Algorithms rule the digital economy. The ranking of search results, the targeting of content and ads to users, and, increasingly, the pricing of goods online, are all determined by algorithms. In essence, an algorithm is a finite set of steps executed by a computer to solve a given problem. But the economic, ethical and legal questions raised by algorithms are seemingly infinite.
Do algorithms facilitate price collusion? If so, how can such behavior be detected? Should corporations be held liable for pricing conduct when this is carried out by an algorithm rather than the company’s officers? Are there other areas, beyond pricing, where algorithms could give rise to anticompetitive conduct? For example, could companies be held liable for exploiting or “gaming” third parties’ ranking algorithms to stifle nascent competition?
On the flipside, could algorithms not lead to greater efficiency, by ensuring that companies will undercut rivals’ prices as promptly as possible? In this context, could deviation from an algorithmic result to favor one’s own business be categorized as an abuse? Moreover, could algorithms be used as a tool to disrupt anticompetitive behavior, either by other competitors, or in the hands of competition authorities?
These are but a few of the questions raised in this month’s Chronicle. How to deal with algorithms will be a defining issue for antitrust enforcement over the coming years.
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