The Separation of Platforms and Commerce
Posted: 6 Jun 2018 Last revised: 30 Jan 2019
Date Written: May 15, 2018
A handful of technology platforms mediate a growing share of online commerce and communications. Structuring access to markets, these firms function as gatekeepers for billions of dollars in economic activity. While recent debate about tech platform power has focused on scale, a key feature these firms share is their structure. By being integrated across lines of business, dominant platforms compete with the companies that now depend on them. This structure enables platforms to discriminate against and extort value from rival businesses, threatening to undermine innovation and the competitive process.
This Article argues that the potential hazards of integration by dominant tech platforms invite recovering structural separations. Separations regimes limit the lines of business in which a firm can engage, either by proscribing entry in certain markets, or by requiring that distinct lines of business be operated through separate affiliates. Previously viewed as both a standard regulatory tool and key antitrust remedy in network industries, structural separations have largely fallen into desuetude. At the same time that specific regulatory regimes have been weakened or abandoned entirely, antitrust law has drastically narrowed the forms of vertical conduct and structures that register as anti-competitive. And when antitrust enforcers have targeted these forms of conduct and structures, they’ve applied remedies that generally (i) fail to target the underlying source of the problem and (ii) overwhelm the institutional capacities of the actors assigned to oversee them. Neglecting structural separations 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. Doing so would help focus attention not just on how dominant platforms use their integrated structure to entrench their dominance and undermine innovation, but also on the features of digital markets that may render other network remedies — absent structural separations — insufficient. Tracing the history of separations, moreover, reveals that they have been motivated by a host of functional goals, ranging from the promotion of open markets to the checking of concentrated private power and the setting of rules that are institutionally administrable. This history invites us to consider the degree to which separations in platform markets would also respond to a multivalent set of concerns.
Keywords: Competition Policy, Antitrust, Tech
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