Assessing Abuse of Dominance in the Platform Economy: A Case Study of App Stores
European Competition Journal 2020, Vol. 16(2-3), 431-491
47 Pages Posted: 10 Jul 2020 Last revised: 18 Dec 2020
Date Written: May 1, 2020
While online platforms are an enforcement priority for European competition authorities, the latter are only now turning their attention to app stores (after having scrutinized, among others, hotel booking websites, search engines and online marketplaces). However, app stores can be characterized as the quintessential multisided platform market, where a few players (Apple and Google) serve as intermediaries between third-party suppliers (app developers) and consumers in exchange for a commission fee. Moreover, these app stores are embedded in intricate mobile ecosystems with varying degrees of ‘openness’ to third parties.
Increasingly, these third parties are complaining about allegedly anticompetitive practices. In particular, the operators of app stores—which are vertically integrated into the supply of apps—are said to preference the distribution of their own apps over those of competitors. Such ‘self-preferencing’ can take many forms. Music streaming app Spotify, for example, complains that it is being treated unfairly in comparison with Apple’s music app because of exorbitant commission fees, delayed approvals, restricted promotions, and limited integration with Apple’s broader ecosystem. Other apps claim they have simply been removed when the app store operator introduced its own competing app.
App stores thus constitute the ideal case study to clarify the assessment of abuse of dominance in the platform economy. Firstly, this implies correctly delineating markets: do app stores operate in one or multiple markets (one for each ‘side’ of the platform)? Secondly, one needs to establish market power: do network effects entrench the market power of app stores, or is any market power transient in a digital context? Thirdly, under which theory of harm should one qualify the conduct of app stores: refusal to supply, margin squeeze, tying — or perhaps an independent theory of self-preferencing? Fourthly, can seemingly anticompetitive practices not be justified by the need for effective platform management? And finally, how does the new P2B Regulation impact the freedom of app store operators? In answering these questions, this paper offers a guide to both authorities and concerned businesses, when it comes to app stores as well as other multisided platforms.
Keywords: app stores, abuse of dominance, market definition, market power, theories of harm, objective justification, P2B Regulation
JEL Classification: K00, K20, K21, K24, L40, L41, L43
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