Tuesday, November 8, 2022

Antitrust Presumptions for Digital Platforms

Antitrust Presumptions for Digital Platforms

Herbert Hovenkamp

University of Pennsylvania Carey Law School; University of Pennsylvania - The Wharton School; University College London



Antitrust litigation often involves situations where important relevant information is limited or costly to obtain, behavior is complex and can have multiple explanations, or theory is not particularly well developed. As a result, legal and factual presumptions, evidentiary shortcuts, and assignment of the burden of proof can be critical and often decisive. This situation is common across all types of antitrust actions, including unilateral and collaborative conduct, as well as mergers. In general, the more complex an issue is or the market in which it occurs, the more valuable evidentiary shortcuts become, provided that they point us in the right direction. This paper considers how these constraints should be applied to large digital platform markets.

Uniquely harsh treatment threatens an error that antitrust policy has made before, which is excessive management of a part of the economy that is in fact notable for its superior performance. The need for and nature of presumptions or other evidentiary shortcuts should be partly based on our overall assessment of performance. If we believe that the markets dominated by large digital platforms are performing poorly, with a great deal of monopoly and low customer satisfaction, then stronger evidentiary biases against them might be warranted. However, if we think they are performing relatively well, then perhaps such presumptions should be weakened or not employed at all.

At the same time, however, the digital economy contains unique features that serve both to differentiate and to complicate antitrust analysis. Further, the opportunities for engaging in harmful exercises of market power are numerous. Large tech firms trade heavily, although not exclusively, in digital content; they have different cost structures than most traditional firms; they often operate on “two-sided” markets; and they are heavily involved in distribution with both direct and indirect network effects.


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