How to Maintain a Competitive Internet

The Internet has become an essential vehicle for communications, electronic commerce, and entrepreneurship. A McKinsey report found that the Internet provided 21 percent of the GDP growth over the past five years in 13 different countries. As enumerated by the Boston Consulting Group, the Internet currently generates 4.1 percent of Gross Domestic Product; in some countries, the percentage is double that.  By 2016, analysts estimate that the digital economy will comprise $4.2 trillion among G-20 nations, up from $2.3 trillion in 2010. 

The Web offers several features that drive its usefulness for consumers and businesses:  interconnectivity, openness, scalability, and efficiency. Interconnectivity is important because the Internet links users across the globe.  Americans can order goods from shops in Europe or Asia, and vice versa. The openness and growth possibilities allow entrepreneurs to scale up quickly. And since it offers these benefits in a ubiquitous manner, it is a remarkably efficient vehicle for communications and service delivery.

To protect these virtues, a number of academic experts and business leaders have concluded that the government should be cautious about applying competition law to the Internet market.  They argue we should have a “hands-off” competition policy given the rapidly changing nature of digital technology, the complexity of networked industries, the slow pace of government decision-making, the lack of substantive knowledge on the part of regulators, and the globalization of service delivery. 

In this paper, we argue that robust competition policy, including the application of law and enforcement, are vital to ensure the continuing benefits of Internet communications and commerce. Competition is good for consumers, and we need to protect against threats to open competition in Internet markets in order to maintain its beneficial features.  It is important to have antitrust enforcement and fair, transparent, and non-discriminatory market behavior to gain the full benefits of the Internet. We need public policies that promote consumer choice and encourage innovation without stifling competition.

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