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  • Writer's pictureRitik Agrawal

Significance of the Relevant Market: With Special Reference to the Relevant Product Market for Social Media

Kiran Kirti Rath,

Xavier Law School, XIM University, Bhubaneswar

"Understanding the Significance of Relevant Product Market for Social Media in Business Strategy"

INTRODUCTION

Competition laws are founded upon a particular understanding of market dynamics and desired market outcomes, heavily influenced by economic principles. This understanding is instrumental in defining the relevant market, a fundamental analytical tool in competition law. However, the delineation of this market's boundaries often lacks clarity: Should economics dictate the delineation of the market, or should the law determine the approach, potentially drawing from economic insights?

In the realm of competition law, the relevant market serves as a cornerstone within rules governing anti-competitive agreements, abuse of dominance, unilateral conduct, and merger control. Understanding how this concept is formed is crucial. Market definition serves as a crucial tool in delineating the boundaries within which competition occurs among businesses. This tool is instrumental for regulatory bodies like the Competition Commission of India to establish a framework for applying competition policy effectively. The primary objective of competition policy is to assess the competitive landscape confronting the businesses under scrutiny.

The essence of market definition lies in determining the competitive conditions faced by the businesses being assessed. This involves identifying the product and geographic scope within which competitors possess the ability to influence the behaviour of the businesses under review. The aim is to prevent these competitors from exerting undue influence and to ensure that the businesses operate under efficient competitive pressures.

While businesses typically conceive of the market as the domain where they sell their products or the broader industry or sector in which they operate, the concept of the relevant market in competition law differs somewhat. It focuses specifically on identifying the market boundaries pertinent to assessing competition, distinct from the broader business perspective.

"Understanding the Significance of Relevant Product Market for Social Media in Business Strategy"

LEGAL PROVISIONS APPLICABLE AS PER THE COMPETITION ACT, 2002

Section 2(r) of the Competition Act, 2002 provides for “relevant market” defining it as “the market which may be determined by the commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets;

Section 2(s) further elaborates “relevant geographic market” as a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas;

In addition to Section 2(s) defining the “relevant geographic market”, Section 2(t) defines “relevant product market” as a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use;

Section 19 of the Competition Act, 2002 provides with a list of factors to be considered while assessing the relevant product market and the relevant geographic market.

Section 19 (6) states that “The Commission shall, while determining the “relevant geographic market”, have due regard to all or any of the following factors, namely:—

(a) regulatory trade barriers;

(b) local specification requirements;

(c) national procurement policies;

(d) adequate distribution facilities;

(e) transport costs;

(f) language;

(g) consumer preferences;

(h) need for secure or regular supplies or rapid after-sales services.”

Section 19 (7) states that, “The Commission shall, while determining the “relevant product market”, have due regard to all or any of the following factors, namely:—

(a) physical characteristics or end-use of goods;

(b) price of goods or service

(c) consumer preferences;

(d) exclusion of in-house production;

(e) existence of specialised producers;

(f) classification of industrial products.”

"Understanding the Significance of Relevant Product Market for Social Media in Business Strategy"

LANDMARK JUDGEMENTS WHEREIN DETERMINATION OF THE DEFINITION OF RELEVANT MARKET HAS BEEN CRITICAL

  1. Bharti Airtel Limited vs. Reliance Industries Limited and Ors. (2016): In this case, the CCI assessed the relevant market to determine whether Reliance Jio's entry into the telecom sector constituted predatory pricing. The definition of the relevant market was crucial in analysing the competitive effects of Reliance Jio's pricing strategy on incumbent operators like Bharti Airtel.

  2. Excel Crop Care Limited vs. Competition Commission of India (2017): This case revolved around allegations of abuse of dominance by Excel Crop Care Limited in the market for the herbicide 'glyphosate'. The CCI's determination of the relevant product market played a crucial role in assessing Excel Crop Care's market power and its alleged anti-competitive conduct.

  3. Fast Track Call Cab Pvt. Ltd. vs. ANI Technologies Pvt. Ltd. & Ors. (2018): In this matter, CCI examined whether the relevant market should be defined as the broader market for radio taxis or the narrower market for app-based taxi services. The definition of the relevant market was pivotal in determining whether ANI Technologies' (Ola) alleged anti-competitive practices constituted an abuse of dominance.

  4. Samir Agrawal vs. ANI Technologies Pvt. Ltd. & Ors. (2020): This case involved allegations of anti-competitive conduct by ANI Technologies (Ola) in the market for app-based taxi services. The definition of the relevant market was central to assessing Ola's market dominance and its alleged anti-competitive practices.

  5. Delhi Vyapar Mahasangh vs. Flipkart Internet Pvt. Ltd. & Ors. (2021): In this matter, the CCI investigated allegations of abuse of dominance by Flipkart in the market for online marketplace platforms. The determination of the relevant market was critical in assessing Flipkart's market power and its alleged anti-competitive practices, including exclusive tie-ups and preferential treatment of certain sellers.

DEFINING THE RELEVANT PRODUCT MARKET IN THE MARKET OF SOCIAL MEDIA PLATFORMS

The social media landscape is a dynamic and multifaceted ecosystem that has transformed how we connect, communicate, and consume content. In this article, we delve into the concept of the relevant product market within the context of social media, focusing on platforms like Facebook, Google, WhatsApp, Instagram, LinkedIn, and others. It is aimed to provide a comprehensive understanding of how to define the relevant product market in this ever-evolving digital sphere.

THE RICH TAPESTRY OF SOCIAL MEDIA

 Social media platforms offer a myriad of goods and services, each with distinct functionalities. Before we embark on defining the relevant product market, the following of these platforms are amongst the top social media platforms worldwide[i]:

1.     Facebook: With a user base of over 2 billion daily users globally, Facebook is a versatile platform. It caters to various needs, from social networking and community building to e-commerce through Facebook Marketplace. However, it has faced issues related to misinformation and misuse.

2.     Instagram: Originally a photo-sharing app, Instagram has evolved into a platform where users focus on presenting curated aspects of their lives. This includes lifestyle content, influencer marketing, and aspirational posts. While it can be fun and inspirational, concerns have been raised about its impact on users' mental health, especially among young audiences.

3.     Pinterest: Pinterest is an ideal platform for those seeking inspiration. Users can discover and organize visual content related to various creative topics. Additionally, Pinterest has rolled out features allowing users to shop directly from their feeds, making it a hub for creative and shopping enthusiasts.

4.     TikTok: TikTok has evolved from being solely a platform for dance enthusiasts. Users now scroll through short-form videos for entertainment, covering a wide range of topics from news and humour to beauty tutorials and conspiracy theories. While popular for entertainment, content moderation has been a concern.

5.     Snapchat: Popular among young users, Snapchat is known for real-time photo and chat exchanges with ephemeral content. While the platform offers a unique experience, concerns persist about content safety and privacy, particularly among younger users.

6.     YouTube: As the original video-based social network, YouTube has launched countless influencers' careers and provided a space for various content. Recent efforts to combat misinformation have been seen, although the platform recently rolled back a policy regarding election denialism. YouTube has also entered the short video arena with "YouTube Shorts."

7.     NeXT door: Designed for local community engagement, NeXT door is a platform where users discuss neighborhood issues, advertise services, and seek local recommendations, creating a sense of community in their immediate geographic area.

8.     Discord: Popular among teens and gamers, Discord offers text, voice, and video chat services. The platform now hosts a variety of community forums, covering everything from union organizers and hiking groups to meme enthusiasts. However, it has encountered issues related to offensive content.

9.     Twitch: Focused on video game streaming, Twitch features live feeds of individuals playing video games, akin to YouTube for gaming. Numerous streamers compete for viewer loyalty, and the platform has also diversified into music, art, sports, and cooking streams.

10.  LinkedIn: Originally a platform for professional networking, LinkedIn has transformed into a place for sharing career updates, industry insights, and professional discussions. Users now use it for thought leadership and networking beyond job searches.

11.  Truth Social: This platform serves as an alternative for right-wing political commentary, featuring content from Donald Trump, far-right political figures, and some spammy advertisers. It was launched as a response to Trump's suspension from mainstream platforms.

12.  Reddit: Known as the "front page of the internet," Reddit offers discussions on a wide range of niche subjects. Its self-managed communities rely on volunteer moderators, but the platform has made some controversial business decisions, alienating some users.

13.  Twitter (or X): For years, Twitter was a central hub for real-time news. However, significant changes have occurred since Elon Musk acquired the platform, including controversial decisions and changes, such as the removal of the iconic bird logo.

14.  Threads: Launched by Meta, Threads resembles Twitter and has a feed of largely text-based posts, along with photos and videos for real-time conversations. It attracted 100 million signups within a week of its launch, with a tamer vibe compared to Twitter.

15.  BlueSky Social: This Twitter alternative, backed by Jack Dorsey, focuses on microblogging and runs on a decentralized network. While it has an invite-only model, it has gained early traction from public figures looking for an alternative to Twitter.

The social media landscape continues to evolve, offering a wide range of features and experiences to users, each with its own set of advantages and challenges. Users are encouraged to choose platforms that align with their specific needs and values.

DEFINING THE RELEVANT PRODUCT MARKET

To ascertain the relevant product market within the social media context, it is imperative to consider the interchangeability and competition among these platforms. Let's dissect the market definitions:

  1. Social Networking Market: Facebook, with its comprehensive social networking functionalities, competes within the social networking market. It vies for users' attention against platforms like Twitter, Snapchat, and emerging entrants in the space. This market is characterized by personal and professional connections, status updates, and content sharing.

  2. Content Sharing Market: Instagram, with its focus on visual content sharing, carves its niche in the media-sharing market. It competes with platforms like Snapchat and Pinterest, which emphasize imagery and media engagement. Users are drawn to Instagram's visually appealing content.

  3. Messaging and Communication Market: WhatsApp stands out in the messaging and communication market. It faces competition from platforms such as Facebook Messenger, Telegram, and Signal, all of which offer real-time text, voice, and video communication. WhatsApp's strengths lie in its simplicity and broad user base.

  4. Professional Networking Market: LinkedIn, by virtue of its exclusive focus on professional networking, defines a distinct market segment. It competes against Xing, a similar professional networking platform, and industry-specific platforms tailored to specialized networking needs.

  5. Integrated Market: Google's suite of services, encompassing Google+ (formerly) and YouTube, amalgamates elements from various social media markets. It offers a blend of social networking, content sharing, and video streaming, making its definition more intricate. Its competition is diverse, spanning multiple categories.

  6. E-commerce and Marketplace: Some platforms, like Facebook and Instagram, have ventured into the e-commerce and marketplace segment. They allow businesses to sell products directly to users on the platform, providing a unique shopping experience. Users can discover, shop, and purchase products without leaving the platform, adding a new dimension to their relevance in the broader market.

CONCLUDING - IS THERE ANY ONE DEFINITE RELEVANT PRODUCT MARKET FOR SOCIAL MEDIA PLATFORMS?

The social media ecosystem is characterized by its diversity and dynamism. Platforms cater to various user needs and preferences, with distinct core functionalities. To effectively define the relevant product market, it is imperative to consider the unique attributes and competitive dynamics of each platform.[ii] In analysing the relevant product market for social media, it's important to consider the key players as discussed, such as Facebook, WhatsApp, LinkedIn, and other platforms. Identifying the relevant product market is crucial in the context of antitrust and competition law, as it helps define the scope within which these platforms compete.

One of the relevant product market for social media can be broadly defined as online platforms that enable users to create, share, and interact with content and other users in a virtual social environment.[iii]. It can however be interpretated in the mannerism necessary in this technologically advanced world.

In the ever-changing landscape of social media, it is essential for regulators and businesses to adapt their understanding of relevant markets to accurately assess competition and address potential anticompetitive practices. Defining the relevant product market is a pivotal step in ensuring that the complexities of the social media landscape are effectively and fairly regulated within the framework of competition law. The introduction of e-commerce and marketplace features further emphasizes the dynamic nature of this evolving market, where the boundaries are continuously challenged and redefined.

THE WAY FORWARD

There have been instances wherein the Competition Commission of India has made strict interpretation of the statute present in the Competition Act, 2002 due to which liberties have been taken by businesses. For instance, even if predatory pricing was not established by the CCI in the Bharati Airtel v. Jio case, the predatory intention and the behaviour could be well established by studying its patterns in the market.

The definition of relevant market, and its relevance in the social media market has immense importance as of now, considering that certain social media companies may abuse their dominance into entering markets that are not theirs and cause restriction of entry of new players.

REFERENCES

[i] Duffy, C., Mankarious, S.-G. and Baker, T. (2023). The social media landscape is changing fast. Here’s everything you need to know | CNN Business. [online] CNN. Available at: https://edition.cnn.com/2023/07/30/media/threads-likes-faves-and-much-more/index.html [Accessed 1 Nov. 2023].

[ii] Eben, M. and Robertson, V.H.S.E. (2021). The Relevant Market Concept in Competition Law and Its Application to Digital Markets: A Comparative Analysis of the EU, US, and Brazil. Graz Law Working Paper No 01-2021, Journal of European Competition Law and Economics 2021. [online] DOI: https://doi.org/10.2139/ssrn.3762447.

[iii] Agrawal, U. (2022). Delineation of Relevant Markets by the CCI: Change in practice? [online] Bar and Bench - Indian Legal news. Available at: https://www.barandbench.com/columns/delineation-of-relevant-market-by-the-cci-change-in-practice [Accessed 2 Nov. 2023].

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