The Internet Ecosystem and Legal Regimes: Economic Regulation Supporting Innovation Dynamism
O'Melveny & Myers LLP; Silicon Flatirons
November 11, 2011
This paper delves into how antitrust and regulation should/shouldn't be applied to dynamic competition. Internet marketplace roles are dynamic, fluid and uncertain. That makes prediction hard and prescriptive rules unwieldy. Prior economic analysis of today’s Internet marketplace demonstrates that fact-based, case-by-case adjudication is the superior means of applying competition policy to economic markets. This paper explains the preferred case-by-case approach to Internet marketplace competition policy, an approach that scrutinizes the facts at hand, applying consistent principles, fairly offering interested parties access to decision-making, and explaining the evolution of policy as new facts and circumstances demand. Such adjudication empowers regulators to learn and respond to new market dynamics, recognizing that today’s conclusions may not be tomorrow’s realities. Past definitions of product markets may no longer fit the nature of substitutable products and services or, even if they do, those market definitions may fail to comprehend the impact that complementary markets (such as devices and operating systems) have on each other. The paper concludes that an antitrust law adjudicative approach is quite flexible, and entirely capable of conforming its analysis to the economic circumstances that the evolution of the Internet presents, and that effective and timely administrative processes should supplement the antitrust laws in order to adjudicate anticompetitive behavior in a timely manner.
Number of Pages in PDF File: 29
Keywords: Internet, antitrust, competition, regulation, adjudication
JEL Classification: L1, D2, K21
Date posted: November 12, 2011