Innovation as a Counterpower in Digital Markets: Rethinking EU Competition Law

Big tech companies have introduced many innovations and with those innovations, disrupted many markets. For example, Google introduced Google Search and disrupted the online search engine market, Meta introduced Facebook and –basically – created a market for (advertising on) social media platforms, and Amazon introduced Amazon’s Marketplace and disrupted many brick-and-mortar stores. These innovations and disruptions gave these big tech companies a powerful position in different markets and in our society. Interestingly enough, innovation is not only how big tech companies have obtained a powerful position in our society, but they have also used innovation to argue that their power is not problematic. Especially in the competition law cases that try to address (the abuse of) big tech companies’ power, big tech companies defend themselves by stating that innovation will keep markets competitive and that – therefore – their power is nothing to worry about. To address these arguments, it is essential to further examine the role of innovation in digital markets and how innovation functions as a counterpower to the power of big tech companies. The conceptualization of innovation in (EU competition) law is not an easy feat. Innovation as an inherently uncertain concept is difficult to capture in law, which generally needs to provide legal certainty. More specifically in EU competition law, the problem is that the law focuses predominantly on static competition, which is juxtaposed to the dynamics of innovation. This leads to the main research question of this dissertation: How can EU competition law effectively deal with innovation as a counterpower to the power of big tech companies? To answer this question, in this dissertation I perform a legal doctrinal and normative research with multidisciplinary elements that will lead to proposals – and the evaluation of those proposals – for the use of theories that conceptualize how innovation works in (digital) markets in EU competition law. The theories that I analyze in this dissertation are disruptive innovation theory, the concept of dominant designs grounded in the theory of technology cycles, and theories belonging to the domain of complexity economics. Based on the analyses of these theories I conclude that EU competition law can (more) effectively deal with innovation as a counterpower to the power of big tech companies by using alternative innovation theories to better conceptualize and capture innovation in digital markets. Better conceptualizing innovation can help EU competition law achieve its goals of protecting the competitive process by limiting power and by protecting innovation.