The Separation of Platforms and Commerce
121 Pages Posted: 6 Jun 2018 Last revised: 17 Mar 2020
Date Written: May 15, 2019
A handful of digital platforms mediate a growing share of online commerce and communications. By structuring access to markets, these firms function as gatekeepers for billions of dollars in economic activity. One feature dominant digital platforms share is that they have integrated across business lines such that they both operate a platform and market their own goods and services on it. This structure places dominant platforms in direct competition with some of the businesses that depend on them, creating a conflict of interest that platforms can exploit to further entrench their dominance, thwart competition, and stifle innovation.
This Article argues that the potential hazards of integration by dominant tech platforms invite recovering structural separations. Structural separations have been a mainstay element of American economic regulation. Traditionally applied to critical networks and essential infrastructure, structural separations prohibited entry in certain markets and prevented dominant intermediaries from directly competing with the businesses reliant on their services. In recent decades, structural separations have been largely abandoned. At the same time that lawmakers have weakened or eliminated sector-specific regulatory regimes, judicial interpretation of antitrust law has drastically narrowed the forms of vertical conduct and structures that register as anticompetitive. And when antitrust enforcers have targeted these forms of conduct and structures, they have applied remedies that generally (1) fail to target the underlying source of the problem and (2) overwhelm the institutional capacities of the actors assigned to oversee them. Neglecting structural remedies results in both substantive harms and institutional misalignments—effects that are especially pronounced in digital platform markets.
This Article seeks to give structural separations a seat back at the table. Tracing the history of separations reveals that they have been motivated by a host of functional goals, ranging from fair competition and system resiliency to media diversity and administrability. Recalling this broader set of concerns brings into focus the range of factors at stake when dealing with dominant intermediaries and invites consideration of the degree to which separations in platform markets would also respond to a diverse set of problems.
Keywords: Competition Policy, Antitrust, Tech
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