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Information and Communications Technology Markets
The economics of the information and communication technologies industry is discussed, along with features of the Competition Act, 2002 and its relevance to the “new economy.”In the context of three cases—the Multi-Commodity Exchange Stock Exchange case in India, the Microsoft/Netscape Navigator case in the United States, and the Deutsche Telekom case in Europe—the concept of “relevant market” is explored, and observations are made on features such as two-sided markets, network effects and innovation, and on strategies such as vertical integration and predatory pricing.
During the writing of this article Kalpana Tyagi was at the Max Planck Institute for Competition and Innovation, Germany as a PhD candidate and at the IIM Bangalore as a visiting research scholar in competition and innovation. The authors acknowledge the suggestions of an anonymous reviewer.
Information and communication technologies (ICTs) play an important role in our lives today. Google, Microsoft, Amazon, Facebook, and Uber are household names. All these big corporations have been accused of using unfair practices to retain their size and influence, and are closely watched and investigated for alleged anti-competitive practices by antitrust authorities worldwide. This article discusses the economics of the ICT industry, and the concepts of “network effect,” “two-sided market,” “bundling,” “vertical integration,” and “predatory pricing.” Next, it discusses the concept of “relevant market” and the small but significant non-transitory increase in prices (SSNIP) test used to determine it. Finally, the article examines three competition law cases where these concepts and concerns are displayed.
Economics of the ICT Sector
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