Reshaping Digital Competition: The New Platform Regulations and the Future of Modern Antitrust

• DOI: 10.1177/0003603X221082742
• Published date: 01 June 2022
• Date: 01 June 2022
• Subject Matter: Articles

https://doi.org/10.1177/0003603X221082742

The Antitrust Bulletin

2022, Vol. 67(2) 302 –340

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DOI: 10.1177/0003603X221082742

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Article

Reshaping Digital Competition: The

New Platform Regulations and the

Future of Modern Antitrust

Elias Deutscher*

Abstract

This article reflects on the way in which the new initiatives to regulate powerful online platforms in

the European Union, the United States, the United Kingdom, and Germany challenge well-established

fundamentals of modern antitrust and thereby reshape the future of competition law. It shows that

the new platform regulations set in motion a profound transformation of modern antitrust law that

operates along four parameters. First, the new platform regulations unsettle the long-standing baseline

assumption that the maximization of consumer welfare constitutes competition law’s core mission.

Second, the new instruments repudiate the orthodox understanding of error costs that advocates

under-enforcement as the optimal standard of intervention in innovation-driven markets. Third, by

relying primarily on rule-like presumptions as legal commands to regulate digital competition, the

new platform regulations reverse the trend toward an increasingly inductive mode of analysis that

characterized modern antitrust under the “more economic” or “effects-based” approach. Fourth,

the new platform regulations also fundamentally diverge from a purely probabilistic standard of proof

which requires the showing that impugned conduct is more likely than not to cause anticompetitive

harm. The reconfiguration of modern antitrust along these four vectors, the article concludes,

foreshadows a new, more inclusive model of innovation and growth in digital markets.

Keywords

digital markets, digital platform regulations, presumptions, error-costs, standard of proof, rules,

standards, consumer welfare standard, decision theory

I. Introduction

Antitrust law is set to undergo a period of tectonic shifts as policymakers in Europe and the United

States are rushing toward the adoption of new regulations to tame the unprecedented economic power

of digital platforms (hereinafter “new platform regulations”). While the current antitrust debate focuses

primarily on the specific substantive and procedural rules, as well as the institutional design of these

new regulatory tools, this contribution takes a slightly different, at the same time forward- and back-

ward-looking angle. It approaches the new platform regulations not only as the heralds of a new era in

*University of East Anglia, School of Law/Centre for Competition Policy, Norwich, UK

Corresponding Author:

Elias Deutscher, School of Law, University of East Anglia, Norwich Research Park, Norwich NR4 7TJ, UK.

Email: e.deutscher@uea.ac.uk

1082742ABXXXX10.1177/0003603X221082742The Antitrust BulletinDeutscher

research-article2022

Deutscher 303

antitrust law. Rather, as these new platform regulations considerably depart from the status quo of

conventional antitrust enforcement, they also constitute a mirror that throws into relief and, thereby,

allows us to better understand the basic economic and normative predispositions that shaped modern

antitrust law over the last four decades. In unpacking how the new platform regulations reconfigure

these predispositions, the article inquires into the broader implications that the new platform regula-

tions may entail for the future of antitrust law. The paper argues that these new initiatives to regulate

digital competition mark a “paradigm adjustment” of modern antitrust along four fault lines.

First, being geared toward promoting fairness, contestability, and non-economic values such as

privacy, the new platform regulations openly reject the long-standing dogma that consumer welfare

constitutes the only rational and legitimate goal of competition law. Instead, they emphasize that the

protection of competition, as the key mission of competition law, extends beyond promoting consumer

welfare and is capable of embracing other values.

Second, the new platform regulations also challenge the conventional wisdom that false positives of

competition law enforcement are more costly than false negatives. Instead, the new platform regula-

tions embody a recalibration of the error-cost framework which recognizes that the probability and

magnitude of anticompetitive harm in digital markets may be greater than usually assumed by conven-

tional antitrust literature.

Third, this recalibration of the error-cost framework becomes apparent in the reliance of the new

platform regulations on a broad set of ex ante rules that introduce presumptions of illegality for specific

types of platform conduct. By forging rule-like legal presumptions as legal commands to regulate the

conduct of digital platforms, the new regulations depart from the “effects-based” analysis as the default

mode of assessment of the “more economic approach.” Instead of endorsing an inductive case-by-case

approach, the new platform regulations highlight the value of economically informed rebuttable pre-

sumptions in antitrust analysis.

A fourth distinctive feature of the new platform regulations that also reflects the recalibration of the

conventional error-cost framework is their recourse to a probabilistically de-weighted or bounded stan-

dard of proof. Instead of requiring the showing of actual or likely anticompetitive effects, the new

platform regulations compel antitrust intervention on the mere basis that specific forms of conduct by

powerful platforms may result in potential anticompetitive harm of significant scale. This bounded

probabilism of the new platform regulations thus marks an important departure from the increasing

trend in conventional antitrust analysis to make the finding of unlawful conduct conditional on the

showing that anticompetitive effects are more likely than not.

Against the backdrop of this recalibration of the goals, error-cost framework, legal commands, and

standard of proof, the article concludes that the new platform regulations epitomize a fundamental

rethink of innovation in digital markets. In fact, the new platform regulations openly discard the

Schumpeterian conception of innovation that has shaped mainstream antitrust enforcement in dynamic,

high-tech markets. Instead of being concerned about the ability of large-scale incumbents to appropriate

and recoup their investments in the development of innovative technology, products, and services, the

new platform regulations aim to ensure market openness and contestability and preserve smaller busi-

ness users’ and rivals’ sunk investments in digital innovation.

To illustrate how the new platform regulations disrupt and evolve competition law in readjusting the

predispositions of modern antitrust, the remainder of the paper is organized as follows. Section II pro-

vides an overview of the new regulations adopted or currently discussed in Germany, the European

Union (E.U.), the United Kingdom (U.K.), and the United States (U.S.) to reign in the economic power

of digital platforms. Section III describes how the new platform regulations depart from the conven-

tional, monolithic, and consumer welfare-based understanding of competition law which assumes that

the ultimate mission of competition law consists of securing that consumers get a better deal in terms

of lower prices, greater quality, new products, or broader choice. Section IV traces how the new plat-

form regulations bring about a recalibration of the conventional error-cost framework of antitrust law.

304 The Antitrust Bulletin 67(2)

Section V shows how this recalibration of the error-cost framework feeds through into the reliance of

the new platform regulations on form-based, rebuttable presumptions. Section VI sheds light on how

the recalibration of the error-cost framework translates into a lowered, probabilistically de-weighted or

bounded standard of proof. Section VII concludes in putting this evolution into a broader context by

exploring how the new platform regulations foreshadow a new model of digital innovation and growth.

II. The New Platform Regulations—An Overview

Over the last years, experts and policy makers across the world have pondered over how competition

law could be reformed to tackle the challenges that the rise of digital markets poses to competition law.

This process culminated in the adoption of the 10th amendment of the Competition Act in Germany,1

as well as the proposals of a Digital Markets Act (DMA) in the E.U.,2 a New Pro-Competition Regime

for Digital Markets (“SMS regime”) in the U.K.,3 and several legislative bills in the U.S..4 All initia-

tives have as their common aim to address growing concerns over the increasingly entrenched eco-

nomic power that a handful of powerful digital platforms have amassed over the last decade.

A. The Entry-Point: The Designation of Platforms with Entrenched Substantial

Market Power

Although these new platform regulations come along in different forms and shapes,5 they have many

features in common. All new instruments revolve around a designation process that ensures that the

new platform regulations only apply to the most powerful digital platforms (see Table 1). Depending

on the jurisdiction at hand, these regulated platforms are referred to as “gatekeeper” platforms,6 plat-

forms with “strategic market status” (SMS),7 “covered platform,”8 or “multi-sided platforms and net-

works holding a position of paramount significance for competition across markets.”9 In terms of their

1. Gesetz zur Änderung des Gesetzes gegen Wettbewerbsbeschränkungen für ein fokussiertes, proaktives und digitales

Wettbewerbsrecht 4.0 und andere Bestimmungen (GWB-Digitalisierungsgesetz) (hereinafter “Competition Law 4.0”)

18 January 2021, Bundesgesetzblatt Jahrgang 2021. For an English translation of the consolidated version of the 10th

Amendment of the GWB Consolidated version of the 10th Amendment to the German Act against Restraints of Competition,

see German Competition Act 2021—Unofficial Translation, https://www.d-kart.de/wp-content/uploads/2021/01/GWB-

2021-01-14-engl.pdf.

2. Proposal for a Regulation of the European Parliament and of the Council on contestable and fair markets in the digital

sector (Digital Markets Act) (hereinafter “DMA Proposal”). COM/2020/842 final.

3. A new pro-competition regime for digital markets—Advice of the Digital Markets Taskforce (hereinafter “Advice of the

Digital Markets Taskforce”); A new pro-competition regime for digital markets—Consultation document July 2021. CP

489 (hereinafter “DCMS/BEIS Consultation Document”).

4. H.R.3816—American Choice and Innovation Online Act (hereinafter “ACIO Act”) 2021, 117th Congress (2021–2022);

H.R.3825—Ending Platform Monopolies Act (hereinafter “EPM Act”) 2021, 117th Congress (2021–2022); H.R.3826—

Platform Competition and Opportunity Act (hereinafter “PCO Act”) 2021, 117th Congress (2021–2022); H.R.3849—

ACCESS Act (hereinafter “ACCESS Act”) 2021, 117th Congress (2021–2022). H.R.3843—Merger Filing Fee

Modernization Act (hereinafter “MFFM Act)”, 2021, 117th Congress (2021–2022).

5. For instance, the U.S. proposals foresee an important role of the U.S. court system in enforcing the new rules, whereas the

enforcement of the E.U., U.K., and German rules is largely within the competence of administrative authorities. Monika

Schnitzer et al., International Coherence in Digital Platform Regulation: An Economic Perspective on the US and EU

Proposals (2021), at 12, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3923604.

6. DMA Proposal, supra note 2, art. 3 (1).

7. Advice of the Digital Markets Taskforce, supra note 3, paras. 4.7–4.12.

8. ACCESS Act, supra note 4, s. 5 (6); EPM Act, supra note 4, s. 5 (4); PCO Act, supra note 4, s. 3 (d); ACIO Act, supra note

4, s. 2 (d) and (g) (4).

9. Competition Law 4.0, supra note 1, s. 19a (1) in conjunction with s. 18 (3a).