“Please, Help Yourself”: Toward a Taxonomy of Self-Preferencing

GAICIL Insights

Self-preferencing, a firm favoring its own products, is often treated as inherently suspect. The report argues that a blanket ban ignores the many ways it promotes competition and benefits consumers.

It proposes a taxonomy that separates pro-competitive self-preferencing from exclusionary practices. AI assistants and integrated model ecosystems will raise the same question.

Abstract

Prohibiting companies from favoring their own products ignores all the ways it promotes competition and benefits consumers. Antitrust reforms should differentiate that pro-competitive self-preferencing from certain exclusionary practices.¹

Report

Conclusion

The United States faces a critical turning point when it comes to antitrust law. It can continue the current system wherein it generally allows companies, even those with considerable market share, to self-preference (while not allowing active degradation of competitors), or it can go down the EU path that seeks to protect businesses, especially small firms, from competition, even if the result is a degraded consumer experience. A general, per se prohibition of self-preferencing, as proposed in the European Commission’s Digital Markets Act, would generate considerable costs and unintended consequences. Accordingly, the United States should refrain from instituting such an approach with bills such as the Klobuchar-Grassley bill and its House counterpart (Customer Non-Discrimination Act / Equality Act). Indeed, antitrust bills that aim to prohibit self-preferencing without thoughtful analysis and only for a handful of companies will likely do more harm than good. They are likely to undermine rather than strengthen competition on the merits and make consumers’ experiences worse.[83]
One cannot overstate the implications of the radical choice of prohibiting procompetitive self-preferencing. Unfortunately, several forces in the U.S. government seek to go down the EU path: some progressive Democrats because they despise large corporations and want a fundamentally restructured economy; some Republicans because they have let their anger toward social media sites purportedly being biased against conservative speech influence their views on antitrust; and many other elected officials simply because there is so much generated noise about the problems of “big tech.”

Takeaway: Antitrust reforms should differentiate that pro-competitive self-preferencing from certain exclusionary practices.

Conclusion quoted verbatim from the report.

Notes

Aurelien Portuese, “Please, Help Yourself”: Toward a Taxonomy of Self-Preferencing (Info. Tech. & Innovation Found., Oct. 25, 2021), https://itif.org/publications/2021/10/25/please-help-yourself-toward-taxonomy-self-preferencing/. Summary quoted verbatim from the ITIF publication page, https://itif.org/publications/2021/10/25/please-help-yourself-toward-taxonomy-self-preferencing/. ↩

Cite as: Aurelien Portuese, “Please, Help Yourself”: Toward a Taxonomy of Self-Preferencing (Info. Tech. & Innovation Found., Oct. 25, 2021), https://itif.org/publications/2021/10/25/please-help-yourself-toward-taxonomy-self-preferencing/

Header image: Amazon davinia am Studierendenwohnheim 20210815 HOF03531.jpg by PantheraLeo1359531, CC BY 4.0, via Wikimedia Commons.