Author: Richard Feasey Publisher: Centre on Regulation in Europe asbl (CERRE) ISBN: Category : Political Science Languages : en Pages : 62
Book Description
This report considers the challenges that arise in remedying ‘intermediation bias’ by vertically integrated digital platforms which match the needs of different groups of users so they can transact with each other. Platforms perform this intermediation function by displaying and ranking those services or products which are most relevant to the users’ needs and, in doing so, compete for consumers’ attention. What is intermediation bias? Platforms compete for users’ attention to varying degrees depending on the ease with which users can switch between platforms and their inclination to do so, entry barriers for other platforms, and many other factors. Generally, platforms have an incentive to offer consumers the most relevant matches, because the platforms can then capture part of the value that has been created for both the consumer and the businesses that are being intermediated. However, sometimes platforms may also have incentives to deviate from offering the most relevant matches first and bias the intermediation towards matches that are more profitable to themselves. This concern is especially pronounced in the context of vertically integrated platforms which undertake both the intermediation function and supply services or products in the downstream market and who therefore have the ability to direct users’ attention towards their affiliated services and products, even if rival services or products are more relevant to users’ needs. Such ‘biased intermediation’ may harm consumers, both by providing them with poorer matches on the platform and by distorting competition in the relevant downstream market and, potentially, in the platform market itself. Competition authorities have prosecuted a number of significant cases involving intermediation bias – including the recent Google Shopping case – and it seems likely that further cases will be pursued in the future. It can be very difficult to detect bias in the first place, or to determine the source of any bias that has been detected. Digital platforms use very complex algorithms to perform their intermediation functions and make frequent changes to them. Distinguishing between legitimate changes which improve the quality of matches and those which unfairly bias them can be very difficult since the impact of any individual adjustment can be subtle and the effects can be cumulative. This task may be even more difficult ex post, as competitive conditions may have changed in the meantime. This report does not imply that all vertically integrated platforms engage in biased intermediation, nor does it elaborate on how to detect intermediation bias and theories of harm. Rather, it presupposes that a competent authority, whether a competition authority or a regulatory authority with the power to impose ex-post remedies, has identified intermediation bias and it is necessary to remedy it. The aim of this report is to discuss the approach to remedies in this context. Challenges when remedying intermediation bias The challenge of remedying intermediation bias arises in part because a user’s attention is rivalrous and the selection and ranking of matches must involve giving prominence to some results and demoting or excluding others. Non-discrimination rules of the kind applied in the regulation of vertically integrated firms in network industries would compromise the core sorting function which the platform performs. Other remedies used in network industries, such as those requiring regulated access to upstream inputs, are also inappropriate when rivals in digital markets require equal access to users’ attention rather than to specific factors of production. Effective remedies against intermediation bias must either ensure that the platform no longer has an incentive to engage in biased intermediation by separating ownership of the platform from the entity engaged in the downstream activities, or must ensure that the platform no longer has the ability to produce matches which would harm users of the platform. The need for experimentation We recognise that competition authorities may be reluctant to undertake their own remedy design and may prefer to rely upon proposals submitted by platforms, criticisms by rivals, or benchmarks or quotas which specify outcomes in the downstream market rather than directly addressing bias in the intermediation process itself. This seems unsatisfactory. Instead, we would urge public authorities – whether a competition authority or some other body such as a specialist ‘digital agency’ or another existing regulatory body – to demand access to the same experimental data which the platform itself used when proposing any particular remedy. This means the authority would have the same access to internal data and documents of a firm as it is able to obtain when seeking to establish an abuse. In addition, the authority should be able to direct the platform to run other experiments in order to assess their effect on outcomes. They might even involve their own staff in the experiments being undertaken by the platform (as some financial service regulators now do before authorising new financial products). At the same time, a platform might submit experimental data before making changes to its factor-based mechanisms and obtain a ‘safe harbour’ ruling from the authority in return. We think the sharing of experimental data in this way could significantly improve the quality and effectiveness of remedies for intermediation bias, whilst also providing greater certainty and objectivity for dominant vertically integrated platforms that perform intermediation functions. Such data is commercially sensitive and confidentiality would need to be assured. Experiments of this kind are better suited to assessing the impact of incremental changes than fundamental ones and may not be able to determine whether a particular set of changes would restore downstream market conditions to those which prevailed prior to the abuse, as opposed to those which now prevail. The experiments may impose some additional costs on platforms and should be undertaken only for the specific purpose of remedy appraisal. Such a new approach may require new institutional arrangements and changes to the existing legal framework in order to implement them, and might involve both competition authorities and existing or new regulatory bodies working together in a way that they have not generally done to date. The boundaries between ex ante and ex post functions may be less obvious in the future: designing effective remedies for intermediation bias may require both ex ante assessments before they are introduced and ex post appraisals after implementation. It is likely to be a more iterative and a more collaborative process, informed by the scientific results of experiments, than anything we have seen undertaken by competition authorities to date.
Author: Jan Krämer Publisher: Centre on Regulation in Europe (CERRE) ISBN: Category : Law Languages : en Pages : 104
Book Description
Across the world, regulators and policy makers are grappling with how to establish a competitive, safe and fair online environment that also safeguards users’ fundamental rights as citizens. Ahead of the European Commission’s Digital Markets Act (DMA), this book “Digital markets and online platforms: new perspectives on regulation and competition law“, presents CERRE’s latest contribution to the debate with concrete policy recommendations. Together, the policy recommendations in this book present a roadmap that should be pursued for EU policy makers to safeguard competition and innovation in digital platform markets. They can be organised into three key areas for action: (i) More effective enforcement, (ii) increased transparency and switching easiness, and (iii) providing access to key innovation capabilities. “The need to safeguard fair and vibrant competition, which is also seen as an important driving factor for innovation, is nothing new for policy makers. However, the characteristics and complexities of digital markets have challenged some of the traditional approaches.” – Jan Krämer, editor of the book and CERRE Academic Co-Director The book’s recommendations highlight that platform transparency and associated data collection by authorities, as well as data sharing by platforms (initiated through consumers or authorities), are the two most important overarching policy measures for platform markets in the near future. They facilitate enforcement, consumer choice, and innovation capabilities in the digital economy. The contents of this book were presented and debated during a CERRE live debate with guest speakers Anne Yvrande-Billon (Arcep’s Director of Economic, Market and Digital Affairs), MEP Stéphanie Yon-Courtin (Vice-President of the European Parliament’s Committee on Economic and Monetary Affairs) and Javier Espinoza (Financial Times’ EU Correspondent covering competition and digital policy).
Author: Jan Krämer Publisher: Centre on Regulation in Europe asbl (CERRE) ISBN: Category : Technology & Engineering Languages : en Pages : 135
Book Description
This report analyses the processes that turn data into economic value for online search, e-commerce and media platforms. It concludes that forcing data sharing through policy intervention would not prevent dominant incumbents to continue to benefit economically from greater access to data over new entrants. Instead, policy makers should focus on enabling niche entry, niche growth and a level playing field for competitors in new and emerging markets. Data play a central role in the business models that shape competition and innovation in digital markets. As dominant providers of online services collect ever more user data they generate data-driven network effects. They can then improve their services faster, and venture faster into related markets than competitors with less data, thereby raising entry barriers for innovative start-ups. The authors, Sally Broughton Micova (CERRE & University of East Anglia), Jan Krämer (CERRE & University of Passau) and Daniel Schnurr (University of Passau), have analysed processes that transform data into economic value for online search, e-commerce and media platforms. They find that in each case, more data, especially on user behaviour, gradually improves the quality of the service, thereby generating high economic benefits for the firm. The authors find that data-driven network effects can nevertheless be a source of efficiency which can ultimately benefit consumers. Even if some data is shared through policy intervention, dominant incumbents will continue to benefit economically and competitively from greater access to data over new entrants. “We conclude that it is neither realistic nor desirable to try to break data-driven network effects through policy intervention. Instead, we would strongly encourage policy makers to focus on enabling niche entry and niche growth. To do so, they should facilitate the sharing of behavioural user data gathered by the dominant firm with other firms.” The authors provide policy recommendations for data access remedies to safeguard competition, innovation and the openness of the digital ecosystem: 1. Remedies that achieve a more level playing field in the digital economy by breaking the data-driven network effects of data-rich incumbents should be entertained as a last resort and only under specific conditions. 2. Policy makers should foster data sharing on two levels to strike a balance between consumers’ privacy, competition and innovation. They should require the sharing of aggregated and anonymised raw user data in bulk, after a careful review and on a case-by-case basis. They should also facilitate the sharing of detailed raw user data through improved data portability, based on individual users’ consent. Bulk sharing of raw user data should be limited to data that was collected as a by-product of the incumbent’s dominant user-facing service, such as search logs, in order to maintain incentives for innovation and data collection. The main challenge will be to balance privacy concerns with maintaining enough detailed data to ensure it is of value to third-parties. 3. Dominant firms should also be obliged to allow consumers to port their raw data to another provider continuously and in real time. Privacy concerns can then be overcome and the shared user profiles can be more detailed than under bulk sharing. In concert with bulk-sharing, data portability can be a valuable source for attaining both detailed and representative data sets.
Author: Alexandre de Streel Publisher: Centre on Regulation in Europe (CERRE) asbl ISBN: Category : Law Languages : en Pages : 162
Book Description
In the dynamic landscape of EU digital platforms regulation, we are at a focal point of discussions shaping the future of implementation of the Digital Markets Act – arguably one of the most important pieces of legislation of the current times’ digital policy sphere. With the DMA aiming for contestability and fairness in digital markets, designated gatekeeper platforms are set to unveil their compliance plans on March 2024. The European Commission, in its unique role as an enforcer, will lead the work of determining non-compliance and ensure that the DMA fulfils its ambitious goals. However, the success of implementation will depend on the principles on which the new law will be applied. This CERRE report recommends that the DMA implementation process should be guided by the substantive principles of effectiveness, proportionality, non-discrimination, legal predictability, and consistency with other EU laws. Furthermore, the Commission will have to approach enforcement taking into account the procedural principles of responsive regulation and participation, due process, and ex ante and ex post evaluation. The report then applies those principles to series of specific DMA obligations: choice architecture, horizontal and vertical interoperability and data related obligations. It is also essential to agree on how the Commission, gatekeepers, and third parties will engage with each other. The DMA provides a model of compliance which is not based solely on deterrence; instead, the gatekeepers are encouraged to and will comply by engaging co-operatively with the Commission and third parties. However, it is still up for question how this principle will be applied, what it expects from the stakeholders, and how the Commission itself will exercise its deterring powers to enforce compliance. On top of it all, this CERRE DMA edition is also proposing a set of quantitative measurement indicators, so-called output indicators, each relating to a particular obligation or set of obligations, in order to better understand the impact of obligations on the relations between gatekeepers and third parties. These quantitative indicators will not represent specific targets or thresholds against which compliance should be assessed. They will neither attempt to measure the effect of changes in conduct on market outcomes for users nor, more generally, competition. These quantitative measures will be added to other evidence, such as complaints or qualitative representations from affected parties, including gatekeepers, which the Commission will consider in its compliance assessments. This report was written in the framework of a 8-months-long, multi-stakeholder CERRE initiative entitled the ‘DMA Compliance Forum’ that created a neutral and trusted platform and facilitated dialogue among CERRE members and academics to contribute to the effective and proportionate enforcement of the regulation.
Author: Jan Krämer Publisher: Centre on Regulation in Europe asbl (CERRE) ISBN: Category : Political Science Languages : en Pages : 103
Book Description
This study provides recommendations on how to make personal data portability more effective. This will truly empower consumers to use the services they want and share their data with whoever they wish and stimulate innovation in Europe. With the entry into force of the GDPR, European citizens gained new rights, notably with data portability. But two years later, there is still little sign of people exercising this right, and of companies offering an easy and convenient service for data portability. While the European Commission is finalising its evaluation of the GDPR and closes its consultation on the European data strategy, the authors, professors Jan Krämer, Pierre Senellart and Alexandre de Streel*, warn that the current legal framework requires clarifications to better empower European citizens in a data-driven society. In this study, they identify barriers to data portability, including the lack of possibilities to import data as well as the lack of common standards and tools to access data as easy as the click of a button. The ability to provide users with a centralised dashboard for monitoring and controlling the flow of their data is also critically missing. “Today, consumers do not widely use data portability for reasons that can and should be overcome. Making data portability more effective is better for competition, for innovation and to empower users,” stress the authors. “There should be no second-guessing on whether to make data portability more effective, the time to act is now.” The current EU framework encourages data portability, but there are legal gaps that the EU should fill. The authors insist on the need for detailed guidance on how data portability can be facilitated and on which data is subject to data portability without violating privacy rights. They advocate that data provided by users when using a service, such as search history (i.e. “observed data”) should clearly be included under the scope of data portability. The authors consider it essential that the obligation to offer standardised Application Programming Interfaces (APIs) be much more widespread to enable consumers to continuously port their data. “We believe that standardised APIs that enable continuous data portability is a prerequisite for encouraging more organisations to import personal data, and for encouraging more consumers to initiate such transfers,” explain the authors. Projects, such as the Data Transfer Project have highlighted that continuous data portability is technically feasible. The authors argue that Personal Management Information Systems (PIMSs) facilitate the complex consent management and offer users a centralised dashboard for monitoring and controlling the flow of their data will have a crucial role to play for the wider adoption of data portability. “It must be as easy as clicking a button for consumers to continuously share data they created with one provider to another provider. This may also require educating and informing users on their rights through information campaigns alongside clear policy measures,” explain the authors. Nevertheless, they stress that PIMSs are not likely to find a sustainable business model, and thus, policy makers should support the emergence of open-source projects by setting common standards for data transfers, consent management, and identity management.
Author: Juan Montero Publisher: Routledge ISBN: 1000377326 Category : Business & Economics Languages : en Pages : 417
Book Description
Cutting through the confusion around the nature and implications of digitalization, this book explores the rise of the new digital networks, how they affect traditional infrastructure, and how they will eventually need to be regulated. The authors examine how digitalization affects infrastructures in telecommunications, transport, and energy, and how digital platforms establish themselves as a new network on top of and in addition to traditional ones. Complex concepts are introduced through short and colorful stories about the founders of the most popular platforms (Google, Facebook, Skype, Uber, etc.) and how they grew to positions of power, drawing parallels with century-old traditional network industries’ monopoly power (AT&T, General Electric, etc.). The authors argue that these digital platforms strongly interfere with traditional infrastructures that are heavily regulated and provide essential services for society – meaning that digital platforms should be considered as a new and much more powerful type of infrastructure and will require regulation accordingly. A global audience of policy makers, public authorities, consultants, lawyers, students, and academics, as well as anyone with an interest in these digital platforms, will find this book enlightening and essential reading.
Author: Noby Thomas Cyriac Publisher: Nomos Verlag ISBN: 3748934718 Category : Law Languages : en Pages : 322
Book Description
Der Autor untersucht interdisziplinär, inwieweit Art. 102 AEUV geeignet ist, den Wettbewerb vor dem missbräuchlichen Verhalten marktbeherrschender Plattformen zu schützen. Nach einer ersten Erörterung der Grundlagen der digitalen Wirtschaft, insbesondere Big Data und mehrseitige Plattformen, werden die relevanten Konzepte, die von EU-Kommission und EU-Gerichten in ihrer Entscheidungspraxis zur Auslegung von Art. 102 AEUV entwickelt wurden, näher beleuchtet, um ihre Eignung für das Missbrauchsverbot mit Blick auf Plattformbetreiber vor dem Hintergrund der Besonderheiten mehrseitiger Märkte zu bewerten. Auch das Vorhandensein und die Abgrenzung eines Datenmarktes werden diskutiert.
Author: Andrej Savin Publisher: Edward Elgar Publishing ISBN: 1789908574 Category : Law Languages : en Pages : 424
Book Description
This extensively revised and updated third edition of EU Internet Law offers a state of the art overview of the key areas of EU Internet regulation, as well as a critical evaluation of EU policy-making and governance in the field. It provides an in-depth analysis of the ways in which relevant legal instruments interact, as well as comparative discussions contrasting EU and US solutions.
Author: Massimo Motta Publisher: Cambridge University Press ISBN: 1009081462 Category : Business & Economics Languages : en Pages : 411
Book Description
In many economic sectors – the digital industries being first and foremost – the market power of dominant firms has been steadily increasing and is rarely challenged by competitors. Existing competition laws and regulations have been unable to make markets more contestable. The book argues that a new competition tool is needed: market investigations. This tool allows authorities to intervene in markets which do not function as they should, due to market features such as network effects, scale economies, switching costs, and behavioural biases. The book explains the role of market investigations, assesses their use in the few jurisdictions where they exist, and discusses how they should be designed. In so doing, it provides an invaluable and timely instrument to both practitioners and academics.
Author: Christopher Decker Publisher: Cambridge University Press ISBN: 1009092553 Category : Business & Economics Languages : en Pages : 780
Book Description
Economic regulation affects us all, shaping how we access essential services such as water, energy and transport, as well as how we communicate with one another in the digital world. Modern Economic Regulation describes the core insights of economic theory on which regulatory policies are based and connects this with evidence of how regulation is applied. It focuses on fundamental questions such as: why are certain industries regulated? What principles can inform regulation? How is regulation implemented? Which regulatory policies have been more, or less, effective in practice? All chapters in this second edition are fully updated to reflect the latest research and evidence, while five new chapters cover behavioural economics and the regulation of rail, aviation, payment systems and digital platforms. Each chapter contains discussion questions and topical case studies, and online materials include over 60 applied exercises that explore real-life regulatory problems from around the world.
Author: Richard Feasey
Author: Jan Krämer
Author: Jan Krämer
Author: Alexandre de Streel
Author: Jan Krämer
Author: Juan Montero
Author: Noby Thomas Cyriac
Author: Andrej Savin
Author: Massimo Motta
Author: Christopher Decker