Thomas B. Nachbar

Platform Effects

PUBLISHER
Jurimetrics
DATE
2021 Autumn
 

Abstract

Few issues have aroused more interest of late than the role of “platforms” in the economy. The Supreme Court has recently made the what is likely to be the first of many pronouncements on antitrust analysis of platforms, and major platform firms that dominate the economy – Google, Amazon, Facebook, and Apple – are facing intense scrutiny from both regulators and commentators. Courts, commentators, and policymakers are confronting the many ways that platforms both benefit and potentially harm society, from data privacy to content moderation to competition concerns over concentration of economic power in a few large platform firms. Indeed, the ubiquity of concerns and inquiries over platforms has caused confusion, with varying legal approaches overlapping and occasionally confounding each other.

This paper seeks to disentangle some of the overlapping concerns about platforms by focusing on concerns in antitrust, which, because of the high concentration evident in most platform markets, has an outsized role to play in platform regulation. “Platform” and “two-sided” are not just descriptions of firms or markets; they carry with them specific market and wealth effects – what I call “platform effects” – that are distinct from other, similar economic phenomena commonly associated with platforms, such as network effects. It is easy for courts to miss platform effects and their unique role in understanding platform business practices, as arguably happened in the Supreme Court’s recent American Express case on antitrust analysis of two-sided markets. 

Platforms are attractive targets for both antitrust enforcers and policymakers by virtue of their size and market concentration, but consideration of the economic effects generated by platforms provides a way to distinguish wide-ranging calls for platform regulation from the kinds of harms that antitrust is designed to prevent. Recognition of platform effects requires thinking selectively about platforms and their specific business practices and alters antitrust analysis of platform markets in important and surprising ways.

Citation

Thomas B. Nachbar, Platform Effects, 62 Jurimetrics 1-48 (2021).
 

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