The accusation that the competition law is an antiquated framework for regulating the digital economy has found many takers in the past few years. This accusation is, in part, well-founded. The competition law evolved over the years to rely on a certain view of how the market is structured, a view which was challenged by digital platforms. In this traditional understanding, competition in the market is said to suffer when ‘consumer welfare’ suffers. The measure of consumer welfare is largely based on the price and volume of goods.
In the past decade, many scholars have made the case that this framework, grounded in the neoclassical economic framework, fails to capture the specific anti-competitive effects of digital platforms. Particularly, these platforms often offer services for free by relying on advertising as a revenue stream; or entities are often willing to bear losses while they establish their market power. Therefore, the abuse of dominant market power by a digital platform may not always be reflected in the price of a product. Instead, this requires that the competition law consider other parameters in order to assess the impact of actions by dominant entities on competition.
Legal research- intrigues me they often bring out perspectives that are otherwise hard to fathom. WhatsApp is a “free” platform but what can go wrong if healthcare professionals use it to deliver medical advise? The privacy concepts are fuzzy and the encryption keys are controlled by Facebook which has a skin in the game for fashioning end-users perspectives under the clever ambit of “network for friends and family”. The corporate sinister agendas are hidden behind the smiling faces and a vast disgusting PR agenda that mitigates any criticism; even from the nation states.
I have written extensively about WhatsApp before; including their privacy policies and spoken up against them. Which is the ideal methodology for telemedicine then? Augmented reality? Long distance “virtual reality”? What comes after the mobiles?
Investors who claim “software has eaten the world” are shaping up narratives around this rather lame them. They are unwilling to address the practical realities and established workflows but prefer to gain market dominance through “re-fashioning” old habits.
Here’s something important:
These strands of academic and policy thinking have found recognition in the CCI’s order. The order, in paragraph 30, almost word-for-word reflects the understanding of the CCI’s telecom sector market study. The order sets out a cogent scheme for thinking through the competition law: Digital platforms, like WhatsApp, can occupy a dominant position due to high network effects and the difficulty of switching to alternatives.
This dominant position can be used to impose conditions on users, which include conditions about the treatment of their data. Given that users are not given a choice to accept or reject these conditions, and that they cannot easily switch to alternatives, this would result in lower privacy protection for users. A lower standard of privacy for users amounts to lower quality for consumers without justification. This, for the CCI, is ‘consumer harm’ and should be measured as a ‘non-price parameter of competition’.
There is a glowing clamour for antitrust actions against these platforms. The only way to avoid a massive user concentration of data is to avoid them altogether- there are better avenues of contact. Own the medium. It is tedious. It is a little expensive. However, it is worth it. I pay for my email. I pay for the blog. I pay for storage. I pay for some apps. I will pay for a service that gives me value for money. The free services are completely at loggerheads with individual choices. Because you are the product.