Accounting for Two-Sided Business Reality Reduces False Negatives as Well as False Positives in Antitrust Decisions Involving Platform Enterprises

Abstract

The two-sided analysis of platform businesses isn’t pro-defendant or pro-plaintiff. By accounting for business reality and modern economics, it helps courts and enforcement agencies reach the right decision and thereby reduce the likelihood of false negatives as well as false positives. Sometimes two-sided analysis is essential for uncovering how conduct harms competition and consumers. Other times it helps establish that conduct is innocuous or beneficial. Fears, and hopes, that two-sided analysis will discourage enforcement efforts are misplaced.

Keywords: two-sided markets, multisided platforms, rule of reason, mergers platforms, error costs in antitrust, network effects, American Express steering case, Supreme Court and platforms

JEL Classification: K21, K23, K40, L13, L14, L41, L42, L51 L86