Navigating The Complexities Of Defining Anti- Competitive Behavior In Two-Sided Digital Platforms

Author: LawSphereX

Category: Technology, Cyber & Privacy

Published: 2026-08-23T20:39:25.758698+00:00

Updated: 2026-08-26T17:10:21.78+00:00

NAVIGATING THE COMPLEXITIES OF DEFINING ANTI-

COMPETITIVE BEHAVIOR IN TWO-SIDED DIGITAL

PLATFORMS

Rafeeque Hussain AK, Research Scholar, Hindustan Institute of Technology & Science (HITS), Padur, Chennai, Tamil Nadu

ABSTRACT

Anti-competitive practices in two-sided digital markets presents significant challenges due to the unique dynamics of these platforms. Unlike traditional markets, two-sided platforms, such as e-commerce marketplaces, search engines, and social media networks connect two distinct user groups, creating interdependencies and network effects that complicate competition assessments. One of the primary challenges is determining market power, as dominance in a digital platform does not always translate to consumer harm. Strong network effects often lead to market concentration, but intervention requires distinguishing between natural monopolies and anti-competitive behaviour. Another issue is the presence of zero-price markets, where platforms offer free services to users while monetizing another group, typically through advertising.

Traditional competition metrics, such as pricing power, become less relevant in these cases, making it difficult to establish predatory pricing or monopolistic control. Additionally, multihoming and switching costs create further complications. While users and businesses may engage with multiple platforms simultaneously, exclusivity agreements, algorithmic biases, and high switching costs can restrict competition. Identifying when these strategies are anti-competitive rather than efficiency-driven is complex. Self-preferencing and data advantages also raise concerns. Platform operators that simultaneously function as marketplace regulators may Favor their own products over third-party sellers, reducing competition. Furthermore, control over vast amounts of user data can create high entry barriers for competitors, reinforcing dominance.

Regulatory bodies struggle to define clear legal frameworks that balance competition enforcement with innovation incentives. Overall, the dynamic and rapidly evolving nature of two-sided digital markets demands a nuanced approach to competition law. Existing regulatory tools often fail to capture the complexities of digital platforms, requiring new analytical frameworks and policy measures. Addressing these challenges is essential to ensuring fair

competition while fostering technological advancements in the digital economy. Keywords: Anti-competitive practices, Two-sided markets, Digital platforms, Network effects, Market dominance.

1. INTRODUCTION:

Two-sided digital markets refer to online platforms that connect two distinct user groups and facilitate interactions between them. These platforms act as intermediaries, creating value by enabling seamless transactions between service providers and consumers. Examples include Zomato and Swiggy, which link restaurants with food delivery customers; Amazon, which connects buyers and sellers; and Uber, which facilitates interactions between drivers and riders. The success of these platforms depends on network effects, meaning that as more users join on either side, the platform becomes more valuable. However, these markets present unique challenges that differentiate them from traditional business models.

Since their growth relies on attracting and retaining users on both sides, they often engage in pricing strategies, data-driven decision-making, and business practices that may raise concerns about fair competition. Issues like self-preferencing, exclusivity agreements, and data monopolization have sparked debates about whether dominant platforms engage in anti-competitive behaviour. For instance, in India, Zomato and Swiggy have faced scrutiny from the Competition Commission of India (CCI) over alleged unfair practices, such as preferential treatment of certain restaurants and high commission fees imposed on partner businesses1. Given these complexities, competition law plays a crucial role in regulating market dominance and ensuring a level playing field.

Traditional antitrust principles must be adapted to address the digital economy’s challenges, ensuring that platforms do not exploit their position to the detriment of competitors or consumers. The evolving nature of these markets demands proactive regulatory approaches to balance innovation with fair competition, preventing monopolistic behaviour while encouraging healthy market growth.

1 M. M. Sharma, CCI DIRECTS INVESTIGATION AGAINST ZOMATO AND SWIGGY FOR ALLEGED ANTI-

COMPETITIVE PRACTICES -, - The Antitrust Attorney Blog - By MM Sharma (Apr. 6, 2022), https://www.competitionlawyer.in/cci-directs-investigation-against-zomato-and-swiggy-for-alleged-anticompetitive-practices/ (last visited Feb 2, 2025).

2. UNDERSTANDING TWO-SIDED MARKETS

A two-sided market, also known as a two-sided platform or multi-sided platform, is a

business model that facilitates interactions between two distinct groups of users, each of whom benefits from the platform’s ability to connect them. The core feature of a two-sided market is that the value of the platform to one group depends on the participation and engagement of the other group. This mutual interdependence creates what economists refer to as indirect network effects. The essence of a two-sided market lies in its ability to enable and manage this interaction between user groups, making the platform more valuable as participation on both sides grows. For instance, in online marketplaces like Amazon or eBay, buyers are attracted to platforms that feature a diverse range of products from various sellers. At the same time, sellers prefer platforms with a large and active pool of potential buyers.

As more users join one side of the platform, it enhances the platform's appeal to the other side, creating a self-reinforcing feedback loop that fuels continuous growth. Indirect network effects play a key role in two-sided markets. These effects are called indirect because the benefit a user derives from the platform doesn’t just depend on other users within the same group, but on users from the opposite group. For instance, more drivers on a ride-sharing platform like Uber ensure shorter wait times and better service for passengers, making the platform more appealing to them. At the same time, the presence of more passengers guarantees more earnings opportunities for drivers, motivating them to stay on the platform. A distinguishing feature of two-sided markets is their pricing structure, which is

carefully designed to optimize user participation on both sides. Platforms often subsidize one side to attract users while charging the other side, based on which group derives more financial benefit. For example, social media platforms like Facebook and Instagram allow users to access the service for free, while charging advertisers for the ability to reach those users2. Similarly, in credit card networks like Visa and Mastercard, cardholders are often incentivized with Vikram Joshi, Council Post: The Power Of Social Media In Modern Marketing, Forbes, https://www.forbes.com/councils/forbesbusinesscouncil/2024/10/09/the-power-of-social-media-in-modernmarketing/ (last visited Feb 2, 2025).

rewards or minimal fees, while merchants bear the cost of transaction fees to access the network’s customer base. However, two-sided markets also introduce complexities and challenges, particularly in terms of competition and regulation. Because of network effects, established platforms tend to grow larger and can become dominant, creating high barriers for new entrants. Once a platform achieves a critical mass of users on both sides, it becomes difficult for competitors to attract users away. This may lead to monopolistic market structure. Regulating two-sided markets is a complex task because traditional antitrust frameworks often do not account for the intricate interdependencies between the two sides. Actions that benefit one side, such as offering consumers lower prices, may harm the other side by limiting competition among service providers or alternative platforms3.

Policymakers must carefully balance these considerations to ensure that platforms promote innovation and consumer welfare without entrenching dominance or stifling competition.

3. ANTICOMPETITIVE PRACTICES IN TWO-SIDED MARKETS

Two-sided markets play a vital role in today’s economies, with platforms like Booking. com serving as intermediaries connecting two distinct groups of users in this case, consumers and service providers such as hotels. These markets rely on network effects, where the platform’s value increases as more users from both sides participate. While this structure promotes innovation and efficiency, it also creates vulnerabilities to anti-competitive practices. Such practices can restrict market entry, stifle innovation, and harm consumer welfare in the long run. A key reason for the sustained dominance of established platforms is the presence of high barriers to entry, which make it challenging for new competitors to gain a foothold and compete effectively4. Barriers to entry refer to the obstacles that prevent new firms from entering the market and competing effectively.

In two-sided markets, these barriers tend to be especially strong due 3 Shiying Wang, Huimiao Chen & Desheng Wu, Regulating Platform Competition in Two-Sided Markets under the

O2O

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to the combination of network effects, high initial costs, and the need to achieve scale to succeed.

3.1 NETWORK EFFECTS AS A BARRIER

One of the defining features of two-sided markets is the presence of network effects, where the value of the platform increases as more users join5. For example, in a ride-sharing market, more drivers attract more passengers, and more passengers, in turn, attract more drivers. Once a platform reaches a critical mass of users, it becomes highly attractive to both sides of the market, making it difficult for new entrants to lure users away. New entrants face the challenge of overcoming this initial lack of users on both sides, which can create a “chicken-and-egg” problem. Without a large user base, a new platform may struggle to attract businesses or consumers, which in turn limits its ability to grow and compete.

Established players, benefiting from these network effects, further strengthen their position and make it nearly impossible for new competitors to achieve the scale needed for sustainability.

3.2 HIGH INITIAL COSTS

Building and maintaining a two-sided platform often require substantial upfront investment. These costs include developing the platform’s infrastructure, marketing to attract both user groups, and managing the technology necessary to facilitate smooth interactions between the groups6. For example, an e-commerce platform needs to develop robust payment systems, logistics networks, and customer support systems to compete with established platforms like Amazon. Platforms may offer heavy initial discounts or subsidies to attract users such as ridesharing companies offering lower fares to passengers and higher earnings to drivers. Competing with such practices can be financially daunting for new entrants who lack significant funding, creating another major barrier to entry.

5 Nedo Bartels & Anna Schmitt, Developing Network Effects for Digital Platforms in Two-Sided Markets – The NfX Construction Guide,

2 Digital

Business 100044 (2022), https://www.sciencedirect.com/science/article/pii/S2666954422000242 (last visited Feb 2, 2025).

6 Yuwan Liang, Two-sided platform s performance investment and pricing, 46 zgkxjsdxxb 1030 (2016),

https://justc.ustc.edu.cn/en/article/doi/10.3969/j.issn.0253-2778.2016.12.010.pdf (last visited Feb 2, 2025).

3.3 ACHIEVING SCALE AND BALANCING CROSS-SUBSIDIZATION

In two-sided markets, achieving scale is crucial for long-term success. Established platforms often have the financial resources to cross-subsidize one side of the market while earning profits from the other7. For example, platforms like Google and Facebook offer free services to users while generating revenue from advertisers. New entrants may lack the ability to operate at a loss for extended periods, making it difficult to attract users and sustain operations.

4. EXPLORING KEY ANTICOMPETITIVE PRACTICES

Anticompetitive practices refer to strategies used by firms, often dominant ones, to limit competition and maintain or strengthen their market power. These practices are particularly prevalent in two-sided markets, where platforms connect distinct user groups, and network effects play a crucial role in sustaining dominance8.

4.1 PRICE PARITY CLAUSES

One of the most debated anticompetitive practices is the use of price parity clauses. These agreements require service providers to offer the same or better prices on the platform compared to any other sales channel, including their own websites9. While such clauses aim to ensure consumers get competitive pricing, they can limit competition among platforms by discouraging price differentiation. Smaller or emerging platforms may find it difficult to compete if they cannot offer better deals, thus reinforcing the dominance of larger platforms like Booking.com.

4.2 EXCLUSIVE AGREEMENTS

Another significant antitrust concern arises from exclusive agreements, wherein service providers are restricted from listing their services on multiple platforms. By preventing hotels

7 Qi Fu & Gaoyan Lyu, Competition Between Two-Sided Platforms With Quality-Based Subsidization,

26 International

Journal of Electronic Commerce 526 (2022), https://www.tandfonline.com/doi/full/10.1080/10864415.2022.2123648 (last visited Feb 2, 2025). 8 All About Anti-Competitive Practices under Indian Competition Law, https://blog.finology.in/Legal-news/Anti- Competitive-Practices-under-Indian-Competition-Law (last visited Feb 2, 2025). 9 Vikas Kathuria & Mark-Oliver Mackenrodt, The Case against ‘Narrow’ Price Parity Clauses, 41 Computer Law & Security Review 105574 (2021), https://www.sciencedirect.com/science/article/pii/S0267364921000479 (last visited Feb 2, 2025).

or service providers from using competing platforms, these agreements can restrict market access for rivals and further entrench the dominance of established players10. Such restrictions reduce options for both consumers and service providers, potentially leading to higher prices and less innovation.

4.3 SELF-PREFERENCING PRACTICES

Platforms that engage in self-preferencing behaviors favouring their own services or products over those of competitors distort competition within the platform ecosystem11. For example, if a platform prioritizes its own listings in search results, it can make it harder for competitors’ listings to gain visibility, disadvantaging rival providers and limiting consumer choice. This practice can result in a feedback loop that reinforces the platform’s market power at the expense of competitors and overall market health.

5. Challenges in Defining Anti-Competitive Practices in Two-Sided Markets

Two-sided markets, where platforms connect two distinct groups of users, have transformed global industries, ranging from e-commerce to food delivery, ride-sharing, and online marketplaces. While these platforms foster innovation, efficiency, and consumer benefits, they also pose unique challenges for regulators seeking to define and address anticompetitive practices. Traditional antitrust frameworks often struggle to accommodate the complexities of pricing, market power, and data control inherent in two-sided markets. This essay explores key challenges regulators face in identifying and defining anti-competitive practices within such markets.

5.1 COMPLEX PRICING STRUCTURES

A defining characteristic of two-sided markets is their complex pricing models, where

platforms typically subsidize one side of the market while charging the other. For example, food delivery platforms like Zomato and Swiggy often provide free or discounted delivery for 10 Does an Exclusive-Dealing Agreement Violate the Antitrust Laws? The Antitrust Attorney Blog (2022), https://www.theantitrustattorney.com/exclusive-dealing-agreement-violate-antitrust-laws/ (last visited Feb 2, 2025). 11 Yuta Kittaka, Susumu Sato & Yusuke Zennyo, Self-Preferencing by Platforms: A Literature Review, 66 Japan and the World Economy 101191 (2023), https://www.sciencedirect.com/science/article/pii/S0922142523000178 (last visited Feb 2, 2025).

consumers while imposing substantial commissions on restaurants12. Similarly, social media platforms offer free access to users while generating revenue through advertising fees charged to businesses. The challenge for regulators lies in distinguishing between legitimate pricing strategies that enhance consumer welfare and predatory pricing aimed at driving competitors out of the market. In two-sided markets, low or negative prices on one side may be necessary to attract users, making it harder to prove intent to harm competition13. For example, platforms may justify low prices as a means of achieving scale or network effects. However, when dominant platforms use their market power to maintain artificially low prices while charging unsustainably high fees on the other side, regulators need to determine whether such practices distort competition.

Predatory pricing is particularly difficult to assess in two-sided markets because of cross-subsidization, where losses on one side are offset by profits on the other. Traditional costbased tests often fail to capture this complexity, leading to regulatory uncertainty about when pricing becomes anti-competitive.

5.2 MULTI-HOMING AND LOCK-IN EFFECTS

Multi-homing refers to the practice of users, whether consumers or service providers engaging with multiple platforms simultaneously. For example, consumers may use both Uber and Lyft for ride-sharing or order food from multiple delivery services. In theory, multi-homing enhances competition by allowing users to switch between platforms easily. However, many dominant platforms seek to limit multi-homing by imposing exclusivity agreements or creating high switching costs14. For instance, restaurants partnering with one food delivery platform may face contractual obligations preventing them from joining competitors. Such exclusivity clauses 12 Feriha Zingal & Frauke Becker, Drivers of Optimal Prices in Two-Sided Markets: The State of the Art, 63 J Betriebswirtsch 87 (2013), https://doi. org/10. 1007/s11301-012-0091-8 (last visited Feb 2, 2025).

13 Krati Gupta, Price Manipulation and Predatory Pricing: The Confluence of Competition Act and E-Commerce Rules, IRCCL (2020), https://www. irccl. in/post/price-manipulation-and-predatory-pricing-the-confluence-ofcompetition-act-and-e-commerce-rules (last visited Feb 2, 2025). 14 Joost Rietveld & Melissa A. Schilling, Platform Competition: A Systematic and Interdisciplinary Review of the Literature,

47 Journal

of Management 1528 (2021), https://journals.sagepub.com/doi/10.1177/0149206320969791 (last visited Feb 2, 2025).

limit the ability of smaller platforms to gain market share by reducing their access to essential service providers15. Switching costs further complicate the issue; platforms often incentivize loyalty through rewards programs, making it costly for users to shift to competitors. This practice raises the question of whether restrictions on multi-homing are anticompetitive or simply part of normal business strategy. Regulators must consider the context which includes exclusivity may be acceptable if it incentivizes investment in better services but harmful if it locks out competitors or prevents new entrants from accessing the market.

5.3 Network Effects Amplifying Dominance

Network effects, a hallmark of two-sided markets, occur when the value of the platform increases as more users join. For example, the more consumers use a food delivery app, the more attractive it becomes to restaurants, and vice versa16. While network effects drive growth and innovation, they also create a “winner-takes-all” dynamic, where a dominant platform can become nearly impossible to displace. The challenge for regulators is distinguishing between dominance achieved through legitimate competitive advantages and dominance reinforced through anti-competitive practices. Some platforms may argue that their market power is the result of superior efficiency, innovation, and user satisfaction17.

However, when platforms use their dominance to exclude competitors through practices like predatory pricing, exclusivity clauses, or self-preferencing regulators face the difficult task of proving intent and harm. Network effects can also lead to tipping points, where once a platform reaches critical mass, competitors are unable to attract enough users to compete effectively. Regulators must evaluate whether dominance naturally results from network effects or whether it is artificially sustained through anti-competitive behaviour. 15 Law School Policy Review, Unfair Business Practices by Food Delivery Platforms: An Analysis of the Competition Commission’s Assessment, Law School Policy Review (Oct. 11, 2022), https://lawschoolpolicyreview. com/2022/10/11/unfair-business-practices-by-food-delivery-platforms-ananalysis-of-the-competition-commissions-assessment/ (last visited Feb 2, 2025).

16 Shengli Li, Yipeng Liu & Subhajyoti Bandyopadhyay, Network Effects in Online Two-Sided Market Platforms:

A Research Note, 49 Decision Support Systems 245 (2010),

https://www.sciencedirect.com/science/article/pii/S0167923610000412 (last visited Feb 2, 2025). 17 Waynezion Balosbalos, Antitrust Issues in Competitive Markets, Attorney Aaron Hall (Aug. 17, 2024), https://aaronhall.com/antitrust-issues-in-competitive-markets/ (last visited Feb 2, 2025).

5.4 DATA CONTROL AND MISUSE

Digital platforms collect vast amounts of user and partner data, giving them significant market power and a potential competitive advantage. This data includes information on consumer preferences, service provider performance, and market trends. When platforms use this data to improve their own services, it may be considered a legitimate business practice. However, when they use it to disadvantage competitors, it raises concerns about anticompetitive conduct18. For example, food delivery platforms like Zomato and Swiggy have been accused of using data from partner restaurants to identify high-performing dishes or locations and then promoting their own in-house brands in search results. Such practices give platforms an unfair advantage, as they can use proprietary data unavailable to competitors19.

Regulators face the challenge of proving that data use crosses the line from normal competition to abuse of dominance. Further, platforms may engage in data hoarding, preventing competitors or new entrants from accessing essential data needed to compete. Addressing these concerns requires new regulatory approaches, as traditional antitrust tools do not fully account for the role of data in modern markets.

5.5 BLURRED LINES BETWEEN CONSUMER WELFARE AND MARKET

FAIRNESS

One of the central challenges in defining anti-competitive practices in two-sided markets is balancing consumer welfare with market fairness for service providers. Platforms often benefit consumers through low prices, discounts, and convenience, which may initially appear pro-competitive. However, these benefits may come at the cost of fair treatment for service providers, who may face high fees, unfavourable terms, or limited bargaining power20. 18 Amplifying Customer Engagement Strategy with CDPs | IDC Blog, https://blogs. idc. com/2025/01/13/choosea-customer-data-platform-that-amplifies-your-customer-engagement-strategy/ (last visited Feb 2, 2025). 19 Restaurant industry flags Zomato, Swiggy’s private labels as unfair competition, Financialexpress (Jan. 23, 2025), https://www. financialexpress.

com/business/industry-restaurant-industry-flags-zomato-swiggys-privatelabels-as-unfair-competition-3723360/ (last visited Feb 2, 2025). 20 Understanding Market Structures: Their Impact on Prices and Consumer Welfare, JTT Accounting (Jul. 25, 2023), https://jttaccountingservices. com/understanding-market-structures-their-impact-on-prices-and-consumerwelfare/ (last visited Feb 2, 2025).

For example, restaurants partnering with food delivery platforms may face commission rates that significantly reduce their profit margins, limiting their ability to sustain operations. While consumers benefit from cheaper, faster deliveries, regulators must consider whether these short-term gains outweigh the long-term harm caused by reduced competition and provider exploitation. The challenge lies in finding a balance with regulators need to protect consumer interests without allowing platforms to impose unfair conditions on service providers, which could reduce market diversity and innovation.

5.6 BALANCING GLOBAL PLATFORMS WITH LOCAL LAWS

Many digital platforms operate across multiple countries and jurisdictions, creating challenges for local competition authorities. Different jurisdictions may have varying laws, regulatory standards, and enforcement capabilities, making it difficult to apply consistent antitrust rules globally. For example, practices deemed anti-competitive in one country may be allowed in another, leading to regulatory fragmentation21. Global platforms often exploit this inconsistency by adapting their practices to local regulations or engaging in forum shopping, choosing jurisdictions with lax regulations to base their operations. This creates a need for greater international coordination and cooperation among regulatory bodies.

6. CASE STUDIES

6.1 ZOMATO AND SWIGGY IN INDIA

Zomato and Swiggy, India’s leading food delivery platforms, play a crucial role in the country’s food service industry by connecting millions of consumers with restaurants through a two-sided market structure. These platforms benefit from strong network effects, where an increase in users on one side (consumers) attracts more participants on the other side (restaurants), creating a self-reinforcing cycle that solidifies their market dominance. However, this dominance has come under scrutiny due to allegations of anti-competitive practices, 21 United Nations Conference on Trade and Development, Global Competition Law and Policy Approaches to Digital Markets (2024), https://unctad.org/system/files/official-document/ditcclp2023d7_en.pdf (last visited Feb 2, 2025).

specifically the misuse of partner data and the preferential treatment of in-house or cloud kitchen brands22. The National Restaurant Association of India (NRAI) and various restaurant partners have accused Zomato and Swiggy of leveraging proprietary data collected from partner restaurants to gain an unfair competitive edge. As platforms, they gather information on consumer preferences, order volumes, and the most popular menu items offered by partner restaurants23. This data, meant to optimize delivery services and enhance user experience, was allegedly being used to help Zomato and Swiggy develop and promote their own cloud kitchen brands. By identifying high-demand dishes, popular cuisines, and profitable locations through partner data, the platforms could replicate successful menu offerings and launch their own competing brands.

This practice is viewed as a misuse of market power, as smaller or independent restaurants lack access to comparable data, leaving them at a competitive disadvantage. In addition to data misuse, Zomato and Swiggy have been accused of providing preferential visibility to their in-house brands on their platforms. For example, when consumers search for certain cuisines or dishes, the platforms allegedly prioritize their own brands in search results or promotional banners, effectively pushing down listings for partner restaurants. This practice has a direct impact on the ability of partner restaurants to compete, as reduced visibility leads to lower order volumes and diminished revenue. Many restaurant owners argue that despite offering similar or superior products, they are unable to reach customers because the platforms prioritize their own offerings.

This self-preferencing behavior mirrors concerns seen in other global markets, such as investigations into Amazon’s preferential promotion of its private-label products. These practices raise significant concerns about the balance of power in two-sided markets and the potential for abuse by dominant platforms. As intermediaries, Zomato and Swiggy control a critical access point to consumers, making it difficult for restaurants to operate independently or switch to alternative platforms. The preferential treatment of in-house

22 Bhumika Bankura, Zomato vs Swiggy: The Ultimate Food Delivery Showdown, (Jan. 25, 2025),

https://kanoon360.com/blog/zomato-vs-swiggy-the-ultimate-food-delivery/ (last visited Feb 2, 2025). 23 NRAI to sue Zomato and Swiggy for attempting to monopolise the food delivery market, The Times of India, Jan. 9, 2025, https://timesofindia.indiatimes.com/business/india-business/nrai-to-sue-zomato-and-swiggy-forattempting-to-monopolise-the-food-delivery-market/articleshow/117092360.cms (last visited Feb 2, 2025).

brands and the misuse of partner data contribute to a winner-takes-all market structure, where the platform’s dominance is reinforced at the expense of competition and innovation. The Competition Commission of India (CCI) has launched a formal investigation into the allegations against Zomato and Swiggy. The investigation seeks to determine whether these platforms have engaged in practices that violate India’s competition laws by exploiting their market power to stifle competition. The outcome of this case is expected to have broad implications for the regulatory landscape governing digital platforms in India. If the allegations are upheld, it could lead to stricter regulations and greater oversight of how platforms use data and treat partner businesses. This case highlights the growing tension between promoting innovation and ensuring fair competition within digital markets.

While platforms like Zomato and Swiggy offer consumers convenience and a wide range of choices, unchecked dominance could lead to long term harm, including reduced competition, higher prices, and limited options for consumers and service providers alike. As digital platforms continue to shape modern economies, effective regulatory intervention is essential to balance market power and protect the interests of smaller players24.

6.2 GOOGLE PLAY STORE

The Google Play Store, one of the largest app distribution platforms globally, plays a crucial role in the two-sided market connecting app developers with Android users. Its dominance stems from its position as the default and most widely used app store on Android devices, which gives it significant control over app distribution, payment systems, and monetization. However, its practices have drawn widespread scrutiny due to allegations of anticompetitive behavior, particularly in terms of imposing high commissions on app sales and inapp purchases, and forcing developers to use Google’s proprietary payment processing system.

These practices highlight the challenges regulators face in addressing anti-competitive behavior in two-sided markets, where platforms often wield outsized influence over both sides 24 Emilio Calvano & Michele Polo, Market Power, Competition and Innovation in Digital Markets: A Survey,

54 Information Economics and Policy 100853 (2021),

https://www.sciencedirect.com/science/article/pii/S0167624519301994 (last visited Feb 2, 2025).

of the market25. One of the primary issues revolves around Google’s requirement that developers selling digital goods through their apps on the Play Store must use Google’s in-house billing system. This billing system comes with a commission fee ranging from 15% to 30%, a rate that many developers consider excessive, especially for smaller businesses. Developers argue that they are forced to pay these high fees due to the Play Store’s market dominance, as opting out of the platform means losing access to a significant portion of Android users. Critics contend that this fee structure reflects a form of monopolistic behaviour, as developers are locked into using Google’s services without the option to use alternative or lower-cost payment systems. The issue becomes more problematic when considering the broader impact on the app ecosystem.

By enforcing its payment system and commissions, Google can effectively control how much revenue developers earn from their apps. For smaller developers, this high fee can be detrimental, as it reduces profit margins and limits their ability to reinvest in product development and innovation. Larger developers, such as Epic Games, have also voiced concerns, with Epic filing lawsuits against both Google and Apple for their restrictive payment policies. Epic Games argued that forcing developers to use Google’s payment system not only stifles competition but also harms consumers by driving up the cost of in-app purchases and subscriptions26. From the perspective of anti-competitive practices in two-sided markets, Google’s control over both users and developers creates an imbalance that hinders competition.

In a healthy two-sided market, platforms typically balance the needs of both user groups to foster competition and innovation. However, by enforcing a one-size-fits-all payment policy and imposing high commissions, Google reduces developers’ bargaining power and limits their ability to offer alternative pricing models or discounts to users. This creates a “walled garden” effect, where developers are dependent on the platform, but the platform’s practices restrict their growth and profitability. 25 Google Play Store Statistics (2025), Business of Apps, https://www. businessofapps. com/data/google-playstatistics/ (last visited Feb 2, 2025).

26 The biggest tech court case in Australian history you’ve never heard of, ABC News, May 3, 2024,

https://www.abc.net.au/news/2024-05-04/apple-google-court-case-epic-games-fortniteanticompetitive/103738898 (last visited Feb 2, 2025).

Regulatory bodies, including the European Commission and the Competition Commission of India, have initiated investigations into Google’s practices, seeking to determine whether they constitute abuse of market dominance. Potential remedies being considered include allowing third-party payment systems on the platform, reducing commission rates, and increasing transparency regarding app store policies. The outcomes of these investigations could significantly impact how app stores operate globally and set a precedent for regulating digital platforms. This case underscores the broader challenges of managing platform power in two-sided markets. While platforms like the Google Play Store provide users with easy access to apps and developers with a large customer base, unchecked dominance can lead to anti-competitive outcomes.

Ensuring fair competition requires regulatory frameworks that address the unique dynamics of two-sided markets while promoting innovation and protecting consumer welfare.

6.3 AMAZON

Amazon, one of the world’s largest online marketplaces, has faced significant scrutiny over accusations of exploiting its dual role as both a platform operator and a competitor within its marketplace. Operating in a two-sided market, Amazon connects millions of consumers with third-party sellers, fostering interactions and transactions that generate substantial economic value. However, concerns have emerged over whether Amazon’s practices within this twosided structure have crossed into anti-competitive territory, particularly regarding its alleged misuse of seller data to develop and promote its own private-label products27. The core allegation against Amazon centres on its access to vast amounts of sensitive data from third-party sellers on its platform.

As a platform operator, Amazon collects information about sellers’ product listings, sales performance, customer reviews, pricing strategies, and consumer demand patterns. While this data is essential for maintaining and improving the marketplace’s functionality, it has been alleged that Amazon uses this proprietary information to gain a competitive advantage for its in-house brands. By analyzing data from successful third-party sellers, Amazon is accused of identifying high-demand 27CCI Order Investigation Against Amazon And Flipkart, https://www. khuranaandkhurana. com/2021/06/30/antitrust-investigation-into-amazon-and-flipkart-an-overview/ (last visited Feb 2, 2025).

products, replicating them, and then launching its own competing private-label alternatives under brands like AmazonBasics28. One of the most notable examples involves electronics, home goods, and personal care products, where Amazon has been accused of copying popular products sold by third-party vendors and offering nearly identical versions at lower prices. Amazon’s ability to leverage seller data gives it an advantage that competitors cannot easily replicate. Small and mediumsized sellers often rely on their product uniqueness and market knowledge to thrive. When Amazon, armed with comprehensive performance metrics, introduces competing products, it erodes the original sellers’ market share and profitability.

For instance, reports have highlighted instances where sellers of popular electronics or accessories saw significant declines in visibility and sales after Amazon launched similar products and gave them preferential placement on its platform. Another key component of the allegations is Amazon’s alleged self-preferencing behavior. As the platform operator, Amazon controls search algorithms, recommendations, and featured listings on its website. Critics argue that Amazon promotes its private-label products by giving them preferential placement in search results and “featured product” sections, even when third-party sellers offer comparable or higher-rated options. This self-preferencing behavior can create a feedback loop, where Amazon’s brands dominate visibility and, by extension, sales, further consolidating its market power29.

These accusations highlight a significant concern within two-sided markets: the ability of dominant platforms to exploit their intermediary position. Third-party sellers rely on Amazon for access to millions of potential customers, but this dependence can leave them vulnerable to exclusion or unfair competition. The network effects that drive Amazon’s success where more sellers attract more buyers, and vice versa can also reinforce its dominance, making it difficult for competitors to enter the market or for sellers to shift to alternative platforms. In response to these allegations, competition regulators in various jurisdictions, including the European Union and the United States, have launched investigations into 28 Danyu Liang et al. , Should Competing Sellers Adopt the Data Analytics Service to Enable Product Improvement in Online Marketplace,

9 Journal

of Management Science and Engineering 390 (2024), https://www.sciencedirect.com/science/article/pii/S2096232024000192 (last visited Feb 2, 2025).

29 Jean-Pierre Dubé, Amazon Private Brands: Self-Preferencing vs Traditional Retailing, (2022),

https://papers.ssrn.com/abstract=4205988 (last visited Feb 2, 2025).

Amazon’s business practices. In 2022, the European Commission issued formal charges against Amazon, alleging that its use of non-public seller data constituted an abuse of market dominance in violation of EU competition laws. The investigations aim to establish whether Amazon’s practices unfairly distort competition, limit innovation, and harm sellers30. This case underscores the broader challenges of regulating anti-competitive practices in two-sided markets, where platforms wield significant control over access to consumers and market dynamics. As regulators seek to address these concerns, the outcome of Amazon’s investigations could shape global policies governing platform behavior, data use, and fair competition.

6.4 BOOKING.COM

This case highlights the scrutiny faced by Booking. com regarding its use of price parity clauses. European antitrust authorities carefully examined how these clauses influenced market competition and dynamics. They noted the complexities in evaluating such practices within two-sided markets, where actions taken to benefit one user group (such as offering low prices to consumers) could have adverse effects on another (limiting service providers’ flexibility and competition among platforms). While analysing the Booking. com cases, authorities faced challenges in defining the market, assessing competitive harm, and balancing the potential pro-competitive and anticompetitive outcomes. Traditional antitrust frameworks often struggle to account for the indirect network effects in two-sided markets.

For instance, practices that seem beneficial to consumers may, in the long run, reduce competition, leading to higher prices and limited choices31. Ultimately, the cases underscore the need for a nuanced approach in addressing anticompetitive practices in two-sided markets. Regulators must consider both sides of the platform when assessing market impact, ensuring that interventions promote sustainable competition without undermining the platform's role in connecting users effectively.

30 Javier Espinoza, EU Accuses Amazon of Breaching Antitrust Rules, Financial Times, Nov. 10, 2020.

31 Foo Yun Chee & Foo Yun Chee, Booking.Com’s Price Curbs on Hotels May Hinder Competition, EU Top

Court Says, Reuters, Sep. 19, 2024, https://www.reuters.com/technology/bookingcoms-price-curbs-hotels-mayhinder-competition-eu-top-court-says-2024-09-19/ (last visited Feb 2, 2025).

7. STRATEGIES TO MITIGATE ANTI-COMPETITIVE PRACTICES IN TWO-

SIDED DIGITAL MARKETS

Given the complexities of two-sided markets, regulators need to adopt innovative and tailored approaches to ensure fair competition while allowing platforms to continue driving innovation. Traditional antitrust frameworks often fall short in addressing the unique dynamics of digital platforms, such as cross-subsidization, network effects, and data-driven market power. The following solutions provide a comprehensive approach to tackling anti-competitive practices in these markets.

7.1 Tailored Regulatory Frameworks

One of the primary solutions is the development of tailored regulatory frameworks specifically designed for two-sided digital markets. Traditional competition laws, which focus on price-based metrics and market shares, are often insufficient to address the complexities of digital platforms. Platforms like Amazon, Google, and Zomato operate in markets where competitive harm is often tied to issues like data misuse, network effects, and self-preferencing rather than direct pricing concerns32. Tailored regulations would provide clear guidelines to prevent platforms from exploiting their dual role as intermediaries and competitors. For example, they could address how platforms use partner data, restrict self-preferencing practices, and set limits on exclusive contractual terms.

These frameworks can better reflect the realities of digital markets, ensuring innovation without allowing platforms to unfairly entrench their market dominance.

7.2 DATA SHARING MANDATES

A significant factor driving anti-competitive behavior in two-sided markets is

platforms’ control over vast amounts of data, which gives them a competitive edge over smaller businesses. To address this imbalance, regulators should implement data-sharing mandates that require platforms to share relevant data with their partners in a transparent and fair manner33. For instance, food delivery platforms like Swiggy or Zomato could be required to provide New Compliance Framework, KPMG, https://kpmg.com/in/en/blogs/2025/01/new-complianceframework.html (last visited Feb 2, 2025). 33 Bruno Jullien & Wilfried Sand-Zantman, The Economics of Platforms: A Theory Guide for Competition Policy,

54 Information

Economics and Policy 100880 (2021), https://www.sciencedirect.com/science/article/pii/S0167624520301244 (last visited Feb 2, 2025).

partner restaurants with access to data on customer behavior, order trends, and market performance. This would allow smaller players to make data-driven decisions and compete on a more level playing field. By reducing the information asymmetry, data-sharing mandates would promote fair competition and enable smaller businesses to better target their customers, optimize pricing, and improve operational efficiency.

7.3 STRONGER OVERSIGHT OF PRICING AND CONTRACTUAL

PRACTICES

Regulators need to monitor pricing structures, exclusivity clauses, and commission rates more closely to prevent platforms from engaging in anti-competitive practices. Many dominant platforms impose high commissions on service providers, enforce exclusivity clauses, and subsidize one side of the market to maintain dominance. For example, food delivery platforms often offer free or discounted services to consumers while charging restaurants high commissions, potentially driving smaller restaurants out of business. Oversight should include evaluating whether commission rates are fair and whether exclusivity agreements promote efficiency or restrict market access. Platforms should be required to disclose their pricing mechanisms and promotional algorithms to ensure they do not favor inhouse brands over third-party competitors34.

7.4 COLLABORATION ACROSS JURISDICTIONS

Given that many digital platforms operate globally, effective regulation requires international collaboration among competition authorities. Platforms like Amazon and Google often operate across multiple jurisdictions with varying regulatory standards, allowing them to exploit differences in enforcement. Collaborative efforts, such as joint investigations, datasharing agreements, and harmonized policies, can address this challenge35. The European Union’s collaboration with other jurisdictions, including the United States, to investigate Amazon’s data practices is a good example of how coordinated action can hold global platforms accountable. 34 Amit Shankar et al., Why Do Consumers Choose Online Food Delivery Services? A Meta-Analytic Review,

123 International

Journal of Hospitality Management 103921 (2024), https://www.sciencedirect.com/science/article/pii/S0278431924002330 (last visited Feb 2, 2025).

35 Annabelle Gawer & Carla Bonina, Digital Platforms and Development: Risks to Competition and Their

Regulatory Implications in Developing Countries, 34 Information and Organization 100525 (2024), https://www.sciencedirect.com/science/article/pii/S1471772724000253 (last visited Feb 2, 2025).

8. CONCLUSION

Anti-competitive practices in two-sided digital markets highlight the need for proactive and nuanced regulatory measures. These platforms, driven by network effects and crosssubsidization, have fundamentally altered competitive dynamics across industries, creating significant barriers to entry for new competitors and posing risks of market concentration. While they promote innovation and consumer benefits, their dominance raises concerns regarding data misuse, self-preferencing, and exclusionary practices. Case studies involving major players such as Amazon, Google, Booking. com, Zomato, and Swiggy emphasize the extent to which dominant platforms can exploit their intermediary roles to limit competition.

These platforms not only gather vast amounts of user and partner data but also control critical access points to consumers, giving them an advantage that smaller businesses often cannot replicate. The allegations of self-preferencing, where platforms prioritize their own products or services over those of competitors, have particularly drawn regulatory attention, as they directly impact market fairness and consumer choice. Traditional competition law frameworks struggle to address these issues, primarily because they were developed for linear, price-driven markets rather than the interconnected, data-driven nature of two-sided digital markets. To ensure sustainable competition and protect innovation, regulators must move beyond conventional approaches and adopt tailored solutions.

This includes the creation of regulatory frameworks that address specific concerns such as data control, pricing structures, and multi-homing restrictions. Data-sharing mandates, for instance, can help level the playing field by ensuring that partners have access to the same data platforms use to optimize their services. Stronger oversight of contractual and pricing practices is also crucial, as platforms often use exclusivity agreements and commission structures to limit competition. By closely monitoring these mechanisms, regulators can prevent platforms from imposing conditions that unfairly disadvantage smaller competitors. Collaboration across jurisdictions is equally important, given the global reach of digital platforms.

Coordinated regulatory actions, joint investigations, and harmonized legal standards can ensure that platforms do not exploit jurisdictional inconsistencies to engage in anti-competitive behavior. Ultimately, the goal of regulatory intervention should be to strike a balance between

promoting innovation and maintaining fair competition. While digital platforms have revolutionized commerce and consumer experiences, unchecked dominance can lead to longterm harm, including higher prices, reduced innovation, and fewer choices for consumers and businesses. By implementing forward-looking policies and international cooperation, regulators can create an environment that fosters innovation while protecting smaller players and ensuring a competitive marketplace for all.