Competition Law and Strategic Digital Infrastructure Competition

1. Introduction

Strategic digital infrastructure competition concerns competition over the technological infrastructure on which digital markets depend. Unlike conventional competition between finished products or services, the focus is on the underlying infrastructure, access points, standards, networks, platforms, data systems, cloud resources, application interfaces, payment rails, operating systems, app stores, connectivity infrastructure and other technical layers that determine whether rivals can enter, innovate, interoperate and reach consumers.

Digital infrastructure can become strategically important because control over an infrastructure layer may enable an undertaking to:

• restrict competitors' access;
• impose discriminatory technical or commercial conditions;
• leverage market power into adjacent markets;
• foreclose downstream competitors;
• control interoperability;
• raise switching costs;
• prevent multi-homing;
• accumulate strategically important data;
• impose technical standards that favour its own products;
• engage in tying or bundling;
• acquire potential competitors; or
• make competitors dependent upon a privately controlled infrastructure.

Competition law therefore increasingly examines not merely who sells the digital product, but who controls the infrastructure necessary for others to compete.

2. Meaning of Strategic Digital Infrastructure

Digital infrastructure includes several interconnected layers.

A. Physical infrastructure

Examples include:

• telecommunications networks;
• fibre networks;
• data centres;
• internet exchange points;
• submarine cables;
• mobile networks;
• broadband infrastructure;
• cloud-computing facilities.

B. Platform infrastructure

Examples include:

• operating systems;
• app stores;
• search engines;
• online marketplaces;
• cloud platforms;
• payment platforms;
• advertising exchanges.

C. Technical infrastructure

Examples include:

• APIs;
• authentication systems;
• interoperability protocols;
• identity systems;
• software-development frameworks;
• technical standards;
• digital certification systems.

D. Data infrastructure

This includes:

• databases;
• data-access systems;
• data portability mechanisms;
• transaction datasets;
• interoperability datasets;
• real-time information systems.

A firm controlling one of these layers may possess a competitive advantage that is difficult for rivals to replicate.

3. Competition-Law Issues

Strategic digital infrastructure raises several classic competition-law doctrines.

3.1 Abuse of Dominant Position

A dominant infrastructure operator may abuse its position by:

• refusing access;
• imposing discriminatory access terms;
• charging excessive or exclusionary prices;
• degrading interoperability;
• restricting APIs;
• technically disadvantaging competing services;
• imposing discriminatory authentication requirements.

The central issue is generally whether the infrastructure constitutes a bottleneck or strategically indispensable input and whether exclusionary conduct harms competition.

4. Essential-Facilities Considerations

The essential-facilities doctrine becomes particularly relevant where competitors cannot realistically reproduce the infrastructure.

A competition authority or court may examine:

1. whether the infrastructure is controlled by a dominant undertaking;
2. whether competitors require access;
3. whether duplication is technically or economically feasible;
4. whether access has actually been refused or restricted;
5. whether there is an objective justification;
6. whether access can be provided without disproportionate operational difficulties.

Digital infrastructure creates difficult questions because technological infrastructure is sometimes technically reproducible but commercially difficult to duplicate.

5. Interoperability as a Competition Issue

Interoperability is especially important in digital infrastructure.

A dominant firm can potentially reduce competition by designing its infrastructure so that rival products cannot communicate effectively with it.

Examples include:

• refusing API access;
• withholding technical specifications;
• restricting data portability;
• limiting third-party integrations;
• degrading interoperability;
• changing technical protocols selectively;
• making competing applications incompatible.

The competitive harm may arise even when the dominant firm does not expressly prohibit competitors.

6. Strategic Control of APIs

APIs can function as digital gateways.

A platform controlling an important API may determine:

• which competitors can connect;
• what information they receive;
• how frequently they can access data;
• whether they can use particular functions;
• what authentication conditions apply;
• whether competitors receive equivalent technical treatment.

Therefore, discriminatory API access may potentially constitute:

• exclusionary abuse;
• discriminatory dealing;
• tying;
• leveraging;
• refusal to deal;
• or conduct facilitating self-preferencing.

7. Digital Infrastructure and Network Effects

Digital infrastructure frequently generates network effects.

The value of a network can increase as more:

• users join;
• developers participate;
• merchants connect;
• advertisers participate;
• devices become compatible;
• data becomes available.

Network effects can create a feedback loop:

More users → more data → better infrastructure → more users → stronger network effects

Once a firm becomes sufficiently entrenched, competitors may face substantial barriers to entry.

8. Switching Costs and Lock-In

Strategic infrastructure can also create technological lock-in.

Examples include:

• proprietary cloud architectures;
• platform-specific APIs;
• proprietary identity systems;
• incompatible data formats;
• ecosystem-specific payment systems;
• operating-system dependencies.

A customer may technically be free to switch but face substantial costs in transferring:

• data;
• applications;
• contracts;
• integrations;
• employees;
• technical infrastructure.

Competition authorities may therefore distinguish formal freedom to switch from effective competitive mobility.

9. Self-Preferencing

A vertically integrated infrastructure operator may favour its downstream services.

For example:

Infrastructure operator → platform → downstream service

The infrastructure provider could theoretically:

• give its own application preferential API access;
• provide its own cloud service with better technical functionality;
• favour its own payment service;
• rank its own services more prominently;
• restrict competitors' interoperability.

This creates a competition concern because the infrastructure operator simultaneously acts as infrastructure provider and competitor.

10. Tying and Bundling

Infrastructure dominance may facilitate tying.

For example:

Operating system + mandatory payment system

or

Cloud infrastructure + proprietary security service

or

Marketplace infrastructure + compulsory logistics service

The competition analysis generally considers whether:

1. two separate products or services exist;
2. the undertaking has market power in the tying product;
3. customers are effectively compelled to obtain the tied product;
4. competition in the tied market may be foreclosed.

11. Cloud Infrastructure Competition

Cloud computing creates important infrastructure-related competition issues.

Large cloud providers can control:

• computing resources;
• storage;
• databases;
• cybersecurity;
• AI infrastructure;
• developer tools;
• data-processing environments.

Potential competition concerns include:

• cloud switching barriers;
• data-transfer costs;
• interoperability restrictions;
• preferential treatment of affiliated services;
• exclusive contracts;
• technical incompatibility;
• bundling;
• use of customer data.

12. Telecommunications and Digital Infrastructure

Telecommunications infrastructure is a traditional example of a network industry.

Competition authorities may regulate:

• network access;
• interconnection;
• spectrum;
• infrastructure sharing;
• roaming;
• broadband access;
• fibre networks;
• mobile towers.

Digitalisation has blurred the distinction between telecommunications infrastructure and digital-platform infrastructure.

A network can simultaneously function as:

Physical infrastructure → connectivity infrastructure → data infrastructure → platform infrastructure.

13. Data as Strategic Infrastructure

Large datasets can function as a competitive infrastructure.

A dominant undertaking may possess datasets concerning:

• consumer behaviour;
• transactions;
• location;
• search activity;
• purchasing patterns;
• technical performance;
• advertising responses.

The competition question is not simply whether data is valuable.

It is whether control over particular data creates a structural competitive advantage that rivals cannot realistically reproduce.

14. Digital Infrastructure and Mergers

Mergers involving infrastructure providers can raise concerns even where the parties do not currently compete directly.

Competition authorities may investigate:

• acquisition of an emerging infrastructure competitor;
• vertical integration;
• control of interoperability layers;
• acquisition of strategically valuable data;
• foreclosure of downstream competitors;
• elimination of future competition.

The relevant theory may therefore involve potential competition, vertical foreclosure, or ecosystem entrenchment.

15. Important Case Laws

1. United Brands v Commission

Case 27/76, 1978

The European Court of Justice developed important principles concerning dominance and market power.

The case concerned the banana market rather than digital infrastructure, but its broader importance lies in the analysis of dominance, economic power and the ability of an undertaking to behave independently of competitors and customers.

Relevance to digital infrastructure

A digital infrastructure operator with control over a critical infrastructure layer may similarly acquire a position allowing it to act independently of competitive constraints.

The case therefore provides a foundational concept for analysing dominance before moving to infrastructure-specific conduct.

16. Bronner v Mediaprint

Case C-7/97, 1998

This is one of the most important European cases concerning refusal to provide access to infrastructure.

The applicant sought access to an established newspaper home-delivery system.

The Court established demanding conditions for treating refusal to provide access to an infrastructure as abusive.

Among the important considerations were whether:

• access was indispensable;
• duplication of the facility was impossible or economically unreasonable;
• refusal would eliminate effective competition;
• there was no objective justification.

Digital significance

The reasoning is highly relevant to:

• cloud infrastructure;
• payment infrastructure;
• APIs;
• digital authentication systems;
• app ecosystems;
• data-access infrastructure;
• interoperability systems.

The mere fact that infrastructure is useful does not automatically make it an essential facility.

17. IMS Health v NDC Health

Joined Cases C-418/01 P and C-408/01 P, 2004

IMS Health concerned access to a commercially important database structure.

The case is especially important because it examined the circumstances in which intellectual-property rights and control over an important information structure may intersect with competition law.

The Court identified demanding circumstances for compulsory access, including the importance of the input to competing products and the potential elimination of competition.

Digital significance

The case provides an important framework for analysing:

• proprietary databases;
• data architectures;
• digital information systems;
• interoperability structures;
• proprietary technical formats.

It demonstrates that ownership of an infrastructure-like asset does not automatically create a duty to share it.

18. Microsoft v Commission

Case T-201/04, General Court, 2007

Microsoft is one of the most important precedents for digital infrastructure competition.

The European Commission found that Microsoft had abused its dominant position through, among other conduct, restrictions concerning interoperability information.

The case involved Microsoft's control over operating-system infrastructure and the relationship between Windows and work-group server products.

Competition significance

The case demonstrated how a dominant operating-system provider could potentially use control over technical information to disadvantage competitors.

Digital-infrastructure significance

It is directly relevant to:

• interoperability;
• technical specifications;
• APIs;
• operating systems;
• software ecosystems;
• platform compatibility.

The case illustrates how technical interoperability can become a competition-law issue.

19. Google Shopping

Google Search (Shopping), Commission Decision AT.39740, 2017; General Court, Case T-612/17, 2021

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

The case concerned the relationship between:

search infrastructure → ranking mechanism → downstream service

Competition significance

The case illustrates the potential competitive significance of a dominant digital infrastructure provider controlling an important access point to consumers.

Strategic-infrastructure relevance

Search engines can function as digital infrastructure because they determine how users and businesses reach information and commercial services.

The case therefore illustrates concerns surrounding:

• self-preferencing;
• access control;
• ranking;
• platform neutrality;
• vertical leveraging.

20. Google Android

Commission Decision AT.40099, 2018; General Court, Case T-604/18, 2022

The European Commission examined Google's Android ecosystem and several contractual arrangements involving:

• Google Search;
• Google Play Store;
• mobile-device manufacturers;
• browser applications.

The case concerned the interaction between an operating system and related digital services.

Strategic infrastructure significance

An operating system is infrastructure for:

• applications;
• developers;
• device manufacturers;
• users;
• digital services.

The case demonstrates how contractual restrictions within a technological ecosystem may affect competition across adjacent markets.

21. Apple App Store / Epic Games Litigation

Epic Games, Inc. v Apple Inc., U.S. District Court for the Northern District of California, 2021

The litigation examined Apple's control over distribution of applications on iOS devices and Apple's payment-related rules.

Although the court did not adopt every theory advanced by Epic, the dispute provides an important illustration of competition questions surrounding platform infrastructure and access conditions.

Strategic infrastructure significance

The App Store can be viewed as an infrastructure layer connecting:

developers → applications → consumers → payments

The case raises questions concerning:

• platform access;
• payment restrictions;
• commission structures;
• alternative distribution;
• anti-steering;
• ecosystem control.

22. Qualcomm

FTC v Qualcomm Inc., 969 F.3d 974 (9th Cir. 2020)

The case concerned Qualcomm's licensing practices involving cellular-standard-essential patents and modem-chip competition.

The Ninth Circuit reversed the district court's judgment against Qualcomm under Section 2 of the Sherman Act.

Strategic infrastructure significance

The case is particularly useful for understanding competition around technological standards and infrastructure-dependent markets.

It demonstrates the importance of distinguishing:

• technological standardisation;
• intellectual-property licensing;
• vertical relationships;
• exclusionary conduct.

23. Essential-Facility Analysis in Digital Infrastructure

The cases collectively show that an infrastructure-access claim normally requires careful examination.

Question 1 — Is the infrastructure important?

A facility may be commercially valuable without being legally indispensable.

Question 2 — Can competitors reproduce it?

If competitors can reasonably construct alternatives, compulsory access becomes less compelling.

Question 3 — Does denial eliminate effective competition?

The effect on competitive structure matters more than harm to one individual competitor.

Question 4 — Is access technically feasible?

Infrastructure operators may have legitimate security, privacy, capacity or reliability concerns.

Question 5 — Is there objective justification?

A restriction may be legitimate where it protects:

• cybersecurity;
• system integrity;
• privacy;
• network stability;
• intellectual property;
• safety.

24. Strategic Digital Infrastructure and Market Definition

Market definition can be particularly difficult.

A competition authority may consider separate markets for:

• cloud infrastructure;
• cloud storage;
• operating systems;
• app distribution;
• online search;
• digital advertising;
• payment processing;
• data services;
• API services.

Alternatively, infrastructure may form part of a broader ecosystem.

Traditional substitution analysis may therefore be supplemented by analysis of:

• multi-homing;
• interoperability;
• switching costs;
• network effects;
• data advantages;
• ecosystem dependencies.

25. Strategic Bottlenecks

A strategic digital bottleneck exists where an infrastructure layer controls an important pathway between market participants.

Examples:

Developer → App Store → Consumer

Merchant → Payment Network → Consumer

Website → Search Engine → User

Enterprise → Cloud Infrastructure → Digital Service

Application → Operating System → Device User

The operator positioned at the bottleneck can potentially influence competitive conditions downstream.

26. Competition Risks Created by Strategic Infrastructure

27. Remedies

Competition authorities may employ several remedies.

Structural remedies

• divestiture;
• separation of infrastructure and downstream businesses;
• ownership restrictions.

Behavioural remedies

• non-discriminatory access;
• interoperability;
• API access;
• data portability;
• anti-self-preferencing obligations;
• transparency requirements.

Technical remedies

• interoperability standards;
• data-transfer mechanisms;
• technical documentation;
• compatibility requirements.

Merger remedies

• access commitments;
• licensing commitments;
• firewall obligations;
• non-discrimination commitments;
• divestitures.

28. China Perspective

For China, strategic digital infrastructure competition is particularly significant under the Anti-Monopoly Law (AML) and the regulatory framework addressing the platform economy.

Relevant concerns include:

• abuse of market dominance;
• unreasonable refusal to transact;
• discriminatory treatment;
• tying;
• exclusive arrangements;
• exploitation of data advantages;
• algorithmic conduct;
• interoperability;
• platform ecosystem control.

The Chinese regulatory approach increasingly considers the characteristics of digital markets, including:

• network effects;
• economies of scale;
• lock-in;
• data;
• algorithmic technologies;
• multi-sided markets.

The Alibaba administrative penalty (2021) and Meituan administrative penalty (2021) are particularly significant Chinese enforcement examples concerning platform conduct and exclusivity.

29. Economic Effects

Strategic infrastructure conduct can affect competition through several mechanisms.

Foreclosure

Competitors may be prevented from reaching customers.

Entry barriers

New entrants may have to reproduce extremely expensive infrastructure.

Innovation suppression

Rivals may be unable to develop complementary technologies.

Reduced interoperability

Consumers may become locked into one ecosystem.

Increased switching costs

Users may remain with an incumbent even where alternatives exist.

Data concentration

Infrastructure control may provide a persistent informational advantage.

Ecosystem expansion

A firm may use infrastructure dominance to enter neighbouring markets.

30. Difference Between Infrastructure Dominance and Ordinary Product Dominance

The distinction is important.

An ordinary dominant firm may control a successful product.

A strategic infrastructure operator may control the environment in which competing products must operate.

Thus:

Product dominance = control over a product market.

Infrastructure dominance = potential control over the conditions under which multiple markets function.

The latter can therefore have broader competitive consequences.

31. Key Legal Test

A useful analytical framework is:

Infrastructure → Market Position → Dependency → Conduct → Competitive Effect → Justification → Remedy

Step 1

Identify the infrastructure.

Step 2

Determine the relevant market.

Step 3

Assess market power or dominance.

Step 4

Identify competitor dependency.

Step 5

Examine the conduct.

Step 6

Assess foreclosure and consumer effects.

Step 7

Examine objective justification.

Step 8

Determine an appropriate remedy.

32. Conclusion

Strategic digital infrastructure is becoming a central competition-law issue because digital competition increasingly occurs inside technological ecosystems rather than merely between individual products.

Control over operating systems, cloud infrastructure, APIs, payment systems, search engines, app stores, data systems, telecommunications networks and technical standards can give firms substantial influence over downstream competition.

The major cases—Bronner, IMS Health, Microsoft, Google Shopping, Google Android, Epic Games v Apple and Qualcomm, among others—illustrate different dimensions of this problem.

The central competition-law question is ultimately:

Does control over a strategically important digital infrastructure merely reflect legitimate technological success, or is that control being used to restrict the ability of actual or potential competitors to compete?

That distinction is critical because competition law generally does not condemn infrastructure ownership itself. Its concern arises where infrastructure control is accompanied by exclusionary, discriminatory, exploitative, tying, interoperability-restricting or strategically leveraging conduct that materially weakens competitive conditions.