Platform Discrimination Against Rivals: An Economic Framework for Antitrust Enforcement

Platform Discrimination Against Rivals: An Economic Framework for Antitrust Enforcement

Erik Hovenkamp

USC Gould School of Law

Abstract

There is widespread concern that dominant platforms may be undermining competition by discriminating against rivals in adjacent markets, such as by refusing to let rival sellers use their platforms or by engaging in “self-preferencing.” Such acts fall within a category of unilateral conduct that is virtually impossible to challenge under existing antitrust law. To address this, Congress recently proposed complex new legislation aimed at platform discrimination. However, these bills are poorly crafted and could cause serious economic harm in their own right.

This paper suggests an economic framework for evaluating platform discrimination in a practicable way that is consistent with core antitrust principles. Following other recent work, it argues that platform discrimination raises essentially the same competition concerns as tying or similar restraints, and that it should be analyzed under a revised legal standard that treats it as such. After sketching out the basic proposal, the bulk of the paper focuses on applying it to real-world cases, such as analyzing foreclosure; defining markets; overcoming proof difficulties; and evaluating potential defenses.