The dynamics of competition in zero-price digital markets, an economic and antitrust analysis

Details

Supervisors

de Ghellinck, Elisabeth

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale

Abstract

In today’s digital economy we are surrounded by products and services provided free of charge. While free goods have always existed, the advent of internet and the drastic reduction in the incremental costs of producing and distributing digital goods have increased their number and variety to unprecedented levels. Services like search engines, social networks, maps, dating apps, video and music streaming, messaging and many others are now part of our everyday life. Consumers get many benefits from them. However, several antitrust cases and high profile mergers have raised the attention on their effects on competition and welfare. The aim of this work is to explore the competitive dynamics in zero-price digital markets and the possible sources of consumer’s harm. In order to do so, I analyse the specificities of zero-price digital markets, looking at the business models and strategies that allow firms to profitably supply goods at no price and at the psychological effects of “free” on consumer’s behaviour. The analysis shows that, by offering free goods, companies compete with each other for attracting consumers’ attention and personal data. The first is sold to advertisers, the second is used to target users and improve services. While the traditional principles and tools of competition law remain relevant, these dynamics shape the competitive environment and make their application more complex. Relying on case studies and hypothetical scenarios, I show that the effects of conducts and mergers in the context of zero-price markets can be assessed following the traditional analysis framework. However, this needs to be reinterpreted and adapted on a case by case basis, taking into account the related markets and products and considering new theories of harm that go beyond what is more easily measurable, prices.