Addressing the Main Hurdles of Product Market Definition for Online Services: Products, Price, and Dynamic Competition

Market definition is an essential component of competition policy in many jurisdictions. It is the first step in assessments of collusion, unilateral conduct, and mergers. However, authorities around the world have struggled to delineate product markets for online services. The challenges emerge around three variables: products, price, and dynamic competition.
First, online services are increasingly complex. Multiple services might be offered on one platform, to the same or different customer groups. Such complexity and variety make it difficult to determine which products undertakings actually offer. Second, several undertakings offer online services free of monetary charge. Not only do the traditional quantitative tools to assess demand-substitutability rely on price (absent here), studies indicate that customers value ‘free’ products differently than they would the same product at a price. Third, online competition is characterised by continuous innovation in products and business models. When undertakings compete by shaping demand instead of merely responding to it, they can even face competition from products which do not yet exist. The authority may be uncertain which constraints to include in the market.
These three categories of challenges impede reliable market definitions for online services. The scholarship has failed to provide a systematic overview of these challenges and propose satisfactory answers to them. This thesis takes up that task. The thesis makes a general contribution to the scholarship, by engaging in a comprehensive analysis of market definition in general, in order to enable specific answers to the questions particular to online services. It provides an understanding of what prices, products, and competition mean within the context of antitrust markets, before examining the problems for online services in each category. The thesis provides suggestions to resolve the problems in each category, and help authorities recognise ‘products’, ‘price’, and ‘dynamic competition’ online.