EDITOR’S NOTE

Qianwei Fu

Zelle LLP

San Francisco, CA

Digitization has become the means by which businesses increase productivity and spur innovation. The COVID-19 outbreak is accelerating the rise of the digital economy. The unprecedented growth of digital markets has also had disruptive effects in many economic sectors. How to protect consumers and foster innovation in the rapidly developing digital markets? In what ways does competition law interact with other legal regimes such as data protection and sector-specific regulations? What role can competition policy play in responding to the unique challenges in the age of digitalization and in shaping the competitive digital ecosystem? The debate on these questions has led to a prolific body of written work and research. This topically-themed edition is a small contribution to that body of distinct work, centering on digital platforms and their implications for competition law and policy.

Professor Joshua P. Davis at the University of San Francisco School of Law and Anupama K. Reddy of the Joseph Saveri Law Firm address civil liability for interdependent pricing without an agreement as facilitated by Artificial Intelligence (AI). Because AI may make interdependent pricing far more prevalent and far more effective, they argue, it poses a threat to antitrust law that derives from its ability to overcome coordination problems. They suggest that if use of AI becomes widespread, it may make sense to impose civil liability for interdependent pricing generally.

Ryan C. Thomas and Peter Julian ofJones Day give an introduction to blockchain technology, explore the antitrust issues presented by blockchain implementations, and discuss the implications for companies considering adopting blockchain technology. They provide some useful advice to participants and administrators of blockchain networks on the best practices to avoid or minimize antitrust risks.

Ken (Jianmin) Dai and Jet (Zhisong) Deng, co-chairs of the Antitrust Practice Group of Dentons China, discuss big data and antitrust risks by examining high-profile cases in major jurisdictions including the U.S., the EU, and China. Their article takes a deep dive into several hotly debated issues: why merger control regime might malfunction in startup acquisitions; the increasing concern for pricing algorithms; determination of market dominance in a volatile digital market; data-related abusive conduct analyzed from the antitrust perspective; and the application of the essential facilities doctrine to big data.

John Ceccio and Christopher Mufarrige of Wilson Sonsini examine the digital ecosystems. They argue that some of the policy proposals aimed at making it more difficult for large digital firms to acquire small tech startups do not fully appreciate the disincentive effects of instituting a regulatory scheme that deters large platforms from purchasing smaller tech startups. They believe that the current merger enforcement principles and legal frameworks provide sufficient tools for preventing anticompetitive transactions in the digital markets.

Josh Palmer, an economist at applEcon, LLC, obverses that, twenty-five years after Bill Gates’ Memo, the Internet tidal wave seems to be cresting again. Dr. Palmer reviews the economic and antitrust lessons from the Microsoft cases and discusses what these lessons, combined with commentary from economists analyzing digital platforms and competition, suggest about the next wave of antitrust cases in the digital markets.

Neil Dryden, Sergey Khodjamirian and Jorge Padilla, economists at Compass Lexecon, explain that the decision of a marketplace to operate its own reseller in competition with third-party sellers within the platform is likely to spur competition to the ultimate benefit of consumers. The article argues that when assessing the competitive implications of seemingly discriminatory decisions by multi-sided online businesses, attention needs to be paid to their underlying business models and the nature and strength of competition in the markets where they compete.

Jeewon Kim Serrato, Co-lead of the Digital Transformation and Data Economy team at BakerHostetler and Lawrence Wu, economist and President of NERA Economic Consulting, address the complexities that businesses will face in calculating the value of consumer data when meeting one of the fundamental requirements under the California Consumer Privacy Act (CCPA): if a business offers financial incentives or a price or service difference as compensation for the collection, sale, or retention of consumer data, the business must explain how the incentives or price or service difference are reasonably related to the value of the data to the business.

In addition to the topically-themed articles, we also include two articles highly relevant to antitrust practice.

Stephen McIntyre, counsel of O’Melveny, analyzes the current circuit split on the interpretation of the "direct effects" prong of the Foreign Trade Antitrust Improvements Act (the "FTAIA"). The article argues that the "immediate consequence" test of directness adopted by the Ninth Circuit is the correct approach, because it is not only truer to the FTAIA’s statutory text, but also more consistent with how a similar provision in the Foreign Sovereign Immunity Act—another law dealing with extraterritoriality—is construed.

Also reprised here are discussions from the Section’s fourth annual flagship program "Celebrating Women in Competition Law in California." Consistent with the Section’s Diversity and Inclusion Policy and Initiative, this program celebrates women’s rising representation in the competition law practice. This year, the panelists shared their invaluable experience and advice about business development, mentoring, and making a difference within the legal profession.

My special thanks to Robert L. Newman of Zelle LLP for his help in the production of this issue. I would also like to thank our editors and the Section’s Executive Committee for their contribution and support.