In his speech in Austin, Texas in 2019[1] and subsequent interviews,[2] the Chairman of the French Electronic Communications and Postal Regulatory Authority (ARCEP) and former general rapporteur at the French Competition Authority, Sébastien Soriano, suggested that it is no longer appropriate to apply the “Schumpeterian paradigm” to technology companies that he characterised as having reached “… a critical size making it unlikely that external innovation will reverse the situation”.

Since then, Mr. Soriano has spoken about addressing the market power of “prevailing platforms”(“plateformes structurantes”). Last week, ARCEP defined “prevailing platforms” in a strategic note “Prevailing digital platforms – Elements of reflection relating to their characterization”.[3] This strategic note effects the shift in approach that Mr Soriano proposed.

Taking into account the current definitions of digital platforms, ARCEP has defined “prevailing digital platforms” as follows:

online platform operators or operating system providers which, in particular because of their intermediation activity in accessing internet services and content, and because of their importance, are able to significantly limit the ability of users to engage in economic activity or communicate online”.

To determine whether a given operator falls within this definition, ARCEP has set out a set of indices (partly based on the criteria used by the European Commission to characterise operators with significant market power in the electronic communications sector).

While ARCEP has declined to indicate whether these indices are cumulative or alternative, it has identified three “main” indices (of the total of seven):

  1. the platform is unavoidable, either because it has “bottleneck-power” (i.e., it has the capacity to develop and preserve, because of the network effects it benefits from, a customer base in which a significant proportion of its users remain captive), or because its downstream position induces dependence.
  2. the platform has a certain size in terms of the number of unique users.
  3. the platform is integrated into an ecosystem controlled by the group to which it belongs, and this ecosystem enables leverage from one sector of activity to another.

The four “secondary” indices are:

  1. the platform is an essential gateway to a range of digital content (a “gatekeeper”).
  2. the platform has access to large quantities of high quality data.
  3. where an advertising network is (directly or indirectly) associated with the platform, the platform’s market share in the advertising market is significant.
  4. the financial valuation of the company owning the platform(s).

In its strategic note, ARCEP notes that access, transparency, non-discriminatory treatment, and separation of activities obligations should be applied to “prevailing digital platforms”.

[1] South-by-South West Festival, “A Robin Hood Regulation to Free Us From Big Tech”, Sébastien Soriano, March 8, 2019.

[2] For example: interview “Démantèlement des Gafam: “on raisonne dans une logique de l’ancien monde””, April 2, 2019.

[3] ARCEP, strategic note “Plateformes numériques structurantes – Eléments de réflexions relatifs à leur caractérisation”, Décembre 2019.