Self-preferencing—the practice of platforms favoring their own products or services—has become a contentious issue in global competition policy. While these platforms drive innovation and enhance consumer experiences, concerns about market power concentration and unfair competition persist.
The Issue at Hand
Self-preferencing takes various forms, such as algorithmic prioritization, exclusive access to data, or preferential market terms. For instance, a platform might rank its products higher in search results or restrict third-party access to crucial market inputs. These practices can undermine competitors, reduce consumer choice, and potentially stifle innovation. However, not all self-preferencing is detrimental. It can also enhance efficiency by lowering prices, improving quality, and promoting innovation.
The dual impact of self-preferencing requires a careful regulatory balance. A blanket ban could inadvertently suppress innovation and efficiency gains. Instead, Dr. Kim recommends a “rule-of-reason” approach: targeting only practices deemed unfair or harmful to competition while preserving the benefits of platform-led innovations.
Policy Recommendations
To effectively regulate self-preferencing, the report emphasizes 1) Tailored Regulation: A nuanced framework that addresses specific harmful behaviors without imposing excessive constraints on innovation, and 2) Enhanced Enforcement Mechanisms: Improving the timeliness and efficiency of regulatory interventions to address rapidly evolving platform behaviors.
|