Competition Law and Competition Issues in Augmented Economies

1. Introduction

Augmented economies are economic environments in which conventional physical economic activity is enhanced by digital technologies such as augmented reality (AR), virtual reality (VR), mixed reality (MR), artificial intelligence, spatial computing, wearable devices, digital twins, virtual goods, digital marketplaces and immersive platforms.

The expression "augmented economy" is not, by itself, a separate established category of competition law. It is useful as an analytical concept for studying markets where physical and digital economic activity increasingly operate together.

Examples include:

AR shopping;

virtual stores;

VR fitness;

immersive advertising;

virtual events;

digital fashion;

virtual goods;

gaming ecosystems;

AR navigation;

smart glasses;

spatial-computing platforms;

virtual workplaces;

digital twins;

metaverse marketplaces.

Competition law becomes important because the same company may control several layers of the augmented economy:

Device → operating system → app store → platform → data → payment system → content → advertising

Such vertical integration can produce substantial competitive advantages and, in some circumstances, competition concerns.

2. Meaning of Augmented Economies

An augmented economy combines physical economic activity with digital layers.

For example, a conventional retail transaction may involve:

Consumer → physical shop → product

An augmented retail transaction may involve:

Consumer → AR glasses → AR platform → recommendation algorithm → virtual showroom → seller → payment platform

The additional digital layers create new competitive relationships.

Thus:

Physical market + digital technology + data + immersive interface = augmented economy

3. Main Characteristics

3.1 Digital-Physical Integration

Augmented economies connect physical goods and services with digital information.

Examples:

AR showing furniture inside a customer's home;

smart glasses providing product information;

AR navigation directing consumers to stores;

digital overlays on physical products.

3.2 Platform Dependence

Many augmented services require a platform.

A developer may need access to:

an operating system;

an app store;

AR hardware;

software development tools;

cloud computing;

payment infrastructure.

Therefore, platform owners can become gatekeepers.

3.3 Network Effects

The value of an augmented platform can increase as more users, developers and content creators join.

For example:

More users

↓

More developers

↓

More applications

↓

More content

↓

Greater consumer attraction

↓

More users

This can create self-reinforcing concentration.

The FTC's Meta/Within complaint specifically described this kind of network-effect mechanism in the VR ecosystem, including the interaction between users, content and developers. (Federal Trade Commission)

4. Competition Law Issues in Augmented Economies

The major competition issues include:

platform dominance;

ecosystem concentration;

app-store control;

self-preferencing;

data concentration;

interoperability restrictions;

exclusive arrangements;

tying and bundling;

excessive platform commissions;

foreclosure of competitors;

killer acquisitions;

innovation competition;

access to hardware;

control of virtual marketplaces;

algorithmic discrimination;

switching costs and lock-in.

5. Platform Dominance

An augmented-economy platform may control the interface through which users access applications.

For example:

AR device

↓

Operating system

↓

AR app store

↓

AR applications

↓

Consumers

If one company controls several layers, competing developers may become dependent on that company.

The competition-law question is not simply whether the platform is large. The relevant questions include:

Does it possess substantial market power?

Are competitors dependent upon it?

Can users switch?

Are alternative platforms available?

Does the platform impose exclusionary conditions?

6. App Stores as Gatekeepers

App stores can become particularly important in augmented economies.

An AR/VR platform may determine:

which applications are admitted;

how applications are ranked;

which payment systems developers can use;

commission rates;

advertising conditions;

access to APIs;

access to user data.

This gives the platform potentially significant control over downstream competition.

7. Data Concentration

Augmented technologies can generate unusually detailed data.

Examples include:

eye movement;

hand movements;

voice;

location;

physical surroundings;

purchase behaviour;

interaction patterns;

spatial maps.

This information can become commercially valuable.

A company possessing large quantities of such data may gain advantages in:

advertising;

recommendation systems;

product development;

personalisation;

AI training.

Thus, data concentration can become a competition issue.

8. Privacy and Competition

Augmented economies demonstrate the increasing relationship between:

Competition law + privacy + data governance.

For example, a platform might offer an apparently free AR service but collect extensive behavioural or biometric-related information.

Competition authorities may need to consider whether deterioration in non-price conditions, including privacy-related conditions where legally relevant, can form part of competitive analysis.

However, privacy law and competition law remain distinct legal regimes.

9. Interoperability

Interoperability is particularly important in augmented economies.

An AR application may need to communicate with:

operating systems;

sensors;

cameras;

smart glasses;

virtual environments;

payment systems;

cloud services.

If a dominant platform restricts interoperability, competitors may be disadvantaged.

The Microsoft interoperability litigation provides an important analogy because the case concerned access to technical information necessary for interoperability in a dominant software ecosystem.

10. Self-Preferencing

Suppose a dominant AR platform operates its own:

AR shopping application;

advertising service;

virtual marketplace;

payment system.

The platform may potentially give preferential treatment to its own products.

For example:

Platform search

Platform's own AR store

Independent competitor

Independent competitor

If the ranking advantage results from the platform's dominant position and harms competition, it can attract competition-law scrutiny.

The Google Shopping litigation is an important example of the broader competition-law problem of preferential treatment within a dominant digital gateway.

11. Tying and Bundling

Augmented economies can create opportunities for tying.

For example:

AR headset + compulsory payment system

or

AR operating system + compulsory app store

or

Virtual platform + mandatory advertising service.

Where a dominant company makes one product conditional upon acceptance of another product or service, competition authorities may examine whether the arrangement unlawfully restricts competition.

12. Exclusive Dealing

A dominant augmented-reality platform could potentially require:

exclusive distribution;

exclusive content;

exclusive developers;

exclusive payment systems;

exclusive advertising.

Such arrangements can make it difficult for rival platforms to obtain sufficient scale.

The legality depends on the applicable competition law and the actual or likely competitive effects.

13. Foreclosure

Foreclosure occurs when conduct makes it substantially more difficult for competitors to compete.

In augmented economies, foreclosure could occur through:

restricting API access;

denying platform access;

discriminatory rankings;

exclusive contracts;

technical incompatibility;

control of critical hardware;

restricting payment alternatives.

14. Network Effects and Market Tipping

Augmented economies may experience strong network effects.

Consider an AR platform:

More users → more developers → more applications → more content → greater platform attractiveness → more users.

Once a platform becomes sufficiently large, a competing platform may find it difficult to obtain enough users and developers to challenge it.

This can produce market tipping.

However, the existence of network effects does not itself establish an antitrust violation.

15. Switching Costs

Consumers and developers may become locked into an augmented ecosystem because they have invested in:

hardware;

applications;

virtual goods;

subscriptions;

digital identities;

data;

developer tools.

Switching to another ecosystem may require purchasing new hardware or rebuilding digital assets.

High switching costs can strengthen incumbent market power.

16. Virtual Goods

Augmented economies may involve virtual products such as:

digital clothing;

avatars;

virtual property;

game assets;

digital collectibles;

virtual advertising spaces.

Competition issues may arise where one platform prevents consumers from using digital assets outside its ecosystem.

This raises questions about:

portability;

interoperability;

exclusivity;

platform control.

17. Digital Advertising

Augmented environments could become important advertising markets.

Advertising might be displayed:

through AR glasses;

in virtual environments;

through spatial overlays;

through location-based recommendations.

A platform controlling both:

the AR interface, and

advertising services

could potentially possess substantial vertical advantages.

18. Killer Acquisitions

A major competition concern is acquisition of emerging competitors.

An established technology company might acquire:

a promising AR startup;

a VR fitness application;

a new spatial-computing technology;

an innovative virtual marketplace.

The target may have relatively little revenue but substantial future competitive significance.

This is especially important in innovation-driven markets.

19. Case Law 1 — FTC v Meta/Within

Federal Trade Commission v Meta Platforms, Inc., Mark Zuckerberg and Within Unlimited, Inc.

This is one of the most directly relevant cases to augmented economies.

Meta sought to acquire Within Unlimited, developer of the VR fitness application Supernatural.

The FTC alleged that Meta was already a major participant at multiple levels of the VR ecosystem, including VR hardware, app distribution and VR applications. It argued that acquiring Within could reduce competition and innovation in VR fitness applications. (Federal Trade Commission)

Competition significance

The case demonstrates the importance of:

potential competition;

innovation;

vertical ecosystem control;

network effects;

emerging VR markets.

Principle

Competition authorities may examine acquisitions in emerging augmented-reality and virtual-reality markets even where the market is still developing.

The FTC's administrative matter was later closed in February 2023, so the allegations should be distinguished from a final finding of antitrust liability. (Federal Trade Commission)

20. Case Law 2 — Epic Games v Google

Epic Games, Inc. v Google LLC

This is highly relevant to augmented economies because many AR/VR ecosystems depend upon app-store and payment infrastructure.

In 2023, a jury found Google liable under U.S. federal and California antitrust law concerning Android app distribution and in-app billing. In 2025, the Ninth Circuit affirmed the verdict and upheld the injunction. The case involved Google's Play Store and Google Play Billing systems. (Justia Law)

Competition significance

The case concerns:

platform gatekeeping;

app distribution;

payment systems;

tying;

developer access;

commissions;

alternative distribution.

Application to augmented economies

The same issues can arise in AR/VR ecosystems where a platform controls:

hardware → operating system → app store → payment system.

Thus, Epic v Google is an important precedent for analysing platform competition in emerging augmented economies.

21. Case Law 3 — Epic Games v Apple

Epic Games, Inc. v Apple Inc.

Epic challenged Apple's App Store restrictions and payment rules.

The district court ultimately rejected most of Epic's federal antitrust claims but issued an injunction concerning Apple's anti-steering practices under California law; the Ninth Circuit affirmed the relevant judgment.

Competition significance

The case illustrates the complexity of defining markets in platform ecosystems.

It also demonstrates the importance of:

app-store control;

payment systems;

developer restrictions;

alternative purchasing channels.

Relevance

An augmented-reality ecosystem could reproduce the same structure:

AR hardware → platform → app store → payment → digital content.

The Epic cases therefore provide an important analytical framework for future AR/VR platform disputes.

22. Case Law 4 — Microsoft v Commission

Microsoft Corp. v Commission, Case T-201/04

Microsoft controlled the Windows operating-system ecosystem and important interoperability information.

The European Commission found that Microsoft had abused its dominant position, including through conduct concerning interoperability.

The General Court substantially upheld the Commission's decision.

Relevance to augmented economies

AR ecosystems require interoperability among:

devices;

software;

applications;

sensors;

platforms.

A dominant platform's control over technical interfaces can therefore create similar competition concerns.

Principle

Control of technical interoperability can become a source of competitive power.

23. Case Law 5 — Google Android

Google LLC and Alphabet Inc. v European Commission, Case T-604/18

The Android case concerned Google's conduct involving:

Google Search;

Android;

Play Store;

Chrome;

device manufacturers;

mobile network operators.

The General Court analysed Google's conduct in the context of a complex multi-sided platform ecosystem.

Relevance

AR and VR platforms can similarly connect:

hardware manufacturers;

application developers;

consumers;

advertisers;

payment providers.

The case therefore provides useful principles for analysing ecosystem competition.

24. Case Law 6 — Google Shopping

Google Search (Shopping), Case AT.39740

The European Commission found that Google abused its dominant position by favouring its comparison-shopping service in general search results.

Competition significance

The case illustrates the potential problem of self-preferencing by a dominant digital gateway.

Application to augmented economies

Imagine a dominant AR shopping platform that controls what users see through AR glasses.

It could potentially influence:

product visibility;

rankings;

recommendations;

advertisements.

This makes Google Shopping particularly relevant as an analytical precedent.

25. Case Law 7 — United States v Microsoft

United States v Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001)

Microsoft's dominance in operating systems provided a foundation for analysing its conduct concerning web browsers and emerging technologies.

The court found unlawful exclusionary conduct.

Relevance to augmented economies

The case demonstrates how an incumbent technological platform can use its existing ecosystem to influence emerging technologies.

An analogous concern could arise where a dominant AR operating-system provider uses control over its platform to restrict emerging competing interfaces or applications.

26. Case Law 8 — Qualcomm

FTC v Qualcomm Inc.

The case involved patents, licensing and the relationship between technological standards and competition.

Although not an AR-specific case, it is relevant because augmented devices rely heavily on:

wireless technology;

semiconductor technology;

patents;

technical standards.

Competition significance

Control over essential technological inputs can affect competition downstream.

Thus, patent and licensing strategies can become particularly important in AR hardware markets.

27. Case Law 9 — Rambus

Rambus Inc. v European Commission

The Rambus litigation concerned intellectual property, standard-setting and competition.

Relevance to augmented economies

Augmented devices need technical standards for:

display;

wireless communication;

data transmission;

spatial computing;

interoperability.

A company controlling important standard-related intellectual property may acquire significant bargaining power.

Competition law may therefore intersect with standard-essential technology.

28. Competition Issue: Control of AR Hardware

AR hardware can become a bottleneck.

Examples include:

smart glasses;

headsets;

sensors;

spatial-computing devices.

If one company controls a critical hardware platform and also operates competing software or applications, vertical integration may create foreclosure risks.

29. Competition Issue: Control of Operating Systems

The operating system can control:

application access;

APIs;

permissions;

data;

payments;

device functionality.

Therefore:

AR operating system + app store + payment system

can create significant ecosystem power.

30. Competition Issue: Control of Virtual Marketplaces

A virtual marketplace may determine:

seller admission;

product ranking;

transaction fees;

advertising;

payments;

consumer data.

If the marketplace also sells its own products, there may be potential conflicts between:

platform operator

and

platform-dependent competitors.

31. Competition Issue: Interoperability of Digital Assets

Suppose a consumer buys a virtual product on Platform A.

If Platform A prevents that product from functioning on Platform B, consumers may become locked into Platform A.

This can create:

switching costs;

network effects;

entry barriers.

Competition law may therefore consider interoperability or portability where legally appropriate.

32. Competition Issue: Data Advantage

An AR platform may know:

what consumers look at;

where they look;

what products they inspect;

which virtual advertisements attract attention;

which physical stores they visit.

Such information can provide a competitive advantage.

If the dominant platform uses data obtained from dependent businesses to compete against them, authorities may examine whether this creates exclusionary effects.

33. Competition Issue: Algorithmic Ranking

AR interfaces may rank information directly within a user's physical environment.

For example, a consumer looking at a street through AR glasses might see:

Platform's preferred restaurant;

platform advertisement;

competing restaurant.

If ranking is controlled by a dominant platform, the platform can influence consumer choice.

This makes algorithmic neutrality and transparency potentially important competition issues.

34. Competition Issue: Exclusivity of Content

A VR/AR platform may seek exclusive rights to:

games;

movies;

sports;

virtual events;

educational content;

fitness applications.

Exclusive content may attract users, creating legitimate competitive differentiation.

However, extensive exclusivity can potentially make entry difficult for rival platforms.

The competition assessment depends upon market structure, duration, coverage and actual effects.

35. Competition Issue: Vertical Integration

Consider:

AR headset manufacturer

AR operating system

AR app store

AR advertising

AR payment system

This is a highly vertically integrated structure.

Vertical integration can generate efficiencies, but it can also create the ability and incentive to disadvantage rivals.

36. Competition Issue: Innovation

Augmented economies are highly innovation-driven.

Competition authorities should therefore consider:

R&D;

emerging technologies;

new business models;

future entrants;

product quality;

interoperability;

innovation incentives.

A transaction that appears harmless based solely on current market shares may have greater significance if the acquired company represents a major future competitive constraint.

37. Competition Issue: Consumer Choice

Consumers may experience reduced choice where a dominant augmented ecosystem restricts:

application availability;

payment options;

device compatibility;

digital-asset portability;

alternative marketplaces.

Competition policy therefore has to consider both price and non-price dimensions of competition.

38. Competition Issue: Zero-Price Markets

Many augmented services may be offered for free.

For example:

free AR applications;

free virtual environments;

free social platforms.

The absence of a monetary price does not necessarily mean the absence of competition concerns.

Competition may occur through:

data;

attention;

quality;

privacy;

advertising;

innovation.

39. Augmented Economies and Merger Control

Merger analysis should consider:

Horizontal effects

AR company + competing AR company.

Vertical effects

AR hardware + AR content provider.

Conglomerate effects

AR platform + advertising platform.

Innovation effects

Incumbent + emerging AR technology.

Ecosystem effects

Platform + application + payment system.

40. Possible Remedies

Where an infringement is established, possible remedies may include:

1. Interoperability

Allow competitors to connect with the platform.

2. Anti-discrimination

Prevent discriminatory access.

3. Data portability

Allow users to transfer relevant data where legally required.

4. Alternative payment systems

Permit competing payment methods where appropriate.

5. Non-exclusive access

Restrict anti-competitive exclusivity.

6. Structural separation

Separate platform and competing downstream operations in exceptional circumstances.

7. Merger remedies

Require divestiture or access commitments.

The Epic v Google litigation illustrates how platform remedies can include restrictions on arrangements that advantage a dominant app store and requirements concerning alternative distribution or billing channels. (Justia Law)

41. Indian Competition-Law Perspective

The Competition Act, 2002 is capable of addressing competition problems in augmented economies through its general provisions.

Section 3

Concerns anti-competitive agreements.

Relevant issues could include:

agreements between AR platforms;

exclusivity;

market sharing;

restrictions on interoperability.

Section 4

Concerns abuse of dominant position.

Potential issues include:

denial of market access;

discriminatory conditions;

tying;

leveraging;

limiting technical development.

Sections 5 and 6

Concern combinations and merger control.

These can become relevant to acquisitions of:

AR startups;

VR applications;

spatial-computing companies;

virtual marketplaces.

42. Augmented Economies and Essential Facilities

An AR platform may theoretically become an essential gateway where competitors cannot realistically reach consumers without it.

However, the essential-facilities doctrine is applied cautiously.

The Bronner principles are important because they establish that mere commercial usefulness is generally insufficient to create a compulsory-access obligation.

The relevant considerations include:

indispensability;

lack of alternatives;

elimination of competition;

absence of objective justification.

Thus:

Every dominant AR platform is not automatically an essential facility.

43. Positive Economic Effects

Augmented economies can generate significant benefits:

improved consumer experience;

lower search costs;

better product visualisation;

new forms of advertising;

new entertainment markets;

remote collaboration;

improved education;

greater market access;

new entrepreneurial opportunities.

Competition law should therefore distinguish between legitimate technological success and conduct that unlawfully restricts competition.

44. Potential Negative Effects

Major potential risks include:

excessive platform concentration;

ecosystem lock-in;

high switching costs;

exclusionary interoperability policies;

data concentration;

discriminatory rankings;

self-preferencing;

excessive commissions;

exclusive content;

anti-competitive acquisitions;

foreclosure of smaller developers;

reduction in innovation.

45. Augmented Economies vs Traditional Digital Markets

46. Key Legal Questions

When analysing a competition problem in an augmented economy, ask:

What is the relevant market?

Is it a hardware, software, content or platform market?

Is the market multi-sided?

Does the company control an important gateway?

Are network effects present?

Are switching costs substantial?

Does the firm control important data?

Does it operate at multiple levels of the ecosystem?

Does it favour its own services?

Does it restrict interoperability?

Does it tie products or services?

Does it impose exclusivity?

Does it acquire emerging competitors?

What are the effects on innovation?

What are the effects on consumers?

Are there legitimate efficiencies?

What remedy would preserve competition without unnecessarily reducing innovation?

47. Overall Competition-Law Framework

The competition analysis can be expressed as:

AR/VR technology

↓

Hardware and software platform

↓

Network effects

↓

Data and user accumulation

↓

Developer/content ecosystem

↓

Platform gatekeeping

↓

Potential market power

↓

Exclusionary conduct / anti-competitive acquisition

↓

Effects on competitors, innovation and consumers

↓

Competition-law intervention where statutory requirements are satisfied

48. Conclusion

Augmented economies create a new layer of competition-law complexity because they combine physical markets with digital platforms, immersive technologies, data and network effects.

The central competition concerns are not simply whether AR or VR companies become large. The important questions are whether a company obtains durable market power through control of:

hardware;

operating systems;

app stores;

payment systems;

data;

virtual marketplaces;

interoperability;

content;

advertising;

developer ecosystems.

The FTC's Meta/Within proceeding is particularly significant because it directly addressed competition and innovation in the emerging VR fitness ecosystem and the importance of network effects. (Federal Trade Commission) The Epic Games v Google litigation is also highly relevant because it demonstrates how app-store and payment-system control can become the subject of modern platform antitrust litigation; the Ninth Circuit affirmed the liability verdict and injunction in 2025. (Justia Law)

Other important precedents such as Microsoft, Google Android, Google Shopping, Epic v Apple, Qualcomm and Rambus provide principles concerning interoperability, platform ecosystems, self-preferencing, tying, technological inputs and innovation.

Important Cases for Examination

FTC v Meta Platforms/Within Unlimited — VR ecosystem, potential competition and innovation.

Epic Games v Google — app-store power, billing, tying and platform gatekeeping.

Epic Games v Apple — app-store restrictions and digital distribution.

Microsoft v Commission — interoperability and technological ecosystem dominance.

Google Android — multi-sided platforms, tying and ecosystem effects.

Google Shopping — self-preferencing by a digital gateway.

United States v Microsoft — technological platform power and exclusionary conduct.

FTC v Qualcomm — patents, licensing and technological inputs.

Rambus v Commission — standards, intellectual property and technological competition.

Exam Formula

Augmented technology → platform ecosystem → network effects → data accumulation → gatekeeping → market power → interoperability/self-preferencing/tying/exclusivity → foreclosure → innovation and consumer effects → competition-law assessment → proportionate remedy.