How a simple agreement can affect digital markets: an antitrust perspective

di Giovanna Massarotto – Iowa University, U.S.A.

Summary: 1. Introduction – 2. Digital Markets and Antitrust Issues 2.1.Two-sided markets and Network effects – 2.2. Antitrust Issues – 3. Antitrust Settlements and Their Effects on Markets – 3.1. AT&T Case – 3.2. Google Search Bias – 4. Conclusions

1. Introduction
In the last decade, digital markets have replaced traditional markets, and such markets can appear different every day. Google Maps, for example, at one moment provides users with a map, and the next, navigates the user anywhere and everywhere.

In such different context, where markets are increasingly dynamic, it is difficult, and sometimes impossible, for antitrust agencies to define the relevant market and determine whether a company is jeopardising competition in such a market.

Digital markets often include two-sided markets, but such markets are still underexplored, in addition to network effects that involve both positive and potential negative effects. In such a complex context, the cost of wrongly condemning efficient behaviour is high and used to be higher than the cost of wrongly permitting a monopoly.

A good compromise between wrongly permitting a monopoly and wrongly condemning efficient conduct could be to negotiate a solution directly with the company subject to antitrust investigation.

In the context of antitrust law, indeed, an antitrust investigation can end in an agreement between the applicable antitrust agency and the company subject to the investigation, which can be defined as ‘antitrust settlements’. Antitrust settlements are known as consent decrees or consent orders in the U.S. and commitment decisions in Europe.

Through antitrust settlements, the European and U.S. antitrust agencies save time and money by imposing behavioural or structural remedies on the investigated companies, which appear as a form of regulatory regime (namely rules for markets). By doing so, these agreements, as we will see, can significantly change the dynamics of the markets, including digital markets.

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