Digital Competition

Competition and innovation play a significant role in digital markets. In this conversation generated by ChatGPT, Arrow and Schumpeter discuss their works in the context of digital markets, complexity theory, and the Digital Markets Act.

The movie opens with a shot of Margrethe Vestager, dressed in a sleek black suit and tie, walking confidently down the bustling streets of a major European city. As she moves, we hear the iconic James Bond theme playing in the background.

Competition laws are truly a marvel of modern society. Without them, businesses would be free to engage in all sorts of nefarious activities, such as offering fair prices and high-quality products to consumers. Can you imagine the chaos that would ensue if companies were allowed to compete with each other on a level playing field?

To GAFAM with Love is a love story like in Woody Allen’s movies. There is a complex relationship between love and hate in which nobody understands the story, but everyone wants to make it work. “Don't psychoanalyze me! Many have tried. All have failed,” the GAFAM argue. Some interpretations of the story are original, though. In one story, the French competition service investigates the wedding between two major French media companies, TF1 and M6. The wedding would give them tremendous market power in the media and television advertising markets. The situation might oblige the competition service not to celebrate the wedding or, at least partially, to the detriment of the future spouses and the French sovereign. The spouses thus argue they must merge because GAFAM threaten them. In GAFAM we love.

The UK Majesty’s competition service ordered the behemoth social media Facebook to divorce with its spouse, the titan GIF provider Giphy in November 2021, following a 17-months investigation by M. The first license to sell in digital markets. The first license to kill a killer acquisition against Facebook. Shocking. Positively shocking, I think he got the point, said agent 007 James Bond, a former MI6 agent, now working for the competition service. The license to sell is a clear signal that competition services worldwide will now act vigorously to maintain and restore competition in digital markets.

Antitrust is paradise. It is all about money, drugs, and sexy questions. Policymakers offer champagne, lawyers enjoy champagne showers, and economists try to assess the costs of the fun party. Of course, they try to be reasonable. They thus invent puzzling concepts such as fair, reasonable, and non-discriminatory terms—FRAND terms. Philip Marsden, the inventor of the title, will probably agree that licensing it for a virgin mojito is fair and reasonable, but others might agree for a bottle of champagne. Presumably, the Court of Justice will settle for a royal mojito to please everyone. Welcome to antitrust paradise.

People love choice. Choice makes people happy because they decide what they want. Looking for a date? It takes less than a minute to create a Tinder account that opens the door to thousands of handsome people. Some compete with a dog picture, while others with a cat or even a dog filter on their head. Aware of the dilemma of choosing between cat, dog, and dog filter, Tinder helps select a list of potential dateable people thanks to personalized algorithms—what the two funniest economics, Thaler and Sunstein, call a nudge. Of course, the dredgers think they choose. Everyone believes in choice.