influence that some of the digital giants have on the markets for informations, news, and ideas. Of course, the norm that antitrust enforcement should be immune from direct political influence is integral to maintaining its integrity and must be defended. Nevertheless, there is room for discussion whether antitrust should continue to rely on purely economic analysis, or whether it should also take into account the reality in which firms can wield market power to acquire enormous political influence.
The 2nd Annual Stigler Center Antitrust and Concentration Conference again brings together scholars, experts, and practitioners from many disciplines: economics, law, political science, technology, venture capital, psychology, design, and the news media. Their challenges are formidable and it’s high time to bring the most rigorous and broad intellectual energy to make sure that the benefits of technology and innovation will not be squandered by concentration of data and political and economic power.
Check out the rest of the ebook: