Competition Law and Competition Implications of Influence Concentration

1. Introduction

Influence concentration refers to a situation where a small number of firms, platforms, intermediaries, investors, information providers, or other economic actors acquire the ability to shape market behaviour, consumer choices, business decisions, access to information, or competitive conditions without necessarily controlling the largest share of physical production.

It is therefore broader than traditional market concentration.

A company may have only a moderate share of sales but still possess considerable influence power because it controls:

consumer attention;

search rankings;

recommendation systems;

social-media visibility;

app distribution;

advertising access;

important data;

financial infrastructure;

industry standards;

online reviews;

digital reputation;

algorithms;

key business relationships.

Simple example

Suppose three digital platforms control most of the online discovery of products.

Even if they do not sell the products themselves, they can influence:

which products consumers see;

which sellers receive traffic;

which advertisements are displayed;

which products are recommended;

which businesses become commercially visible.

This can produce influence concentration.

The central competition-law question is:

When does the concentration of influence become a source of market power capable of harming competition?

2. Meaning of Influence Concentration

Influence concentration exists where economic influence becomes concentrated in the hands of a limited number of undertakings and that influence can materially affect competitive outcomes.

It may involve concentration over:

A. Consumer attention

A small number of platforms control where consumers discover products.

B. Information

A small number of firms control commercially important information.

C. Distribution

A platform determines which businesses can effectively reach customers.

D. Ranking

An intermediary determines which businesses appear first.

E. Advertising

A small number of platforms control access to digital advertising audiences.

F. Data

A limited number of companies possess extensive behavioural data.

G. Infrastructure

A firm controls an important technological or commercial infrastructure.

H. Standards

An undertaking may have substantial influence over technical or industry standards.

3. Influence Concentration vs Market Concentration

These concepts are related but different.

A company with only 20% of sales could theoretically have substantial influence if it controls the principal channel through which customers discover competitors.

4. Sources of Influence Concentration

4.1 Network Effects

Network effects occur when a platform becomes more valuable as more people use it.

For example:

More Users→More Data→Better Service→More UsersMore\ Users \rightarrow More\ Data \rightarrow Better\ Service \rightarrow More\ Users

This can gradually concentrate influence.

4.2 Data Advantages

Large firms may collect:

search data;

purchase data;

location data;

browsing behaviour;

transaction information;

advertising responses.

This data can improve:

targeting;

recommendations;

pricing;

forecasting;

product design.

Consequently, data can become a source of influence.

4.3 Algorithmic Ranking

A platform can influence competition through:

search rankings;

recommendations;

product placement;

advertising auctions;

content visibility.

The ranking algorithm may therefore function as a competitive gatekeeper.

4.4 Consumer Attention

Attention itself can have economic value.

If most consumers use a particular platform for product discovery, businesses may become dependent upon it even if the platform does not directly sell their products.

4.5 Switching Costs

Influence becomes stronger when customers cannot easily move to alternative platforms.

Switching costs may involve:

loss of data;

loss of followers;

loss of reputation;

retraining costs;

incompatible software;

contractual restrictions.

5. Competition-Law Importance

Influence concentration becomes relevant when influence is converted into market power or exclusionary power.

Competition law may become concerned where an undertaking uses influence to:

exclude competitors;

discriminate against rivals;

favour its own products;

restrict market access;

impose unfair conditions;

exploit consumers;

foreclose distribution channels;

prevent switching;

restrict innovation;

extend dominance into neighbouring markets.

6. Influence Concentration and Abuse of Dominance

A dominant company may use its influence to maintain its position.

Examples include:

favouring its own services;

demoting competitors;

restricting access to important information;

imposing exclusivity;

tying products;

controlling interoperability;

manipulating access conditions.

The legal analysis generally requires more than simply demonstrating that the undertaking has influence.

There must be an appropriate connection between the market power and the alleged anti-competitive conduct.

7. Influence Concentration and Self-Preferencing

One major concern is self-preferencing.

Structure

Platform

↓

Controls visibility

↓

Own product receives preferential treatment

↓

Competitors receive less visibility

↓

Consumer choice may be distorted

The Google Shopping litigation provides an important example.

8. Case Law 1 — Google Shopping

Case

Google and Alphabet v European Commission, Case C-48/22 P

Background

Google operated a general search engine while also providing a comparison-shopping service.

The European Commission found that Google systematically favoured its own comparison-shopping service in its general search results and demoted competing comparison-shopping services.

The EU courts considered the conduct under Article 102 TFEU.

Principle

The case demonstrates that a dominant digital platform's control over an important access point can become competition-law significant when that control is used to favour its own service and disadvantage competitors.

Relevance to Influence Concentration

Google's influence was not limited to selling a product.

Its search engine influenced:

consumer attention;

traffic;

visibility;

discovery;

access to competing services.

Therefore:

Control over consumer attention and digital visibility can have competitive significance.

9. Case Law 2 — United States v. Microsoft Corp.

Citation

253 F.3d 34 (D.C. Cir. 2001)

Facts

Microsoft possessed a dominant position in PC operating systems.

It engaged in conduct concerning Internet Explorer and relationships with computer manufacturers, software developers and other market participants.

Legal principle

The case concerned unlawful maintenance of monopoly power under Section 2 of the Sherman Act.

The court distinguished competition based on superior products from conduct designed to prevent competitive threats.

Relevance

Microsoft illustrates how influence over a technological platform can extend beyond the immediate product.

An operating-system platform could influence:

application developers;

hardware manufacturers;

browsers;

software distribution;

consumer choices.

Lesson

Influence over an important technological platform can become a mechanism for maintaining market power when combined with exclusionary conduct.

10. Case Law 3 — Ohio v. American Express

Citation

585 U.S. 529 (2018)

Facts

American Express operated a two-sided payment platform connecting merchants and cardholders.

Its contractual rules restricted merchants from steering customers toward competing payment methods.

Principle

The U.S. Supreme Court emphasized the importance of analysing both sides of a two-sided transaction platform when determining competitive effects.

Relevance

Influence concentration often occurs on platforms serving multiple groups.

For example:

Platform → Consumers

and

Platform → Businesses

A platform may influence both sides simultaneously.

Competition implication

Authorities may need to examine:

consumer participation;

merchant participation;

platform rules;

network effects;

indirect effects.

Lesson

Influence in a platform economy may operate simultaneously across multiple sides of a market.

11. Case Law 4 — Lorain Journal Co. v. United States

Citation

342 U.S. 143 (1951)

Facts

The Lorain Journal had substantial market power in local advertising.

When a competing radio station entered the market, the newspaper attempted to prevent advertisers from dealing with the competing medium.

Principle

A monopolist cannot use its market power to prevent a competitor from obtaining access to customers.

Relevance

This is highly relevant to influence concentration.

Suppose a dominant digital intermediary controls access to a large group of customers.

It might attempt to tell businesses:

"If you use our platform, you cannot advertise or distribute through competing channels."

Such conduct can convert influence over customers into exclusionary market power.

Lesson

Control over customer access can become an instrument of exclusion.

12. Case Law 5 — Aspen Skiing Co. v. Aspen Highlands Skiing Corp.

Citation

472 U.S. 585 (1985)

Facts

Aspen Skiing and Aspen Highlands were competitors in the skiing market.

The dominant firm discontinued a previously existing joint ticketing arrangement with the smaller competitor.

Principle

Under exceptional circumstances, terminating cooperation with a competitor can constitute exclusionary conduct.

Relevance to Influence Concentration

Influence concentration may involve control over important commercial relationships.

A dominant intermediary might previously allow competitors to access:

customers;

distribution;

information;

technical systems.

If access is withdrawn strategically to exclude a competitor, refusal-to-deal principles may become relevant.

Important qualification

The case does not establish that every refusal to cooperate is unlawful.

The circumstances must satisfy the applicable legal requirements.

13. Case Law 6 — FTC v. Facebook / Meta

Background

The U.S. Federal Trade Commission brought antitrust litigation concerning Meta's alleged maintenance of monopoly power in personal social networking services.

The case involved issues concerning acquisitions, competitive threats and network effects.

Relevance to Influence Concentration

Social-network markets illustrate how influence can grow through:

large user networks;

data accumulation;

network effects;

consumer switching costs;

developer ecosystems.

A platform may therefore exercise substantial influence over:

consumer attention;

advertising;

communication;

content distribution.

Lesson

Large user networks can create forms of influence that reinforce market power and make competitive entry more difficult.

The legal claims and their treatment should be distinguished from the broader economic concept of influence concentration.

14. Case Law 7 — Bronner v Mediaprint

Case

Oscar Bronner GmbH & Co. KG v Mediaprint, Case C-7/97

Facts

A newspaper sought access to another publisher's newspaper-delivery system.

Principle

The Court of Justice established a demanding standard for treating refusal of access to infrastructure as an abuse of dominance.

Relevance

Influence concentration can involve control over infrastructure that competitors need to reach consumers.

However:

Not every influential intermediary is legally required to provide access to competitors.

The exceptional conditions associated with refusal-to-deal doctrine must be carefully established.

15. Case Law 8 — Eturas UAB and Others

Case

Case C-74/14

Facts

Eturas operated an online travel-booking system.

The system communicated a restriction concerning discounts offered by participating travel agencies.

Competition principle

The case examined when participants in an electronic system could be regarded as participating in a concerted practice.

Relevance to Influence Concentration

Digital intermediaries can influence the behaviour of many independent businesses through:

platform rules;

software;

algorithmic recommendations;

automated communications;

pricing systems.

Therefore, an intermediary's influence can become relevant not only to dominance law but also to concerted-practice and cartel analysis.

Lesson

Digital influence can affect the behaviour of multiple market participants simultaneously.

16. Comparative Case-Law Table

17. Influence Concentration and Indian Competition Law

The concept can be analysed under the Competition Act, 2002, particularly Section 4 concerning abuse of dominant position.

Section 4 concerns may include:

1. Discriminatory access

A dominant intermediary may provide different terms to similarly placed businesses.

2. Denial of market access

A platform may restrict competitors' access to customers.

3. Leveraging

Influence in one market may be used to strengthen a position in another.

4. Self-preferencing

A dominant platform may favour its own products or services.

5. Unfair conditions

A dominant platform may impose commercially burdensome conditions on dependent businesses.

18. Influence Concentration in Digital Markets

Digital markets are especially susceptible because one platform may simultaneously control:

search;

advertising;

consumer data;

payments;

app distribution;

social networking;

cloud infrastructure;

recommendation systems.

This produces multi-layered influence concentration.

Example

A large platform could possess:

User data

↓

Recommendation algorithm

↓

Consumer attention

↓

Advertising infrastructure

↓

Merchant access

↓

Transaction data

↓

More user data

This creates a reinforcing ecosystem.

19. Influence Concentration and Consumer Choice

Influence concentration can affect consumers without directly increasing prices.

Traditional competition analysis often examines:

price;

output;

quality.

Digital influence can affect:

visibility;

choice architecture;

rankings;

recommendations;

search results;

default settings.

Thus, competition may be weakened even in a market where the consumer pays zero monetary price.

20. Influence Concentration and Non-Price Competition

Competition can be distorted through non-price variables.

These include:

Quality

A platform could reduce service quality while users remain locked in.

Privacy

Consumers may receive less favourable privacy conditions.

Innovation

Competitors may have less incentive to innovate.

Choice

Consumers may see fewer alternatives.

Attention

A dominant platform can determine which businesses receive consumer attention.

21. Influence Concentration and Self-Reinforcing Effects

Influence can produce a feedback loop:

More Users→More Data→Better Algorithms→Greater InfluenceMore\ Users \rightarrow More\ Data \rightarrow Better\ Algorithms \rightarrow Greater\ Influence

Then:

Greater Influence→More Users→More DataGreater\ Influence \rightarrow More\ Users \rightarrow More\ Data

This is sometimes described as a data-network feedback loop.

Such feedback can make market entry increasingly difficult.

22. Influence Concentration and Gatekeepers

A gatekeeper is an intermediary that controls access between different groups.

Examples include:

search engines;

app stores;

online marketplaces;

payment platforms;

social networks;

advertising exchanges.

The gatekeeper may not manufacture the underlying product.

Nevertheless, it may determine:

Who gets access to whom.

That can make influence concentration highly relevant to competition law.

23. Influence Concentration and Algorithmic Bias

Algorithms can determine:

ranking;

pricing;

advertising;

recommendations;

search visibility.

If a dominant platform systematically gives its own products better treatment, the conduct may raise self-preferencing concerns.

If the algorithm is used by competing firms to coordinate behaviour, cartel or concerted-practice questions may arise.

The legal analysis depends on the facts and applicable statutory requirements.

24. Influence Concentration and Advertising Markets

Advertising is particularly sensitive because digital platforms may control both:

Demand side

Advertisers.

Supply side

Consumer attention.

A platform that controls both may possess substantial influence over advertising conditions.

Potential competition concerns include:

discriminatory advertising access;

tying;

self-preferencing;

exclusion of rival advertising platforms;

excessive dependence;

use of advertiser data to compete against advertisers.

25. Influence Concentration and Interoperability

Interoperability can reduce excessive influence concentration.

For example:

data portability;

API access;

technical compatibility;

messaging interoperability.

If users can easily move between platforms, the influence of the incumbent may be reduced.

Therefore:

Lower Switching Costs→Greater ContestabilityLower\ Switching\ Costs \rightarrow Greater\ Contestability

while:

Higher Switching Costs→Greater EntrenchmentHigher\ Switching\ Costs \rightarrow Greater\ Entrenchment

26. Measuring Influence Concentration

Traditional HHI analysis may not fully capture influence.

Additional indicators may include:

1. Attention share

Percentage of consumer attention controlled by a platform.

2. Traffic share

Percentage of online traffic directed through an intermediary.

3. Data share

Proportion of commercially valuable data controlled.

4. Ranking influence

Ability to determine which businesses consumers see.

5. Dependency ratio

Percentage of a business's sales obtained through a particular platform.

6. Switching costs

Cost of leaving the platform.

7. Multi-homing rate

Percentage of users simultaneously using competing platforms.

8. Network strength

Degree to which additional users increase platform value.

27. Possible Anti-Competitive Effects

Influence concentration may produce:

A. Foreclosure

Competitors cannot obtain sufficient access to consumers.

B. Entrenchment

Existing market power becomes difficult to challenge.

C. Reduced innovation

Potential competitors may be discouraged from entering.

D. Reduced consumer choice

Consumers may be exposed to fewer alternatives.

E. Exploitative conditions

Dependent businesses may receive less favourable terms.

F. Information asymmetry

The platform may possess substantially more information than businesses using it.

G. Strategic discrimination

Competitors may receive inferior treatment.

28. Potential Pro-Competitive Effects

Influence concentration is not automatically harmful.

Large platforms may create legitimate efficiencies through:

lower transaction costs;

better matching;

improved recommendations;

fraud detection;

lower search costs;

greater investment;

economies of scale;

improved logistics;

better consumer information.

Therefore, competition analysis must distinguish:

efficient influence

from

anti-competitive influence.

29. Competition-Law Test

A useful analytical framework is:

Step 1 — Identify the relevant market

What product, service, platform or intermediary is involved?

Step 2 — Determine market power

Does the undertaking possess substantial market power?

Step 3 — Identify the source of influence

Is it based on:

data;

network effects;

infrastructure;

consumer attention;

technology;

contracts?

Step 4 — Identify conduct

Has the firm engaged in:

exclusion;

discrimination;

tying;

exclusivity;

self-preferencing;

refusal to deal?

Step 5 — Analyse effects

Does the conduct:

foreclose rivals?

reduce competition?

reduce innovation?

harm consumer choice?

Step 6 — Examine efficiencies

Are there legitimate efficiency explanations?

Step 7 — Consider remedies

Possible remedies include:

interoperability;

non-discrimination;

data portability;

access obligations where legally justified;

prohibition of exclusionary practices;

behavioural commitments;

structural remedies in appropriate cases.

30. Influence Concentration and Future Competition Law

Future competition-law analysis may increasingly move beyond:

"How much of the market does the company sell?"

towards:

"How much influence does the company exercise over how the market functions?"

This is particularly relevant for:

AI platforms;

social media;

digital advertising;

search engines;

online marketplaces;

app stores;

financial platforms;

cloud services;

data intermediaries.

31. Key Principles for Examination

Remember these points:

Influence concentration is broader than traditional market concentration.

Influence may arise from data, algorithms, infrastructure, attention or networks.

Influence itself is not automatically unlawful.

Competition law becomes relevant when influence is connected with market power and exclusionary conduct.

Self-preferencing is an important potential form of influence-based exclusion.

Digital gatekeepers can influence access between businesses and consumers.

Network effects can make influence self-reinforcing.

Switching costs can strengthen incumbent influence.

Algorithmic systems can affect both unilateral conduct and coordinated behaviour.

Refusal to deal is subject to demanding legal standards.

Two-sided platforms require analysis of interconnected market sides.

Consumer harm can occur through reduced choice, quality, privacy or innovation even without higher prices.

Efficiencies must be distinguished from exclusionary effects.

The appropriate legal analysis depends on the specific market and conduct.

32. Conclusion

Influence concentration represents an important development in modern competition-law analysis. A firm may exercise considerable competitive influence without controlling the majority of physical production. Control over consumer attention, information, data, rankings, distribution, algorithms and digital infrastructure can allow an undertaking to shape how markets operate.

The cases of Google Shopping, United States v. Microsoft, Ohio v. American Express, Lorain Journal, Aspen Skiing, Bronner and Eturas, among others, provide useful principles for analysing different dimensions of influence concentration.

The central principle is:

Competition law does not prohibit a company from becoming influential through successful innovation or efficient services; the concern arises when substantial influence is converted into market power and used in ways that unlawfully exclude competitors, restrict market access, distort consumer choice or reduce competitive conditions.

Thus, influence concentration should be examined through a combination of market power, network effects, data control, consumer dependency, switching costs, gatekeeping, self-preferencing, interoperability and actual or potential foreclosure effects.