Digital Ecosystems and Competition Law: Ecological Approach (HSE University)

Arguments

Digital platform ecosystems are complex adaptive systems like natural ecosystems.

Supporting facts:

• The ‘eco-antitrust’ approach sees competition authorities as overseeing the system as a whole, understanding their evolution. The acquisition cases of Microsoft’s acquisition of Activision Blizzard by the CMA and Booking.com’s acquisition of eTravellery by the European Commission serve as examples.

• The application of this thinking to competition law and policy could aid in effective, systematic regulation.

Topics: Competition Law, Antitrust, Ecosystem Theory, Digital Platforms

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Antitrust authorities should consider the cyclical nature of developments in digital marketplace ecosystems in their regulation.

Supporting facts:

• The cyclical paradigm reflects the stages of birth, growth, and externalization in the development of digital ecosystems as exemplified in the Android case.

• Regulation that is in line with the cyclical, constantly evolving and adaptive nature of these ecosystems could potentially yield better outcomes.

Topics: Competitive Law, Ecosystem Theory, Cyclical Nature

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There is a trend towards fragmentation in the regulation of the global digital economy.

Supporting facts:

• Different jurisdictions often have different perspectives on the same digital phenomenon, leading to fragmentation in regulation.

• The lack of a cohesive and comprehensive view on how to regulate the digital economy at a global level exacerbates this fragmentation.

Topics: Regulation, Global Economy, Digital Platforms

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Alexey Ivanov suggests that smaller and developing countries should apply a shared methodology for understanding digital markets and competition laws, developed through collaboration, with support from organizations such as UNCTAD.

Supporting facts:

• Many small countries have stopped applying competition laws

• Global companies provide local representatives with tools, understanding, and vision to operate

• Similar global trends are emerging in the use of the internet on mobile devices and in the way people consume digital products

Topics: Competition laws, Digital markets, UNCTAD’s role, Developing Countries, Shared methodology

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Report

The digital platform ecosystems are compared to natural ecosystems due to their complex adaptive nature. To effectively regulate these ecosystems, the ‘eco-antitrust’ approach is proposed, which involves competition authorities overseeing the system as a whole. This approach requires understanding the evolution of these ecosystems and integrating it into competition law and policy.

Examples of this approach can be seen in Microsoft’s acquisition of Activision Blizzard by the CMA and Booking.com’s acquisition of eTravellery by the European Commission. However, it is argued that competition law needs to adapt to the realities of digitalisation and the complex nature of digital platform ecosystems.

Current competition law and policies often struggle to understand and integrate ecosystem-level assessments. The rise of digital ecosystems presents challenges for existing regulations. A forward-thinking and cyclical approach is needed, as evidenced by the unsuccessful attempt to revert the cycle of development in certain antitrust cases.

Antitrust authorities should consider the cyclical nature of developments in digital marketplace ecosystems in their regulation. The cyclical paradigm reflects the stages of birth, growth, and externalization in the development of these ecosystems. Regulation that aligns with the constantly evolving and adaptive nature of these ecosystems could potentially yield better outcomes.

The Android case serves as an example of the cyclical nature of digital ecosystem development. The regulation of the global digital economy is experiencing fragmentation as different jurisdictions have varied perspectives. This lack of a cohesive and comprehensive view on digital economy regulation exacerbates the fragmentation.

This trend towards fragmentation highlights the need for better coordination and harmonization of regulations in the global digital economy. Smaller and developing countries are encouraged to apply a shared methodology for understanding digital markets and competition laws. Collaboration between these countries and support from organizations such as UNCTAD can help in developing this methodology.

Many small countries have stopped applying competition laws, but with the support of global companies, local representatives can be equipped with the necessary tools to effectively operate in the digital marketplace. Similar global trends are also emerging in the use of the internet on mobile devices and the consumption of digital products.

UNCTAD plays a critical role in promoting the shared methodology and providing analytical tools to support competition authorities in smaller and developing nations. UNCTAD, being a UN-based platform promoting competition, is in a unique position to act as a center of excellence for smaller competition authorities.

By providing basic analytical tools and expertise, UNCTAD can assist these authorities in effectively regulating digital marketplaces and enforcing competition laws. In conclusion, the complexity of digital platform ecosystems necessitates a holistic and adaptive approach to regulation. The ‘eco-antitrust’ approach, as well as considering the cyclical nature of digital ecosystem development, can contribute to effective and systematic regulation.

In the global digital economy, the trend towards fragmentation in regulation highlights the need for better coordination and harmonization. Smaller and developing countries can benefit from a shared methodology, developed through collaboration and supported by organizations like UNCTAD, to enhance their understanding of digital markets and competition laws.

UNCTAD’s role in promoting this methodology and providing analytical tools is crucial in supporting competition authorities in these nations.

Arguments

Competition authorities of developing countries should intervene earlier.

Supporting facts:

• Agencies with fewer resources struggle to act effectively.

• Small, inexperienced, resource-constrained entities need access to knowledge and analysis.

• Every decision by a competition authority conveys relevant information.

Topics: Market Regulation, Developing Countries, Policy Advice

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Report

Competition authorities in developing countries face resource constraints, but it is argued that they should intervene earlier in order to effectively regulate markets. These authorities need to have a deep understanding of the market and its functions to provide impactful interventions.

Even though they may be smaller, less experienced, and resource-constrained, these entities should have access to knowledge and analysis to inform their actions. One key point supporting this argument is that agencies with fewer resources struggle to act effectively. By intervening earlier, competition authorities can potentially prevent or address anti-competitive practices more efficiently.

It is believed that small, inexperienced, and resource-constrained entities need access to knowledge and analysis, as this enables them to make informed decisions and take appropriate actions. Furthermore, every decision made by a competition authority conveys relevant information. By intervening earlier and taking decisive actions, these authorities send a strong message to market participants, discouraging anti-competitive behavior and promoting fair competition.

This not only benefits the market in question but also provides valuable lessons and insights to other industries. In addition, the importance of these interventions is highlighted by their alignment with Sustainable Development Goal 8 (Decent Work and Economic Growth) and Sustainable Development Goal 10 (Reduced Inequalities).

These interventions aim to foster a competitive and fair market environment that promotes economic growth and reduces inequalities among various economic players, contributing to the overall development of the country. In conclusion, despite the resource constraints faced by competition authorities in developing countries, it is argued that they should intervene earlier.

Through a deep understanding of the market, access to knowledge and analysis, and timely actions, these authorities can effectively regulate markets, combat anti-competitive practices, and promote fair competition. These interventions play a crucial role in achieving SDG 8 and SDG 10, fostering economic growth and reducing inequalities.

Arguments

The phases of development in business ecosystem originate from the traditional Chinese cosmology

Supporting facts:

• Each phase corresponds to an element in Chinese cosmology, e.g., growth corresponds to fire

Topics: Business ecosystem, Chinese cosmology, Evolutionary stages

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Carbon offset programs by big companies are often misleading and ineffective

Supporting facts:

• The Guardian reported 90% of these offset programs by big companies are worthless

Topics: Carbon offset, Environmental sustainability, Big companies

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Individual behavior change is essential for combating global warming

Topics: Individual behavior, Global warming

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Open Banking can potentially be used for calculating individual carbon footprints

Supporting facts:

• Open Banking was first developed in the UK in 2017

• Open Banking is about sharing individual customers consumption pattern data

Topics: Open Banking, Carbon footprint

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Report

The analysis covers a range of topics, including the business ecosystem, carbon offset programs, individual behavior change, open banking, and data privacy. One argument presented is that the phases of development within the business ecosystem are based on traditional Chinese cosmology.

Each phase corresponds to an element in Chinese cosmology, such as growth aligning with fire. This concept suggests a deeper connection between the natural world and business development. Another argument highlights the shortcomings of carbon offset programs by big companies.

The analysis cites a report from The Guardian, which claims that 90% of these offset programs are considered worthless. This suggests that these programs, which aim to reduce carbon emissions, may not effectively fulfill their purpose. The sentiment towards this argument is negative, indicating concern about the misleading and ineffective nature of these programs.

In contrast, the analysis emphasizes the importance of individual behavior change in combating global warming. It suggests that individual actions play a vital role in addressing this global challenge. Although no supporting facts are provided for this argument, the sentiment is positive, indicating recognition of the significance of personal responsibility in tackling climate change.

The analysis also explores the potential of open banking for calculating individual carbon footprints. Open banking, which was first developed in the UK in 2017, involves sharing individual customer consumption pattern data. The sentiment towards this argument is positive, suggesting that open banking could potentially be a useful tool in measuring and assessing individual carbon footprints.

The discussion of data privacy highlights the need for a sophisticated interaction of privacy rules for data sharing for social good. In particular, it mentions that consumer privacy can be protected through a combination of property rules, liability rules, and inability rules.

This argument emphasizes the importance of ensuring that privacy rules and regulations are in place to protect individuals’ personal information while still enabling data sharing for the benefit of society. The sentiment towards this argument is positive, emphasizing the need to strike a balance between privacy and the potential social benefits of data sharing.

Overall, this analysis provides insights into various topics related to business, climate change, banking, and data privacy. It highlights the influence of traditional Chinese cosmology on the business ecosystem, raises concerns about the effectiveness of carbon offset programs by big companies, underscores the importance of individual behavior change in addressing global warming, explores the potential of open banking for calculating carbon footprints, and emphasizes the need for privacy rules in data sharing for social good.

Arguments

Digital platforms and ecosystems are transforming economies and creating new challenges for competition authorities.

Supporting facts:

• Digitalisation contributed to the emergence of digital platforms and ecosystems.

• Digital platform ecosystems offer many products spanning across sectors.

• This transformation blurs the traditional roles of consumers in supply chains.

Topics: digital platforms, e-Commerce, economies, digitalisation

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Competition authorities are increasingly adopting ecosystem-level assessments in their investigations.

Supporting facts:

• Competition authorities have recognised the need for ecosystem-level assessments.

• Examples of this change include the CMA’s handling of Microsoft’s acquisition of Activision Blizzard.

• The European Commission’s rejection of Booking.com’s acquisition of eTravellery also highlighted this shift.

Topics: competition authorities, ecosystem-level assessments, mergers and acquisitions, innovating regulatory frameworks

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The proposed EcoAntitrust approach suggests treating digital platform ecosystems as complex adaptive systems.

Supporting facts:

• The EcoAntitrust is a joint project undertaken by Elena Rovenskaya and Alexei Ivanov.

• The approach proposes that regulators should act more like gardeners rather than mechanical engineers, overseeing the holistic health of the system.

• The goal of this approach is to account for the constantly evolving nature of these systems.

Topics: EcoAntitrust, complex adaptive systems, digital platforms, regulatory methods

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The analogy of data as oil has its limitations since data can be shared without losing possession unlike physical goods

Supporting facts:

• If I give you a barrel of oil, I don’t have it anymore, you have it. If I give you a piece of data, I still have it and you have it.

Topics: Data sharing, Data usage, Competitive strategy

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Report

Digital platforms and ecosystems are fundamentally transforming economies and presenting new challenges for competition authorities. These platforms have enabled the emergence of digital ecosystems that offer a wide range of products across various sectors, blurring the traditional roles of consumers in supply chains.

The shift towards these ecosystems requires competition authorities to adopt ecosystem-level assessments in their investigations. For example, the Competition and Markets Authority (CMA) recognized the importance of evaluating the broader implications of Microsoft’s acquisition of Activision Blizzard within the digital ecosystem.

The European Commission’s rejection of Booking.com’s acquisition of eTravellery also underscored the growing emphasis on ecosystem-level evaluations in merger reviews. To address the unique complexities posed by digital platform ecosystems, the proposed EcoAntitrust approach suggests treating them as complex adaptive systems.

Advocated by Elena Rovenskaya and Alexei Ivanov, this approach proposes that regulators should act more like gardeners rather than mechanical engineers, nurturing the holistic health of the system. As the emergence of digital platforms and ecosystems reshape economies, Elena Rovenskaya argues that competition law and policy need to evolve in response.

She cites cases handled by the CMA and the European Commission as evidence of this need for change. While data is often compared to oil, there are limitations to this analogy. Unlike physical goods, data can be shared without losing ownership, raising questions about its exclusivity and competitive strategies.

It is important for regulators to consider these unique characteristics and dynamics of data utilization when formulating policies. In conclusion, the transformative impact of digital platforms and ecosystems on economies demands a proactive and adaptive approach from competition authorities. Adopting ecosystem-level assessments, such as those seen in the Microsoft-Activision Blizzard and Booking.com-eTravellery cases, is essential.

The EcoAntitrust approach offers a valuable perspective, treating digital platform ecosystems as complex adaptive systems. Elena Rovenskaya emphasizes the need for competition law and policy to adapt to the evolving nature of these platforms and ecosystems. Additionally, it is crucial to acknowledge the limitations of the data-as-oil analogy in understanding the dynamics of data sharing and possession.

Arguments

Marat Omarov emphasized the importance of merging policy with research in digital regulation.

Supporting facts:

• Marat offered an example of how they navigated digital regulation in Kazakhstan, in particular the case of a ride-sharing app.

• Marat mentioned how they considered traditional ways of regulation such as price caps and market definitions but ultimately realized the need for a more dynamic approach.

Topics: Digital Regulation, Policy, Research

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He advocated for a dynamic remedies approach to regulation, stressing the need to preserve innovation while still nurturing the digital environment.

Supporting facts:

• Marat discussed how they are currently auditing the ride-sharing app’s algorithm to understand its pricing.

• He shared how they are examining different leniency programs as part of their investigation.

Topics: Regulation, Innovation, Digital Environment

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Report

Marat Omarov emphasized the importance of integrating policy and research in the context of digital regulation during his discussion on ride-sharing app regulation in Kazakhstan. He provided an example of how a more dynamic approach was needed instead of relying solely on traditional methods like price caps and market definitions.

This highlights his recognition of the evolving nature of digital platforms and the importance of adapting regulatory frameworks accordingly, aligning with SDG 9: Industry, Innovation, and Infrastructure. In advocating for a dynamic remedies approach to regulation, Marat stressed the need to strike a balance between preserving innovation and nurturing a favorable digital environment.

As part of their investigation into the ride-sharing app, they are currently conducting an audit of its pricing algorithm and exploring various leniency programs. This reflects their commitment to understanding the app’s operations and its impact on the market, supporting SDG 9: Industry, Innovation, and Infrastructure.

Marat maintained a constructive stance towards emerging tech platforms, emphasizing the importance of open conversations and cooperative investigations. Acknowledging the ride-sharing company’s openness, he implied a cooperative approach towards the investigation. He also warned against blindly applying traditional regulation to certain industries, highlighting the potential counterproductivity of such an approach.

This aligns with SDG 9: Industry, Innovation, and Infrastructure and SDG 17: Partnerships for the Goals. In conclusion, Marat Omarov’s insights demonstrate the need to merge policy and research in digital regulation. His example of ride-sharing app regulation in Kazakhstan underscores the importance of dynamic approaches to adapt to the rapidly evolving digital landscape, while still nurturing innovation.

By advocating for open conversations and cooperative investigations, Marat emphasizes the value of partnerships in achieving effective regulations in the digital sphere.

Arguments

The role of data is crucial in the competitive market and can be seen as a vital resource needed for the market to thrive

Supporting facts:

• Data often referred to as the ‘new oil’ reflecting its importance as a resource

• Data can be appropriated by strategic players causing imbalance in the market competition

Topics: Data Management, Market Competition, Data Resource

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Authorities should work together in a regulatory ecosystem to ensure goals are aligned and market conduct is properly scrutinized

Supporting facts:

• Different types of authorities need to work together to prevent things from being ‘lost in the cracks’

• There is often a lack of clarity when it comes to roles and responsibilities of respective authorities

Topics: Regulatory Ecosystem, Collaboration, Authority Alignment

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Report

The importance of data as a resource in the competitive market is highlighted in the given information. Data is often referred to as the ‘new oil’, signifying its significance in driving markets. However, there is a concern that strategic players may appropriate data, leading to imbalances in market competition.

This issue acknowledges the potential for certain players to gain an unfair advantage by controlling or monopolizing data, which can hinder fair competition. To address this concern, the argument in favor of a nuanced and ecosystem approach to understanding and regulating the power balance within market competition, particularly concerning data use, is presented.

This approach suggests that a comprehensive understanding of the market is necessary to ensure fair competition. It also highlights the need for proper regulation to prevent the misuse of data power by companies such as WhatsApp, banks, and online food delivery services, which have been cited as examples of data abuse.

In addition, it is argued that creating obstacles for data transfer hampers competition. To promote healthy competition, data should be shared openly with competitors. This open sharing of data is seen as crucial in leveling the playing field and preventing unfair advantages.

It aligns with the goals of reducing inequalities and fostering peace, justice, and strong institutions. Another important aspect emphasized in the provided information is the need for collaboration between different authorities within a regulatory ecosystem. This collaboration seeks to prevent issues from slipping through the cracks and ensures a clear understanding of respective roles and responsibilities.

By working together, authorities can better scrutinize market conduct, align goals, and prevent any actions that may be detrimental to fair competition. In conclusion, the extended summary highlights the significance of data as a vital resource in the competitive market.

It underscores the concerns regarding the appropriation of data by strategic players and the resulting imbalance in market competition. The need for a nuanced approach to regulate data use and promote healthy competition is stressed. Collaboration between different authorities within a regulatory ecosystem is also emphasized to ensure effective market scrutiny and aligned goals.

Overall, the analysis suggests that careful management of data and collaborative regulatory efforts are essential to maintain fairness and ensure a thriving market.

Arguments

Limitations exist in competition laws in addressing big data dynamics

Supporting facts:

• Comparison between competition laws and ecosystems theories shows the inadequacy in coping with digital market dynamism

• South African competition Law has been adapted to be more dynamic by considering public interest issues and market failures in implementing remedies

Topics: Big data, Competition Law, Market Dynamics

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Existing ecosystems could be artificially constraining

Supporting facts:

• App stores’ work design limits developer interface and can be restrictive

• The existence of local platforms and innovations shows alternative possibilities outside major ecosystems

Topics: Ecosystems, Artificial Constrictions, Innovation

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Report

Competition laws are found to be inadequate in addressing the fast-changing dynamics of big data in the digital market. This has been highlighted through a comparison with ecosystem theories, which indicate the limitations of competition laws in coping with the dynamic nature of the digital market.

However, South Africa has taken steps to adapt its competition law to be more responsive to market needs. Specifically, the country has considered public interest issues and market failures in implementing remedies, aiming to create a more dynamic framework. Furthermore, it is argued that competition laws need to evolve to counteract issues such as exploitation and prevent similar occurrences in the future.

South Africa’s relationship with state-owned enterprises and large firms has necessitated the development of strategies to constrain abuse and dominance. One approach that has been effective is the implementation of a market inquiry regime, which has resulted in binding remedies based on identified market failures.

These proactive measures demonstrate the importance of evolving competition laws to ensure fair and equitable competition. The analysis also highlights the need for regulation to be multidimensional, extending beyond competition to encompass sectors such as consumer protection and regulated industries.

The impact of big data goes beyond competition, affecting various areas of the market. The effective regulation of artificial intelligence (AI) requires inputs from multiple disciplinary authorities, emphasising the complexity and interdisciplinary nature of regulating emerging technologies. In addition, the analysis suggests that existing ecosystems may artificially constrain innovation and development.

Specifically, the work design of app stores can limit developer interface, potentially hindering creative possibilities. However, there are alternative possibilities outside major ecosystems, as evidenced by the existence of local platforms and innovations. This highlights the importance of considering the potential constraints of existing ecosystems and exploring alternative avenues for innovation.

Lastly, managing digital ecosystems from an ecological approach is proposed as beneficial. This approach promotes local participation and supports small and medium enterprises, fostering a more inclusive and diverse ecosystem. The adaptability of ecosystems can be utilised to determine their size and structure, ensuring a balanced and sustainable digital ecosystem.

Overall, this analysis underscores the limitations of competition laws in addressing the dynamic nature of big data while also highlighting the efforts made by South Africa to enhance its competition law framework. It emphasises the need for the evolution of competition laws to counteract issues like exploitation and to prevent future occurrences.

Furthermore, the multidimensional nature of regulation, the potential constraints of existing ecosystems, and the benefits of managing digital ecosystems through an ecological approach are highlighted. These insights provide valuable considerations for policymakers and stakeholders in the digital market.