Platforms, Disruptive Innovation, and Competition on the Market

The current academic and policy initiatives to address competition concerns arising from digital platforms rely on a model of competition for the market. That model is presented as a better account of market processes around these platforms than the traditional model of competition in the market. Yet competition for the market has not taken hold in enforcement despite having been around for more than 20 years. This contribution puts forward a model of competition on the market, where market definition is a competitive parameter and is therefore endogenous to the competitive process. Competition on the market is based on the disruptive innovation literature. If introduced in the analysis, competition on the market could reveal Type I error risks (over-protection of sustaining innovation in Microsoft, Intel and Google Search (Shopping) and of Type II (failure to block the Facebook/Whatsapp merger).

By Pierre Larouche¹

I. INTRODUCTION

In both Europe and North America, recent years have seen increased academic interest in the application of competition law to the leading firms of our time, coupled with mounting political pressure to enforce the law against them. A number of expert panels were convened to produce reports to guide the work of enforcement agencies. To name but the main ones, the European Commission produced Competition policy for the digital era,² the UK government commissioned Unlocking digital competition,³ and both these