Regulation of Digital Businesses with Natural Monopolies or Third-Party Payment Business Models: Antitrust Lessons from the Analysis of Google.

Author List: Clemons, Eric K.; Madhani, Nehal;
Journal of Management Information Systems, 2010, Volume 27, Issue 3, Page 43-80.
Some digital business models may be so innovative that they overwhelm existing regulatory mechanisms, both legislation and historical jurisprudence, and require extension to or modification of antitrust law. Regulatory policies that were developed in response to nineteenth- or twentieth-century antitrust concerns dealt principally with economies of scale leading to monopoly power and may not be well suited to the issues of network effects or third-party payer online business models such as sponsored search. From the perspective of information systems economics, we investigate if such third-party payer digital systems require intervention as profound as the government's innovative approach to the problems posed by AT&T in the 1913 Kingsbury Commitment, establishing the first private regulated monopoly. Google provides an example of a company whose innovative digital business model is difficult to fit into current regulatory frameworks, and may provide examples of the issues that might require an extension to regulatory policy.
Keywords: antitrust; bundling and tying; contestability; deterred market entry; digital business strategies; essential facilities doctrine; Google; key word auctions; online search; relevant market share; sponsored search
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#212 0.184 business digital strategy value transformation economy technologies paper creation digitization strategies environment focus net-enabled services processes insights challenges key response
#184 0.158 modeling models model business research paradigm components using representation extension logical set existing way aspects issues current integrated languages traditional
#164 0.133 countries global developing technology international country developed national economic policy domestic study foreign globalization world government nations innovative technological especially
#119 0.101 implementation systems article describes management successful approach lessons design learned technical staff used effort developed organization experiences large managing discusses
#239 0.096 privacy information concerns individuals personal disclosure protection concern consumers practices control data private calculus regulation risk individual legislation government sensitive
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#242 0.065 market competition competitive network markets firms products competing competitor differentiation advantage competitors presence dominant structure share using incumbent make important