Reconceiving Big Tech: Decentralizing the Industry to Align Incentives and Maximize Total Welfare

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This paper reconsiders competition in monetized (zero-priced) digital markets, in the context of the EU’s proposed Digital Markets Act. From first principles, it builds a novel argument that monetized (zero-priced) markets always tip towards the best product in the market. It then shows how firms in these markets use anti-competitive tying to extend their dominant position from a consumer-facing market into other more lucrative markets (i.e. online advertising) to gain a large monopoly profit. It suggests marketization, a new remedy that can prevent this harmful behavior (and the concomitant harms), and suggests how it could be implemented using the proposed DMA. This paper reflects the private opinion of the author.