ARTIFICIAL INTELLIGENCE AND COMPETITION
Antitrust enforcement in the digital space is one of the hot topics of the moment and is likely to remain one during the years to come. The internet economy does indeed attract increased scrutiny from competition authorities across the globe. The European Commission’s (EC) record fines against Google and the recent Facebook decision by the German Bundeskartellamt (BKA) are just two prominent examples of this development.
An area that has attracted a lot of media attention and public debate is how artificial intelligence (AI) can facilitate anti-competitive behaviour. We have seen headlines claiming that algorithms will outsmart consumers by allowing companies to coordinate and fix higher prices without the need for any human contact. But is that actually true?
So far the verdict seems to be: no. No (artificial) smoke without (human) fire; collusion between competitors animated by technology can always be linked back to human conspiracy and no matter how fancy the algorithm, at the end of the day the machine executes what competitors A and B agreed.
But it would be too simplistic to stop here, as AI can play a role in increasing a company’s antitrust risk exposure in various situations: companies or consultants that use similar algorithms to maximise profits resulting in aligned pricing strategies. Or the financial industry’s use of algorithms to obtain and exchange information among banks for the trading floor. AI can help companies with market intelligence and thus increase market transparency. Another area where AI can play a powerful role is to help companies with market power to strengthen their dominance. One illustration of this is the EC’s Google shopping case, where Google algorithms favoured search results for Google’s own shopping sites over competing sites.
Apr-Jun 2019 Issue