Old Tools for the New Economy? Counterfactual Causation in Foreclosure Assessment and Choice of Remedies on Data-driven Markets

Under the recently proposed EU Digital Markets Act (DMA), ‘gatekeeper’ digital platforms have to comply with a number of ex-ante obligations, including narrow ex-ante data-sharing mandates that have been proposed as a viable solution to the phenomenon of data-driven market tipping. Digital platforms will also be subject to ex-post competition interventions, some of which are already ongoing. Given that both ex-ante regulatory and ex-post competition enforcement can address the issue of data-driven market tipping, there is a significant chance that thought from one policy domain will influence the other. This can be readily seen in the DMA, which heavily borrows from competition doctrine.

Such intellectual cross-fertilization needs to be approached with care, however. For one, the objectives and reasons of existence of the two domains are different. Second, data-driven markets are dynamic and always evolving, which means that rigorous ex-post effects analysis that does not simply fall back on ideas and practices from ex-ante regulation is of pivotal importance for i) correctly assessing anti-competitive behavior and ii) devising an appropriate ex-post remedy. This latter point can be seen with regard to data-sharing mandates, which will continue being important as possible ex-post competition remedies even after the adoption of the DMA with its ex-ante solution in that regard. However, a fine-grained, effects-driven assessment of the need for data sharing obligations in an ex-post enforcement setting will be vital, given new political and business-led data-sharing initiatives, novel techniques for generating synthetic data, and companies’ increasing skill at drawing powerful conclusions from small data sets.

In sum, authorities need to proceed carefully with regard to ex-post interventions in dynamic data-driven markets already governed by ex-ante obligations, in particular in two respects: i) establishing that abuse of dominance has taken place (especially given that ex-ante obligations will soon be in place) and ii) choosing the right remedies if such abuse is found. With regard to the former, we propose a ‘multiple counterfactual causation test’ for establishing anticompetitive foreclosure. With regard to the latter, we maintain that ex-post data-sharing mandates should only be imposed after careful proportionality analysis vis-à-vis the counterfactually identified abusive behavior; otherwise, they are unlikely to be effective remedies and other remedial actions need to be considered.