Essential Facilities Fallacy: Big Tech, Winner-Take-All Markets, and Anticompetitive Effects

There have been calls to treat data as an essential facility to reduce barriers to entry in the digital economy where a “winner-take-all” dynamic is often present. In such markets, traditional enforcement may fail to enjoin conduct, or an acquisition, that lowers welfare in expectation because anticompetitive effects, regardless of their magnitude, are given no weight if deemed unlikely to occur. The authors consider several proposals to fine-tune competition law and argue that calls to regulate Big Tech companies like public utilities should be viewed with skepticism because they ignore dynamic competition, the complexity of micromanaging a rapidly evolving sector of the economy, and the very purpose of competition law – to protect competition, not competitors.

John Pecman, Paul A. Johnson & Justine Reisler¹

I. INTRODUCTION

The Big Tech superstar firms, which is a term used by many to refer to Google, Amazon, Facebook, Apple, and sometimes Microsoft, have grown to be among the largest companies in the world principally through innovation, data harvesting and the popularity of their products. Over the past few years, there have been calls for action by populists, the press and politicians to reduce the power of the so-called “dataopolies.”²

The business models of Google and Facebook, for example, operate through multi-sided platforms. They offer products to consumers on one side of the platform for free and recei