Market definition in the platform economy

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The article addresses the role market definition can play for EU competition practice in the platform economy. The focus is on intermediaries that bring together two (or more) groups of users whose decisions are interdependent and which therefore are commonly referred to as “two-sided platforms”. We address challenges to market definition that accompany these cross-group network effects, assess current practice in a number of cases with the European Commission and Member States’ competition authorities, and provide guidance on how prac-tice is to be adapted to properly account for the economic forces shaping markets with two-sided platforms. Owing to the complementarities of services provided to the user groups the platforms cater to, the question arises whether and when a single market can be defined that encompasses both sides. We advocate a multi-markets approach that takes account of cross-market linkages, acknowledges the existence of zero-price markets, and properly accounts for the homing behaviour of market participants.

Disclaimer: We gratefully acknowledge support from the Deutsche Forschungsgemeinschaft through CRC TR 224 (project B05). Parts of this article build on a report the authors prepared for the Centre on Regulation in Europe (CERRE) (“Market Definition and Market Power in the Platform Economy”, May 2019).