Antitrust law
How to evaluate market power in multi sided markets where different user groups influence competitive dynamics.
This guide explains how regulators assess market power in multi sided platforms, where buyers and sellers, or creators and audiences, shape competitive dynamics, and how policy tools address harms without stifling innovation.
August 03, 2025 - 3 min Read
In contemporary competition analysis, evaluating market power in multi sided markets requires more than counting users or monitoring price levels. Platforms create value by coordinating distinct groups, and the price, access, and quality demanded by each side can diverge from traditional indicators. Regulators must map network effects, both direct and indirect, and assess thresholds where small changes in one side translate into meaningful shifts in the other. A robust approach combines economic modeling with empirical data, focusing on cross-side elasticity, switching costs, and the potential for foreclosure or exclusionary practices. The goal is to illuminate whether market power arises from architecture, control of critical interfaces, or strategic gating.
A practical evaluation starts with defining the platform’s core services and the two or more user groups it serves. Analysts identify the primary metrics that indicate dependence: the volume of interactions, the rate at which each side activates features, and how user experience changes when access is restricted. It is essential to distinguish incidental market power from deliberate anti-competitive conduct. Historical cases show that even large platforms can be rivals’ gateways, while smaller entrants can leverage unique network configurations to gain traction. The assessment should therefore combine structural analysis with dynamic considerations, including potential for tipping phenomena, where one side’s growth accelerates the other’s, creating entrenched position.
Dynamic effects and data access shape ongoing competition.
Economic models for multi sided markets emphasize the interdependence of user groups. These models explore how welfare outcomes shift when prices, data access, or visibility are adjusted on one side. A typical concern is whether a platform’s control over essential interfaces creates lock-in effects that hinder competitors from attracting a critical mass on either side. Regulators should examine whether the platform can profitably impose above-market tolls on one group without provoking retaliation or migration that undermines its own revenue. Another focus is the degree of transparency in algorithmic decisions and whether opaque ranking or recommendation systems distort competition by privileging certain partners over others.
Empirical work complements theory by testing how real-world platforms respond to policy changes. Researchers examine natural experiments, such as regulatory mandates or changes in data portability, to observe whether rivals gain or lose access to essential resources. They also analyze the elasticity of demand across sides: how sensitive buyers are to price changes and how that sensitivity affects sellers’ incentives to participate. This evidence helps determine if the platform’s market power is fragile or durable. Importantly, regulators must guard against overreach that could suppress legitimate network effects, innovation, or investment in platform ecosystems that benefit users broadly.
Interface control and access policies determine competitive vitality.
A central challenge in multi sided markets is measuring market power without external benchmarks. Since the platforms’ value stems from interactivity, traditional price-cost margins may misrepresent true leverage. Analysts turn to indicators such as gatekeeping at onboarding, the speed of user migration when terms change, and the concentration of critical data or signals. They also assess the potential for exclusive agreements that foreclose rivals from essential features or access to key audiences. The aim is to detect whether a platform can sustainably raise barriers, extract supra-competitive rents, or deter entry, while avoiding false positives that mislabel benign platform governance as anti-competitive conduct.
Another key element is governance and control over critical interfaces. If a platform controls application programming interfaces, data feeds, or matchmaking protocols, it can influence which third parties participate and under what conditions. Regulators should evaluate both the legal framework and practical enforcement of non-discriminatory access. Even when prices remain competitive, control over core tools can dampen innovation, because entrants must negotiate favorable terms and risk being shut out of essential capabilities. Assessing these dynamics helps identify whether market power is structural—embedded in the platform’s architecture—or temporary, arising from strategic manoeuvres that could be countered through targeted remedies.
Remedies must balance openness with innovation and security.
A clear framework for evaluating power considers consumer surplus on all sides. In many multi sided ecosystems, the benefit to one group depends on the vitality of the others. Regulators ask whether discounts, subsidies, or feature placements on behalf of one side disproportionately undermine alternatives for competitors. They also look at data rights: who owns behavioral data, how it's used, and whether data practices impede fair competition. If users perceive that the platform rewards manipulation or gaming of the system, trust erodes and switching costs rise. The wellbeing of the broader ecosystem requires vigilance against practices that entrench incumbents at the expense of new entrants and consumer welfare.
Market power also relates to governance obligations and remedy design. When a platform wields disproportionate influence, regulators may require behavioral conditions, data-sharing commitments, or non-discriminatory access to essential facilities. Remedies should be proportionate, incentivize competition, and minimize unintended consequences like reduced investment. The assessment should anticipate dynamic responses, such as platform reconfiguration or strategic pivots, and ensure that interventions preserve beneficial network effects while curbing abuses. Effective remedies balance openness with the platform’s ability to innovate, maintain privacy, and sustain investment in user experience and security.
Policy clarity and accountability support sustainable competition.
In practice, evaluating market power in multi sided markets demands ongoing scrutiny rather than a one-off assessment. Markets evolve as platforms expand into new services, audiences diversify, and regulatory norms change. Analysts recommend periodic reexaminations that track indicators of market health, including entry rates, price dispersion, and the speed of multi sided adoption. They also emphasize international coordination when platforms operate across borders, since cross-jurisdictional differences in standards and enforcement can create arbitrage opportunities. A vigilant, collaborative approach helps ensure that policy keeps pace with innovation, preserving competitive pressure without discouraging the investments necessary to deliver high-quality platforms.
For decision makers, the challenge is translating complex analyses into enforceable policy. Clear thresholds, transparent methodologies, and robust data governance reduce uncertainty and enhance legitimacy. It is important to communicate findings in accessible terms so stakeholders understand how specific practices affect competition and consumer welfare. Policymakers should publish the rationale for interventions, including the expected behavioral changes and measurable outcomes. They should also provide a roadmap for exit or adjustment if market dynamics evolve. The ultimate objective is to foster a healthy, innovative platform economy where multiple groups benefit from fair competition and better services.
Beyond regulatory responses, private sector actors can contribute to healthier competition in multi sided markets. Suppliers, developers, and users can advocate for open standards, interoperable architectures, and transparent data practices. Market participants benefit from voluntary commitments that reduce blocking behavior and encourage participation across sides. Independent audits, third party verification, and clear governance frameworks bolster confidence that platforms are not misusing power. Such collaborative pressure complements formal enforcement, creating a sandbox where experimentation with new models and business strategies proceeds with less fear of anti-competitive retaliation. Ultimately, a balanced ecosystem rewards efficiency, innovation, and consumer choice.
The evergreen lesson is that power in multi sided markets is not a single metric but a constellation of factors. Network effects, interface control, data access, and governance shape competitive dynamics in ways that require nuanced, evidence-based assessment. A robust framework blends theoretical insight with empirical validation, monitors evolving practices, and applies proportionate remedies when necessary. By prioritizing transparency, interoperability, and user welfare, regulators can maintain competitive pressure while supporting platform-driven innovation. The result is a durable balance that encourages new entrants, sustains investment, and delivers high-value services to diverse user groups across the economy.
