The EU Digital Markets Act: A Report from a Panel of Economic Experts

Cabral, Luis M. B.; Haucap, Justus; Parker, Geoffrey; Petropoulos, Georgios; Valletti, Tommaso M.; Van Alstyne, Marshall W.

The EU Digital Markets Act: A Report from a Panel of Economic Experts

Cabral, L., Haucap, J., Parker, G., Petropoulos, G., Valletti, T., and Van Alstyne, M ., The EU Digital Markets Act, Publications Office of the European Union, Luxembourg, 2021,ISBN 978-92-76-29788-8, d oi:10.2760/139337, JRC122910.

Boston University Questrom School of Business Research Paper No. 3783436

NYU Stern School of Business Forthcoming

36 Pages Posted: 18 Feb 2021 Last revised: 2 Aug 2023

See all articles by Luis M. B. Cabral

Luis M. B. Cabral

New York University (NYU) - Leonard N. Stern School of Business - Department of Economics; Centre for Economic Policy Research (CEPR)

Justus Haucap

Heinrich Heine University Dusseldorf - Department of Economics; German Institute for Economic Research (DIW Berlin)

Geoffrey Parker

Dartmouth College

Georgios Petropoulos

Massachusetts Institute of Technology (MIT); Stanford University

Tommaso M. Valletti

Imperial College Business School; Centre for Economic Policy Research (CEPR)

Marshall W. Van Alstyne

Boston University - Department of Management Information Systems; Massachusetts Institute of Technology (MIT) - Sloan School

Date Written: February 9, 2021

Abstract

Over the last years, several reports highlighted the market power of very large online platforms that are gatekeeping intermediaries between businesses and consumers, and the difficulty for classic competition policy tools to deal effectively with anti-competitive practices in these platforms. In response to this, the European Commission recently published a proposal for a Digital Markets Act (DMA) to complement existing competition policy tools by means of ex-ante obligations for platforms. This report presents an independent economic opinion on the DMA, from a high-level Panel of Economic Experts, established by the JRC and based on existing economic research and evidence. The Panel endorses the vision encapsulated in the DMA, including the designation of large gatekeeper platforms and a series of ex-ante obligations they should comply with. The Panel points out the challenge of striking a balance between the benefits from network effects of large platforms and the potential negative effects from anti-competitive behaviour and winner-takes-all market forces in online services. While some types of anti-competitive behaviour are well-known from classic competition cases, data-driven multi-sided platforms have found new ways of tying, bundling and self-preferencing that present new challenges. The report explores these behaviours in specific settings, including in online advertising and mobile ecosystems. It discusses ways to use valuable data gathered by platforms for pro-competitive purposes and the wider benefit of society in order to achieve a higher standard of fairness in the distribution of the social value generated by large platforms. Information asymmetry between platforms and regulators remains an issue in the effective implementation of the obligations.

Keywords: Digital Markets Act, Regulation, Competition Policy, Digital Platforms

JEL Classification: D20, D21, K21, L40, L41, L42, L43, L50, L51, L86, L88, M13, M21

Suggested Citation: Suggested Citation

Cabral, Luis M. B. and Haucap, Justus and Haucap, Justus and Parker, Geoffrey and Petropoulos, Georgios and Valletti, Tommaso M. and Van Alstyne, Marshall W., The EU Digital Markets Act: A Report from a Panel of Economic Experts (February 9, 2021). Cabral, L., Haucap, J., Parker, G., Petropoulos, G., Valletti, T., and Van Alstyne, M ., The EU Digital Markets Act, Publications Office of the European Union, Luxembourg, 2021,ISBN 978-92-76-29788-8, d oi:10.2760/139337, JRC122910., Boston University Questrom School of Business Research Paper No. 3783436, NYU Stern School of Business Forthcoming, Available at SSRN: https://ssrn.com/abstract=3783436