Code: 23-02

Authors: Kai-Uwe Kühn and Domilė Butkevičiūtė

Date: 12 Dec 2023

Abstract

Recent new regulations like the Digital Markets Act (DMA), as well as competition enforcement, have been motivated by the concern that large digital platforms can have a gatekeeper function, in the sense that they control the access of business users to end users. Generally, such gatekeeper positions are thought to arise when there are significant ecosystem or network effects. However, many digital platforms are not material gatekeepers. Nonetheless, under the DMA designation proceedings and similar assessments, clear criteria are currently missing for distinguishing between material gatekeepers and those who are not. The aim of this paper is to develop criteria sufficient for the rebuttal of a gatekeeper status. For this purpose, we first characterize in detail under what circumstances ecosystem and/ or network effects can create a gatekeeper position, and under what circumstances this will not be the case. On this basis, we then develop simple tests that provide sufficient conditions to rebut an alleged gatekeeper status. The paper concludes by pointing out the costs of overinclusive regulation that designates firms as gatekeepers that should rather be characterized as challengers to entrenched incumbents. This demonstrates the need for the application of effective rebuttal criteria to achieve both the goals of recent regulatory efforts and the effectiveness of competition policy intervention on the basis of new theories of harm relying on related concepts.

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