Denial of Interoperability and Future First-Party Entry

Massimo Motta and Martin Peitz

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: Motivated by a recent antitrust case involving Google, we develop a rationale for foreclosure when the owner of an essential input is not yet integrated downstream. Our theory rests on data-enabled network effects across periods. If a platform considers offering a first-party app in the future, by not allowing a third-party app to be hosted on its platform, it ensures that the third-party app would be a weaker competitor to its own app in the future. This makes denial of access attractive as a full or partial foreclosure strategy, which is costly in the short term but may be beneficial in the long term. We also study the effects of policies such as compulsory access or data-sharing, showing under which conditions they might be beneficial to consumers or backfire.

Keywords: Exclusionary practices; vertical interoperability; refusal to deal; digital platforms; vertical foreclosure; data-enabled networks effects; compulsory access; data-sharing policies (search for similar items in EconPapers)
JEL-codes: K21 L10 L40 (search for similar items in EconPapers)
Pages: 30
Date: 2023-08
New Economics Papers: this item is included in nep-com, nep-law, nep-mic, nep-pay and nep-reg
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