Markets, Regulation and Law

COSA DICE LA CORTE:

Se vuoi solo introdurre amex ( american express business model ischaracterized by a higher merchant discount fee compared to visa andmastercard due to the fact that in order to maintain its costumers loyal, it hasto invest, and to fund those investment, it has to charge a higher imerchant feeto merchant ( that in this way, can have access to a specific and valuablue typeof costumers, the so called marquee costumers, that are characterized by ahigh willingness to pay compared with the others. However merchant, in orderto avoid the problem of paying a higher fee, while still enticing amex’scardolders to shop at their store, is by dissuading them from using amex at thepoint of sales. )

From an antitrust point of view, forbidding a merchant to provide informationto customers is anticompetitive, because it lowers competition. If customersare aware of different costs among credit cards they would be able to select acheaper card, and so amex would be forced to lower

its merchant fee. So, looking form outside the two-sided market this behavior is illegal. But, in this specific case, the US Supreme Court argues that the antisteering provision is not illegal because without it, Amex cannot survive. Amex uses its higher merchant fees to offer its cardholders a more robust rewards program, which is necessary to maintain cardholder loyalty and encourage the level of spending that makes Amex valuable to merchants. That Amex allocates prices between merchants and cardholders differently from Visa and MasterCard is simply not evidence that it uses market power to achieve anticompetitive ends. When it comes to a multisided platform, the relevant market must consider both the side of the platform and so in the market there are both merchants and cardholders. If you keep cardholders within the same market of merchant, you may balance out benefits for cardholders and restrictions for merchants. If you look only at the side of merchants the strategy appears illegal. By only

Looking on one side of the market, the one of the merchant, Amex is increasing cost for merchant and forbidding them to provide information to customers. But when we look also at the benefits for cardholders, things change. In this scenario the counterfactual, according to supreme court, is that if I forbid the antisteering provision there won't be AE anymore, Amex is unable to survive without its business model (antisteering provision) and otherwise it will be forced to replicate the business model of Visa and Mastercard.

DIGITAL MARKETS ACT

Several reform proposals point to the need to integrate the antitrust toolkit with ex ante measures in order to address the distinctive features of the digital platforms. In particular, those platforms are characterized by economies of scale, extreme indirect network effects, remarkable economies of scope due to the role of data as a critical input, and conglomerate effects, along with consumers' behavioural biases and single-homing tendency (lack of multi-homing).

All those characteristics contribute to define digital platforms as gatekeepers and represent significant barriers to entry that make those digital market highly concentrated, prone to tipping and not easily contestable.

Ex post antitrust enforcement, therefore, would be too slow to successfully keep these digital markets competitive and contestable.

When we refer to contestable and fair market, we are referring to terms and business conditions imposed by gatekeepers to business (not final) users. Users are: App developers, advertisers, sellers etc. There is the need of a new regulatory intervention, instead of antitrust, because we are collecting a different legal interest. There is the need to face the situation independently from the actual, likely or presumed effects of the conduct of a given gatekeeper. (that's why there is the need of an ex ante measures)

Gatekeepers are a small number of large providers with considerable economic power. They are able to leverage their position from one.not apply to all online platforms, but only to those that are designated as gatekeepers. The main objective of the DMA is to ensure fair and contestable markets in the digital sector. Under the DMA, gatekeepers will have to comply with a series of obligations, including: 1. Prohibition of unfair practices: Gatekeepers will be prohibited from engaging in unfair practices that distort competition, such as self-preferencing or leveraging their market power to exclude competitors. 2. Transparency obligations: Gatekeepers will have to provide clear and accessible information to users and business users about the ranking, visibility, and treatment of their offerings on the platform. 3. Data access and portability: Gatekeepers will be required to allow business users to access and use the data they generate on the platform, as well as facilitate the portability of this data to other platforms. 4. Interoperability: Gatekeepers will have to ensure that their services are interoperable with other platforms, allowing users and business users to switch between platforms more easily. 5. Prohibition of unfair contract terms: Gatekeepers will not be allowed to impose unfair contract terms on business users, such as unilateral changes to terms and conditions or unreasonable restrictions on the ability to offer different conditions to different users. The DMA also includes provisions for enforcement, with significant fines for non-compliance and the possibility of structural remedies to address persistent breaches of the obligations. Overall, the DMA aims to address the imbalances of power and the conflicts of interest that can arise in the digital ecosystem, ensuring fair competition and protecting the rights of users and business users.

notrequire to demonstrate, on a case-by-case basis, the anticompetitiveobject and effect of a conduct .The scope of the DMA is defined according to a two-step process whichincludes the definition of the nature of the services provided by the onlineplatform and the definition of the latter as gatekeeper:

1. Reguarding the first step, the concept of “core platform services” isintroduced in order to list those digital services in which, because of theireconomic features, weak con- testability and unfair practices are morefrequent.

Core platform services List of digital services :

• online intermediation services [e.g. Amazon marketplace, Apple appstore, Google play store];
• online search engines [e.g. Google];
• online social networking services [e.g. Facebook];
• video-sharing platform services [e.g. YouTube];
• number-independent interpersonal communication services [e.g. Gmail,Skype, Whatsapp];
• operating systems [e.g. Apple iOS, Google Android, Microsoft Windows];

Cloud Computing Services

Examples of cloud computing services include Amazon Web Services and Microsoft Azure.

Advertising Services

An example of advertising services is Google AdSense.

You are subjected to the provision even if you are a gatekeeper in just one of these markets. However, it's important to consider an ecosystem, so at least two digital markets must be connected. If you are a player only in one of these markets, it is difficult to understand whether you are a gatekeeper or not. So, this intervention has created a huge competition among platforms in order to find a way to demonstrate to the EU commission that the rival is a gatekeeper. This is because if you are not considered a gatekeeper, this provision won't be applied to you.

Gatekeeper Status

As a second step, an online platform achieves a gatekeeper status based on a cumulative three criteria test:

1. Has a significant impact on the internal market (turnover)
2. Serves as an important gateway for business users to reach end-users (a certain number of end users)
3. Enjoys an entrenched and durable position

Each of these qualitative criteria is presumed to be met when a quantitative threshold is exceeded.

1. Turnover
2. A certain number of end users
3. This requirement is presumed to be satisfied where the thresholds in point (b) were met in each of the last three financial years.

To sum up, Gatekeepers are a small number of large providers with considerable economic power. They are able to leverage their position from one area to another (ecosystem); they can access to a huge amount of data. The gatekeeper controls the whole platform ecosystems, and their position is difficult to challenge and to find an alternative to it. The gatekeeper is able to take advantage of unfairness condition, it means take advantage of imbalances in bargaining power.

However, it is important to underline the main features of the EU proposals:

1. No dominance requirement. (Difference from antitrust) gatekeepers are not necessarily dominant in competition-law terms.
2. No efficiency defence (Firms designated as gatekeepers

1. No reference to efficiency as a defense.

2. No reference to multi-homing as a qualitative criteria.

3. No need to define relevant.

4. No formal concept of reversal of burden of proof: the obligations set out in Articles 5 and 6 apply quasi-automatically.

5. Obligations tailored on past and current investigations, hence backward-looking.

6. No relevance to different business models: the same conduct would be forbidden without taking into account differences in business model.

The definition of gatekeeper does not recognize the relevance of different business models that platforms employ. However, the choice of a business model has significant consequences for strategies and incentives affecting the way a platform interacts with its users.

The DMA applies the very same obligations to all gatekeepers irrespectively of their different business models.

So, the DMA proposal opts for non-individualized rules. However, this regulatory inflexibility seems to be in contrast with the essential features of digital markets.

which are fast-changing, innovative and dynamic. Notably, the draft introduces a fixed set of eighteen ex ante obligations split in two lists: a list of self-enforcing obligations (Article 5) and a list of obligations susceptible of further specification (Article 6). In order to fill the gap, the proposal allows the Commission to update the obligations laid down in Articles 5 and 6, following a market investigation.

PROF If you forbid something in advance, there is the risk to treat several platforms in the same way. Instead, platforms are different on terms of business model and strategy. The first thing to understand is the monetization model of the platform (the way through which the platform gets money). For example, duopoly, Google Play Store and Apple App Store. There are significant differences because the monetization model is different. Apple gets money relying on the fact that a lot of people buy Apple devices. Google Play Store's monetization model does not rely on the fact that it sells devices.

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Because it doesn’t sell devices, but it takes money through advertisement. Google is an advertiser model, apple is a device model. So, even if you are talking about the same service, they can have different monetization model and different business model. Instead the digital act treat all the platform in the same model, just considering the fact that they are online. The digital market does not have to be treated as a unified market because its players are characterized by different business model.

In order to guarantee and harmonization within Europe, the provision is prohibiting the member states to introduce further obligations over gatekeeper. However, in EU there are still several national antitrust intervention and national regulatory intervention for digital market, that has been already.