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Economic Efficiency versus Democracy: On the Potential Role of Competition Policy in Regulating Digital Markets in Times of Post-Truth Politics

Forthcoming, Damien Gerard and Ioannis Lianos (eds.), Competition Policy: Between Equity and Efficiency, Cambridge: Cambridge University Press, 2017

Max Planck Institute for Innovation & Competition Research Paper No. 16-16

29 Pages Posted: 7 Dec 2016  

Josef Drexl

Max Planck Institute for Innovation and Competition; Ludwig Maximilian University of Munich

Date Written: December 6, 2016

Abstract

The efficiency approach, as advocated by the Chicago School in particular, only provides a very narrow approach to competition law analysis that relies on the preferences of consumers. This approach remains especially insufficient for the regulation of firms that provide citizens with politically relevant news and information. In times of digitisation, citizens increasingly rely on news disseminated by Internet intermediaries such as Facebook, Twitter or Google for making political decisions. Such firms design their business models and their algorithms for selecting the news according to a purely economic rationale. Yet recent research indicates that dissemination of news through social platforms in particular has a negative impact on the democratic process by favouring the dissemination of false factual statements, fake news and unverifiable conspiracy theories within closed communities and, ultimately, leads to radicalisation and a division of society along political and ideological lines. Experience based on the Brexit referendum in the UK and the recent presidential elections in the US highlights the ability of populist political movements to abuse the business rationale of Internet intermediaries and the functioning of their algorithms in order to win popular votes with their ‘post-truth politics’. This article relies on competition law principles to discuss future approaches to regulating the market for political ideas at the interface of competition law and media law in the new digital age. Based on constitutional considerations the article rests on the assumption that media markets should not only provide news that responds best to the psychological predispositions and subjective beliefs of the individual citizen, but also provide correct information and diversity of opinion as a basis for making informed democratic decisions.

Keywords: competition law, media law, economic efficiency, social platforms, Facebook, market for ideas, conspiracy theories, post-truth politics, Brexit, Trump, populism

Suggested Citation

Drexl, Josef, Economic Efficiency versus Democracy: On the Potential Role of Competition Policy in Regulating Digital Markets in Times of Post-Truth Politics (December 6, 2016). Forthcoming, Damien Gerard and Ioannis Lianos (eds.), Competition Policy: Between Equity and Efficiency, Cambridge: Cambridge University Press, 2017; Max Planck Institute for Innovation & Competition Research Paper No. 16-16. Available at SSRN: https://ssrn.com/abstract=2881191

Josef Drexl (Contact Author)

Max Planck Institute for Innovation and Competition ( email )

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.ip.mpg.de

Ludwig Maximilian University of Munich

Munich, 80539
Germany

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