Combating Anti-Competitive Behavior Involving Algorithms: Platform Design and Organizational Process

By Justin P. Johnson, Andrew Rhodes & Matthijs Wildenbeest

In this article we examine anti-competitive effects associated with algorithms and what can be done about them. We focus on how regulators can promote competition by better understanding the organizational process behind the design of algorithms, and also on how platforms can design their own algorithms to fight anti-competitive behavior by others.

By Justin P. Johnson, Andrew Rhodes & Matthijs Wildenbeest¹

I. INTRODUCTION

In this article we examine potential anti-competitive effects associated with algorithms and what can be done about them.² We take the perspective not only of antitrust authorities but also of firms that wish to avoid being either the victim or unwitting accomplice of other firms’ anti-competitive schemes.

Our analysis is structured as follows. In Section 2 we describe how algorithms can be deployed to more effectively implement classic anti-competitive schemes. We explain in detail why antitrust authorities not only need access to suspect algorithms but more importantly need to understand details of the organizational design process behind the algorithm. We also propose that online retail platforms can use their own algorithms to fight anti-competitive schemes perpetrated on their platforms. In Section 3 we describe ways in which “benign” algorithms (those designed with no anti-competitive intent) can be exploited by bad actors to achieve anti-competitive ends. Sectio