Multisided Platforms and Antitrust Enforcement
abstract. Multisided platforms are ubiquitous in today’s economy. Although newspapers demonstrate that the platform business model is scarcely new, recent economic analysis has explored more deeply the manner of its operation. Drawing upon these insights, we conclude that enforcers and courts should use a multiple-markets approach in which different groups of users on different sides of a platform belong in different product markets. This approach appropriately accounts for cross-market network effects without collapsing all of a platform’s users into a single product market. Furthermore, we advocate the use of a separate-effects analysis, which rejects the view that anticompetitive conduct harming users on one side of a platform can be justified so long as that harm funds benefits for users on another side. Courts should consider the price structure of a platform, and not simply the net price, in assessing competitive effects. This approach in turn supports our final conclusion: that antitrust plaintiffs should not be required to prove as part of their prima facie case more than occurrence of competitive harm in a properly-defined market; thereafter, the burden to produce procompetitive justifications should shift to defendants.
authors. Michael Katz is the Sarin Chair Emeritus in Strategy and Leadership at the Haas School of Business and Professor Emeritus in the Department of Economics at the University of California, Berkeley. Jonathan Sallet is Senior Fellow at the Benton Foundation. Katz served as the government’s economic expert in United States v. American Express. Sallet, as Deputy Assistant Attorney General for Litigation, was involved in the government’s unsuccessful brief seeking rehearing en banc in the Second Circuit. We thank the editors of the Yale Law Journal and participants of the “Unlocking the Promise of Antitrust Enforcement” conference hosted by American University and the Washington Center for Equitable Growth. Due to our participation in the American Express litigation, this Feature does not address specific facts from that case, but occasionally relies on public materials from that litigation to illustrate general principles or provide additional examples.