When the Econometrician Shrugged: Identifying and Plugging Gaps in the Consumer-Welfare Standard
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WHEN THE ECONOMETRICIAN SHRUGGED:
IDENTIFYING AND PLUGGING GAPS IN THE
CONSUMER-WELFARE STANDARD
Kevin Caves & Hal Singer*
INTRODUCTION
Edge providers have alleged that dominant tech platforms exploit their
platform power to gain an artificial advantage in some ancillary, edge mar-
kets. In May 2018, Yelp filed a complaint at the European Commission,
alleging that Google abused its dominance in local search by giving pre-
ferred placement to its own local search offerings over similarly situated
rivals.' Facebook has been accused of leveraging its platform power by
appropriating the functionality of Snapchat (Stories feature), Timehop
(On This Day feature), Grubhub (food delivery feature), and GoFundMe
(fundraising feature).2 And Amazon has been accused of leveraging its plat-
form power into retail via predation against independent retailers such as
Diapers.com,3 and more recently by steering voice searches on Alexa to its
private-label products.4
Kevin Caves is Director of Econ One. Hal Singer is Managing Director of Econ One and an
Adjunct Professor at the McDonough School of Business at Georgetown University. The views ex-
pressed here are those of the authors only and do not represent the views of the authors' affiliated em-
ployers. The authors would like to thank Michael Kades, Lina Khan, Marc Lipton, loana Marinescu,
Nicolas Petit, Randy Picker, Eric Posner, Rob Seamans, Marshall Steinbaum, and Glen Weyl for valua-
ble comments.
1 See Rochelle Toplensky & Hannah Kuchler, Yelp Files New EU Complaint Against Google
over Search Dominance, FIN. TIMES (May 22, 2018), https://www.ft.com/content/42ac9l92-5dd2-1 1c8-
ad9l-c01af256df68.
2 See Elizabeth Dwoskin, Facebook's Willingness to Copy Rivals' Apps Seen as Hurting Innova-
tion, WASH. POST (Aug. 10, 2017), https://www.washingtonpost.com/business/economy/facebooks-
willingness-to-copy-rivals-apps-scen-as-hurting-innovation/2017/08/10/ea7188ca-7df6-l I e7-a669-
b400c5c7clcc storyhtml?utm term=.a77cd0cfc5lf (But while [Facebook's Onavo app] advertises
itself to users as a way to 'keep you and your data safe,' Facebook is able to glean detailed insights
about what consumers are doing when they are not using the social network's family of apps, which
includes Facebook, Messenger, WhatsApp and Instagram.).
3 See Lina M. Khan, Amazon's Antitrust Paradox, 126 YALE L.J. 710, 768-74 (2017).
4 Julie Creswell, How Amazon Steers Shoppers to Its Own Products, N.Y. TIMES (June 23, 2018),
https://www.nytimes.com/2018/06/23/business/amazon-the-brand-buster.html ([R]cscarchers at Bain &
Co., found in categories in which Amazon offered a private-label product, Alexa recommended those
products 17% of the time. Noting that the private label goods represent only about 2% of total volume
sold, the Bain researchers said, 'the online retailer clearly positions its own private labels favorably in
voice shopping.').
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2018]](ViewImageLocal?handle=hein.journals/gmlr26&div=16&collection=&method=preview&ext=.png&size=3)
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When the Econometrician Shrugged: Identifying and Plugging Gaps in the Consumer-Welfare Standard
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