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Alexey Ivanov on Digital Platforms’ Role for Diversity

14.03.2021
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Diversity was always a fundamental value to promote, even during the industrialization waves. Logically, antitrust was modelled to protect diversity and it did until the switch to efficiency occurred. But by its nature, efficiency is opposite to diversity. Take one example – oligopoly is efficient, but it kills diversity and choice.

Recently, the UK parliamentary committee launched an inquiry into big music streaming services – Spotify, Apple Music, Google Music - that collected tremendous money from consumers, but only a tiny bit of that money landed in the artists ‘pockets. In such case, less known and less resourceful artists may lose incentives to use popular streaming services thus leading to a loss of diversity and choice.

Another example is the concern raised about the so-called filter bubbles and echo chambers that appear when a user’s feed on social media is personalized to the extent that she does not receive any content that is different from her preferences. In a certain way, this effect is reinforced by the lesser influence that traditional media currently have on public opinion. More than 50% of respondents in national surveys from different countries (USA, UK, and Russia) receive their news updates from social media, and not from newspapers that do not offer filtering and algorithms and thus cannot personalize content. Add to this positive feedback loops that increase homogeneity, and we see the portrait of a typical platform user confined within his or her ecosystem with little chance to switch to another consumption mode.

Apart from financial losses due to the growing dominance of digital platforms that substitute traditional media, news businesses have to play according to the rules imposed on them by digital platforms. The recent bargaining rules passed by Australia, while inspirational for some jurisdictions around the world, may have the risk of increasing the bargaining power of Facebook and Google instead of harnessing it. Moreover, even in drafting these rules, Facebook managed to force the Australian government to soften the rules for the platform.

Why, then, do we celebrate diversity in multiple settings from biology to social justice, but pretend to overlook it when it comes to markets? The problem lies in antitrust’s commitment to efficiency measured as consumer welfare and inflexibility to change.

It’s a problem for antitrust, it’s time to come rescue this loss of diversity. There is need for a new standard, the one based on diversity, and not pure efficiency. Competition authorities should start to think on how diversity – economic and social - is affected by market concentration and rapidly encroaching power of digital platforms. We see this type of logic in innovation markets and innovation theory where more diversity and more choice imply more innovation.

Competition authorities quite often only think about diversity as a prerequisite of innovation. But diversity needs to be reintroduced as a standalone part of competition analysis, in line with the current trend for sustainability as a result of antitrust enforcement. In comparison to sustainability which is largely focused on ecological externalities, however, diversity m

ust become a social dimension of antitrust. Much like weak links in system analysis, diversity may be seen as a strengthening factor for the stable and sustainable functioning of the market.