Competition Law, Regulation, and Digital Platforms: Japan, China, UK, EU, and USA
Edited by Ruth Taplin and Fuchikawa Kazuhiko
Routledge (2025)
ISBN-13: 978-1032788548
Review by Kenneth S. Friedman
The development and dissemination of groundbreaking platform technologies present a range of regulatory challenges. These are new sectors without established competition. The first successful entrants can readily dominate the sector, suppressing meaningful competition, leading to monopolies or (more typically) oligopolies.
One can find relevant examples in recent history: electricity providers, automobile manufacturers, airline manufacturers, television channel operators, computer manufacturers. In the case of contemporary digital platforms with the potential to become dominant sectors of the economy, the danger posed by oligopoly is exacerbated. ‘It is estimated that by 2023, the digital economy will account for 60% of global gross domestic product…’ (p. 62). An oligopoly in a sector that dominates an entire economy would present a dangerous concentration of power.
New digital technologies provide novel opportunities to exploit market dominance. Governments, seeking to maintain competitive markets, must grapple with unaccustomed considerations, balancing the important gatekeeper roles of platform and operating system providers, including internet data security, with regulations limiting the abuse of monopoly power.
This book provides a valuable snapshot of how major jurisdictions have approached these issues. While each regulative district has its idiosyncrasies, there are important commonalities among most.
China is something of an outlier in that its government plays a larger role in overseeing private corporations, primarily to implement industrial policy and bolster national security. Its government regards the latter as requiring increased caution with respect to limiting the power of corporations.
In the sphere of digital platforms, this involves curtailing practices that enable the largest corporations to increase their market share at the expense of smaller competitors. One common practice in China, “pick one from two”, forces businesses to close their stores on all platforms except one, to consolidate all their digital sales onto just one platform (typically the dominant one).
In a famous case, in 2019, JD.com (which had been accused of a similar violation two years earlier), joined by two smaller companies, accused Alibaba of “pick one from two”, violating the terms of the Anti-Monopoly Law of China. In 2021, the government, in its first prosecuted violation of the Anti-Monopoly Law, levied a massive fine against Alibaba.
Yet in a theme echoed by others, Lu Xiaofei warns against perils of over-regulation.
‘While the involvement of state power is necessary, as noted in the discussion on legal and regulatory transition below, if the scope of state power exceeds reasonable limits, legal stability and transparency will be undermined, business freedom restricted, and innovation curtailed, raising concerns that market competition will be reduced… Thus, there is an undeniable risk of excessive monitoring of individual behaviour and restrictions on freedom of expression and freedom of thought […] (p. 69).
According to a recent empirical study, the tightening of platform regulations in China did not promote competition as expected but suppressed it. The regulations have decreased venture capital investment in platforms and made startups hesitant to enter the market, reducing their numbers.’ (p. 75).
This failure of policy, the unintended consequences of well-meaning regulation, is a product of the novelty of the technological breakthroughs. The legal regulatory apparatus has yet to catch up. There are new modes of exploitation. There are new sets of considerations for standard regulatory interventions. And there are new questions that must be asked and answered.
As Fuchikawa Kazuhiko details in his chapter: ‘There is a need to expand the scope of exclusionary conduct that is deemed illegal in cases involving self-preferencing in platform markets with ecosystems. However, the question arises: What should be the legal limit?’ (p. 17).
It is not surprising, given the novelty of the technologies and the creativity of the corporations, that it is difficult to even discern the relevant factors. The overall picture is pointillist, with specific court rulings in different countries painting a picture with blurred edges and apparent contradictions.
‘Self-preferencing represents a novel form of anticompetitive conduct. Regarding the extent of evidence required to demonstrate competitive harm, actual exclusionary events are not required; it is sufficient to prove the potential for such effect […]
In relation to exclusive dealing, it is considered that, in determining the anticompetitive effects, the focus should be on whether the effect has actually occurred, rather than merely the potential to restrict competition…’ (p. 23-24).
The central notions themselves are unclear. ‘Thus, the definition of self-preferencing is unclear.’ (p. 24).
There is a background of individual cases in a number of different countries, and it is a challenge to find unambiguous overarching principles. In the area of cloud computing Hayashi Shuya and Wu Kun-lin, affirm: ‘In sum, as concisely illustrated above, although the newly-introduced DA (Data Act) is leading to considerable changes in how cloud services are offered to customers, it still has various interpretation issues needed to be resolved […]
It is thus unclear that, in the case of the overlap of application scopes between the DMA (Digital Market Act) and the DA, which regulation should be prioritised, or in other words, how to interpret relevant provisions to ensure coherence and consistency of the two regulations.’ (p. 53-54).
Even where regulations appear straightforward, difficulties are exacerbated by enforcement by different authorities. According to Hirayama Kentaro: ‘As already explained, the METI (Japanese Ministry of Economy, Trade and Industry) is in charge of enforcing the DPF Transparency and Fairness Act, and efforts are underway to make transaction conditions transparent and fair in the online shopping sector, smartphone shopping sector, and digital advertising sector. However, the Smartphone Software Competition Promotion Act, for which the JFTC (Japan Fair Trade Commission) will be in charge of enforcing, will introduce this new ex ante regulation in the smartphone software sector, which could lead to a state of double regulation by two government agencies in the same sector. (p. 39).
This book presents a clear and well-crafted picture of this Heraclitean flux. New technologies provide new tools for industry leaders to extract rents. Governments, seeking to support competition and reduce rents, try different strategies in regulation and enforcement. Industry then seeks to evade or blunt the effects of regulations.
Government does have a powerful option of breaking up oligopolies. In April 2025, Google lost a major case in which it was accused of using its platform to acquire a monopoly in advertising. The presiding judge, Leonie Brinkema, wrote: ‘For over a decade, Google has tied its publisher ad server and ad exchange together through contractual policies and technological integration, which enabled the company to establish and protect its monopoly power in these two markets.’ A new trial is scheduled for September, which may include the demand for massive divestments, including the sale of its Chrome operating system.
Of interest, Mariyama Naoko’s chapter on Big Pharma initially seems tangential, as pharmaceuticals seem quite different from digital platforms. Yet there are important, if not widely noticed, economic similarities between digital platforms and pharmaceuticals. For each, the initial capital expenses are very high, as is the uncertainty. One does not know beforehand how one’s new digital platform will be received; one does not know beforehand if one’s new pharmaceutical will be both safe and efficacious.
If the platform or the pharmaceutical is successful, the incremental cost of adding a new subscriber or making a new capsule is near zero. Incremental profits equal incremental revenue. This increases the incentive to maximize revenue from successful products, be they digital platforms or pharmaceuticals.This may be done somewhat differently in the two fields (in digital platforms, one may seek to add services, to attract and keep more followers, more advertisers; in pharmaceuticals, one may seek to raise prices – and perhaps add "services" by encouraging repurposing). But in both areas, the primary threat to revenues and profits is competition. In both digital platforms and pharmaceuticals, a major focus of industry leaders is staving off competition.
For the most part, tactics have been different. In digital platforms, one may preference one’s own products, either implicitly via algorithms or explicitly by demanding that advertisers use only their platforms. In pharmaceuticals, one may manipulate patent law to delay the competition posed by generic brands. Tactically, pharmaceutical companies use evergreening – marginal changes in uses, in formulations, to patented drugs to extend patent life. And they erect thickets of patents to thwart potential competition.
‘The overwhelming majority of litigated patents in the pharmaceutical industry are secondary patents that claim changes in formulation, dissolution profiles, new uses and the like. These patents are aimed at deterring generic entry and in many cases, they are from the same family and are often obvious variants of each other.’ (p. 87).
While the overall purpose of patents is to encourage innovation by providing the innovator with a period in which it can extract rents, over-patenting has the opposite effect.
‘Some companies file a large number of patent applications and obtain many patents as a way to set up barriers to competition. Some of these patents do not differ from existing ones. When patents work as entry barriers, the patentee may profit from their dominant position created through excess patenting. If a patent procedure is not used for its intended purpose, firms are essentially committing an abuse of procedure to exclude competition… In a situation in which such practices are rife, patents do not provide an incentive to innovate […]
Excessive patenting, though, can be especially problematic in technology-intensive industries, including the information technology (IT) industry.’ (p. 85).
Noting that such practices are endemic in the pharmaceutical industry, the chapter focuses on a particular drug, Humira. ‘AbbVie, the owner of Humira, filed 247 patent applications for Humira in the US, with the aim of delaying competition, and obtained 132 patents. While the basic US patent for Humira expired at the end of 2016, nearly 50% of the patents (122 of 247) were filed by AbbVie from 2014 onwards, more than 20 years after initial scientific research began […]
Since launching Humira in 2003, AbbVie has raised the drug’s price 27 times, including by nearly 30% in one 10-month period. The price of a 40-milligram syringe of Humira has increased by 470% since the drug’s launch. Over two-thirds of Humira’s US sales have come since the March 2016 expiration of its primary patents.’ (p. 87-88).
Humira is not exceptional. Mariyama notes that on average, each of the ten top selling US drugs has 74 patents, and that more than three-fourths of the drugs associated with new patents were ones that had already been on the market. She notes that excessive patenting is also prevalent in Europe. But the EU appears to be better tailored to this problem than are US courts, which appear to impose an unreasonable burden of proof on aspiring producers of generics.
This is a serious book. It addresses a knot of problems that are of considerable importance, but complex and difficult. We are witnessing a significant concentration of economic (and political) activity on digital platforms. Unregulated, self-serving policies that suppress meaningful competition could result in extreme and dangerous concentrations of wealth and power in the hands of the managements and large shareholders of the dominant companies controlling digital platforms.
Market forces, which in theory should restore competition, fail when faced with the combination of high entry costs and the ability of dominant companies to use their dominance to starve new arrivals of revenues. Government intervention is necessary to restore balance and competition.
As editor Ruth Taplin affirms in the ‘Conclusion’, The EU ‘[…] has been outstanding in its efforts to stop the worst anti-monopoly breaches, infringement, and practices by the giants largely due to the efforts of titans of tech regulation Margarethe Vestager and the former European Commissioner for Internal Markets, Thierry Breton.’ (p. 97). However, with these two stalwarts resigning, it is not clear what the future of digital platform regulation will be in the EU.
Separately, the Conclusion addresses the particularly important sector of social media. This has played a primary role in the dissemination of misinformation, leading to many unnecessary deaths in the COVID crisis and likely altering the results of the Brexit referendum and the 2016 U.S. presidential election. (B. Kaiser, Targeted, 2019) It has effectively spread hatred and has been a recruiting arm for violent organizations.
Algorithms based on anger and hate, independent of truth, keep viewers on websites longer, generating greater profits. ‘Facebook is the founder of recommendation algorithms and the largest with 3 billion followers. This means that rather than seeing posts in chronological order which used to be the case, in the digital age Facebook lets users see what it wants them to see. As contentious posts are rewarded by algorithms, these may become overrepresented with the majority views not being given the exposure in proportion to their size. Therefore, a marketplace of ideas in which everyone is heard equally will not occur with social media […]'.
Reflecting the same spirit of prioritizing profits over anything else, the nonprofit Tech Transparency Project investigation found that more than two hundred X users appear to be affiliated with foreign terrorist organizations (leaders of Al-Qaeda, Hezbollah, Hamas, the Houthis, and others). They pay for premium blue check subscriptions enabling preferential treatment by algorithms to attract more attention.
They use favorable positioning on X as a megaphone to spread their propaganda and to raise funds. The New York Times reported that while some of these were stripped of their verification status after the Tech Transparency Project report, several regained access to X’s premium features within a month.
It should be clear that self-regulation is not a viable option when the primary allegiance is to profits, when these are prioritized over lives, over truth, over national security – or when a single individual with dubious principles can bend a dominant platform to embody those principles.
As Ruth Taplin appropriately notes, ‘Therefore, another area of tech giants’ dominance in social communication through social media also needs to be regulated by an independent judicial body and regulator before free speech and content is compromised.’ (p. 99).
In keeping with the general care and thoughtfulness of this book, its recommendations should be well heeded.
One should also appreciate the importance of this book. For the first time, we are faced with a technology that could dominate economies. Like other powerful tools, it has potential for both great good and great harm. Given the nature of digital platforms, market forces do not act as constraints. It is then critical for governments to minimize harm by imposing suitable regulations. However, because this is a new technology, it is not clear what the effect of various regulations will be. Choices yet to be made will be critical.
However, there is little academic work that addresses this issue, perhaps because the situation is in flux and there is not yet a universally accepted protocol for dealing with these issues. The very fluidity of the market may make this a most important time to focus interventions in ways that will lead to promising regulatory frameworks. This book provides the background to address this with clarity and wisdom.