Online Advertising and Antitrust: Network Effects, Switching Costs, and Data as an Essential Facility
CPI Antitrust Chronicle, April 2019
An article by Analysis Group affiliate Catherine Tucker, the Sloan Distinguished Professor of Management Science at MIT Sloan School of Management, proposes that a more nuanced understanding of network effects, switching costs, and access to large amounts of customer data should inform the discussion of potentially anticompetitive effects arising from the boom in online advertising.
In “Online Advertising and Antitrust: Network Effects, Switching Costs, and Data as an Essential Facility” (published in the April 2019 issue of Competition Policy International’s CPI Antitrust Chronicle), Dr. Tucker examines the question of whether the collection and use of large amounts of user data may lead to significant increases in market power for companies with greater access to that information and more extensive data gathering and distribution networks. Dr. Tucker argues that the debate about market power in online advertising suffers from a lack of precision, and that a more sophisticated understanding of consumer and advertiser behavior is required to have a meaningful discussion about sustainable sources of competitive advantage in online advertising markets.