Digital platforms and ecosystems have come to dominate the competitive landscape. In an attempt to increase and deepen engagement of their participants, they expand to adjacent or even remote sectors to offer the customer goods and services which may have little connection with the original business of the ecosystem organizer.
By becoming a one-stop shop with a solution for a variety of a person’s everyday needs, digital ecosystems are changing the design of the economy. They do not compete within but across markets. In fact, the very concept of the market, as an entity with definable geographical, product or service boundaries, is thrown into question. As more customers stay longer within the perimeter of an ecosystem, those outside the perimeter — be it suppliers or consumers — become marginalized.
The breadth of economic power that digital platforms and ecosystem organizers have built up is coming to be realized and competition authorities across jurisdictions are starting to take action. Their response, however, is fragmented and remains inadequate to the severity of the challenge. Although this piecemeal approach is not without effect, it fails to address the issue at its core.
Developed for the industrial era, the legacy concepts of competition law prove inapt for what famous sociologist Zygmunt Bauman termed ‘liquid modernity’ to describe the fluid and elusive nature of today’s social and economic organization. If market boundaries are blurred, how relevant is the market share to the identification of the dominant player — and what is a market share, exactly?
Similia similibus curantur, as the ancients used to say. Like cures like. Fight fire with fire. The universal adoption of the ecosystems approach by businesses requires that competition authorities adopt an ecosystem approach to regulation. The new competitive environment may be better conceived and described, and more effectively impacted upon if looked at through the lens of the laws of ecology and biology.
Life sciences have accumulated a wealth of knowledge about the dynamics of relationships between and within species. Models for predator-prey dynamics, ‘co-opetition’, mutation and others may all provide useful analogies and be helpful in selecting the right type of — and the right time for — regulatory intervention.
To take but one example, an intraguild predation model in biology predicts that exerting an equal pressure on the stronger and the weaker predators in a system with two predators and a prey results not in the strengthening of the prey vis-a-vis the predators but in the strengthening of the strongest predator and the weakening — or, in fact, extinction — of the weaker one, potentially shifting the balance of the system to the detriment of the prey. This finding may have implications for the choice of regulatory intervention in an economy with more than one large player which differ in their clout.
The adoption of the ecological paradigm will imply a change in the role of the regulator. Rather than being a mechanic, who repairs and maintains an industrial mechanism, they will need to transform into a gardener, who cultivates and breeds a living system. This may require abandoning strict formulas and numerical thresholds — a holisti c approach inevitably puts more emphasis on a case-by-case assessment and regulatory discretion. Care must be taken, however, that this does not come at the expense of predictability of regulation.
The BRICS Competition Law and Policy Centre in Moscow has teamed up with the International Institute for Applied Systems Ana-lysis in Austria to draft a concept paper on Ecoantitrust — an up-to-date approach to competition regulation aligned with the realities of the digital economy. The concept was presented at the VII BRICS International Competition Conference which took place during Nov 16-17 in Beijing and Chengdu.
Now that the trend for convergence of regulatory approaches in antitrust — marked, in particular, by a rapid adoption of competition laws in dozens of jurisdictions on the basis of a common set of principles within as little as around twenty years — has lost steam, the BRICS club is presented with an opportunity to take center stage in defining core principles of competition in the digital era.
The BRICS modality, which rejects dogmatism while promoting equal partnership and open dialogue, is uniquely suited to foster the experimentalist spirit and creativity needed to devise a new blueprint for competition regulation. Rather than a rulebook for everyone to follow, it should be a flexible framework with a wide space for adjustment, a tool for cooperation on a common basis but with no rigid boundaries. Its guiding principle should be to provide more space and prevent extremes, bringing sustainability to the global system. This opportunity is not to be missed.
The author specializes on business law and public policy for digital and agricultural development. He is also head of the BRICS Competition Law and Policy Centre based at the Higher School of Economics in Moscow.
The views do not necessarily reflect those of China Daily.