Essays in the Regulation of Digital Markets

This dissertation addresses a number of issues in the regulation of digital markets by means of three different essays. The first essay studies the political economy of antitrust enforcement across the Atlantic. Many believe that the EU’s enforcement actions against US companies are a form of digital protectionism. This essay looks at the foundations of data protection and antitrust policies to propose an alternative explanation. Europeans associate data protection with inalienable rights, Americans treat data as an asset. Europeans use competition policy to advance personal freedom, US antitrust policy focuses on economic efficiency. The combination of these singular EU traits encourages the regulation of internet companies. However, as the US does not share either trait, the EU/US divide over internet regulation will grow. The essay concludes by arguing for an adjusted role for economic reasoning in antitrust enforcement as an avenue to bridge differences. The second essay addresses the definition of antitrust relevant markets by discussing the American Supreme Court decision in Ohio v. American Express. In a controversial landmark ruling, both the Court’s majority and minority battled over definitions of relevant markets in the complex industry of electronic payments: the majority affirmed that “transaction platforms” always constitute a single “two-sided relevant market” and the minority argued that electronic payments are regular complementary goods subject to traditional “one-sided” analysis. This essay challenges both views and proposes a novel multi-layered approach. It then discusses the rich international experience of the EU and Brazil in the application of competition law to of electronic payments’ markets as examples of cases where authorities sometimes correctly applied and sometimes fell short of this multi-layered view. Building on these insights, the essay develops a framework to define relevant markets in cases involving transaction platforms and concludes by outlining the applicability of this layered approach to a variety of markets commonly found in today’s digital economy. The rise of data privacy laws is one of the most profound legal changes of this century. Yet, available data indicates that these laws recurrently suffer from an enforcement gap. This raises the question of the third essay: what accounts for this gap and what can be done to improve the performance of these laws? The essay first describes three core building blocks of data protection regimes in the United States and Europe—namely, market forces, tort liability and regulatory enforcement—that these jurisdictions combine to ensure that companies act in accordance consumers’ privacy preferences. It then identifies two key reasons—particularly deep information asymmetries between companies and consumers/regulators, and high levels of market power in many data markets—that enable companies to behave strategically and undermine legal compliance. The conclusion looks at the institutional design of antitrust and anti-fraud laws to argue that an effective online privacy regulatory system should reflect three key principles. First, the system must multiply monitoring and enforcement resources; second, the system must bring violations to light; and third, the system must promote governmental accountability