Competition Law and Autonomous Ecosystem Market Power

1. Introduction

Autonomous digital ecosystems are becoming increasingly important in modern competition law. An autonomous ecosystem can be understood as a group of interconnected digital products, platforms, applications, devices, data systems, algorithms, payment mechanisms, cloud services, artificial-intelligence systems, and other services that operate together with limited human intervention.

Examples can include a mobile operating system connected with an app store, payment service, cloud infrastructure, digital assistant, advertising system, smart devices, and AI services. Each component may constitute a separate product or service, but their integration can create a much larger competitive ecosystem.

From a competition-law perspective, the existence of a large ecosystem is not automatically unlawful. Problems may arise where an undertaking obtains substantial market power and uses control over one important part of the ecosystem to restrict competition in another part.

Competition authorities therefore increasingly examine market power not only at the level of an individual product but also through network effects, data advantages, interoperability, switching costs, default settings, vertical integration, access to application programming interfaces (APIs), and control over important gateways.

2. Meaning of Autonomous Ecosystem Market Power

Market power generally means the ability of an undertaking to behave to an appreciable extent independently of competitors, customers, or consumers.

In a traditional market, market power may arise from a high market share, control over production facilities, intellectual property rights, or barriers to entry.

In an autonomous digital ecosystem, market power can arise differently. A company may simultaneously control:

• an operating system;
• an app distribution mechanism;
• user accounts;
• payment infrastructure;
• user data;
• cloud infrastructure;
• advertising services;
• AI models;
• connected devices;
• recommendation algorithms; and
• technical interfaces required by third parties.

The combination of these elements can create ecosystem-level advantages that are difficult for individual competitors to reproduce.

For example, a new competitor may be capable of producing a better individual application but may still find it difficult to compete because consumers would have to leave several interconnected services to obtain the full benefit of the rival product.

3. Network Effects and Ecosystem Power

Network effects are particularly important when determining market power in autonomous ecosystems.

A direct network effect exists when a service becomes more valuable as more people use it. An indirect network effect occurs where growth on one side of a platform attracts participants on another side.

For example:

More users → more developers → more applications → greater consumer demand → still more users.

This feedback mechanism can create a self-reinforcing competitive advantage.

Network effects are not themselves unlawful. They can increase efficiency and improve consumer experience. Competition-law concerns arise when an undertaking combines network effects with exclusionary conduct that makes effective competition substantially more difficult.

4. Data as a Source of Ecosystem Market Power

Autonomous systems can generate enormous amounts of information about consumer behaviour.

Data may help companies improve:

• recommendation algorithms;
• advertising;
• fraud detection;
• AI systems;
• personalization;
• search results;
• pricing systems;
• product development; and
• predictive analytics.

Where a dominant ecosystem possesses unique or difficult-to-replicate datasets, competitors may face significant barriers to entry.

However, possession of large quantities of data does not automatically establish dominance. Authorities must examine whether the relevant information is genuinely important, whether comparable information is available elsewhere, whether it can be reproduced, and whether competitors actually require access to compete effectively.

5. Ecosystem Lock-In

Consumer lock-in can strengthen ecosystem market power.

Suppose a consumer has purchased connected devices, applications, cloud storage, subscriptions, digital media, and other services from the same ecosystem. Moving to another ecosystem may involve losing compatibility, transferring information, learning new interfaces, purchasing replacement devices, or abandoning previous purchases.

These switching costs may reduce competitive pressure.

Competition authorities therefore consider whether interoperability restrictions, contractual provisions, technical incompatibility, or data-portability limitations artificially increase switching costs.

6. Self-Preferencing

Self-preferencing occurs where a vertically integrated platform gives preferential treatment to its own products or services.

For example, an ecosystem controller might theoretically:

• rank its own service more prominently;
• make its own application the default;
• provide its service with superior technical access;
• restrict competing applications from particular functions;
• impose different conditions on third-party developers; or
• use commercially sensitive information obtained from businesses operating through its platform.

Self-preferencing is not automatically illegal in every jurisdiction or circumstance. Competition authorities generally need to determine whether the undertaking possesses sufficient market power and whether the conduct satisfies the applicable legal requirements for abuse or exclusionary conduct.

7. Tying and Bundling

Autonomous ecosystems frequently combine several products.

Tying generally occurs where access to one product is conditioned on obtaining another product. Bundling involves selling products together.

Integration can produce genuine efficiencies. Consumers may benefit from lower transaction costs, greater security, compatibility, and a more convenient user experience.

Nevertheless, competition concerns may arise where a powerful ecosystem uses dominance in Product A to protect or expand its position in Product B.

Important questions include:

1. Are the products separate?
2. Does the undertaking possess market power?
3. Are consumers effectively forced to obtain both products?
4. Are competitors foreclosed?
5. Is there an objective justification?
6. Does integration create efficiencies benefiting consumers?

Important Case Laws

8. United States v. Microsoft Corp.

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

This is one of the most important cases for understanding modern ecosystem market power.

Microsoft possessed substantial power in operating systems for Intel-compatible personal computers. Internet browsers and other middleware technologies had the potential to reduce dependence on Windows by allowing developers to create applications that could operate across different systems.

Microsoft integrated Internet Explorer into Windows and adopted several arrangements affecting computer manufacturers, internet service providers, developers, and competing technologies.

The Court of Appeals upheld important findings that Microsoft had unlawfully maintained its operating-system monopoly through exclusionary conduct, although other parts of the lower court's judgment were reversed or remanded.

Importance

The case demonstrates that competition law can examine an ecosystem as interconnected layers rather than treating every digital product in isolation.

It also demonstrates the significance of:

• network effects;
• default positions;
• interoperability;
• developer ecosystems;
• technological integration; and
• barriers to entry.

The principles remain highly relevant to autonomous ecosystems involving operating systems, AI services, digital assistants, and application platforms.

9. Google Android — European Commission

European Commission, Case AT.40099 – Google Android (2018)

The Android proceedings concerned Google's arrangements involving Android mobile devices and related Google applications.

The European Commission examined practices including requirements concerning Google Search and the Chrome browser, restrictions connected with alternative versions of Android, and arrangements involving device manufacturers and mobile network operators.

The Commission concluded that certain practices constituted an abuse of a dominant position under Article 102 TFEU.

Importance

The Android matter illustrates how control over one layer of an ecosystem can influence competition in connected services.

It is particularly relevant to autonomous ecosystem analysis because operating systems can function as gateways connecting:

• applications;
• search services;
• browsers;
• developers;
• hardware manufacturers; and
• consumers.

It demonstrates why competition authorities examine default settings, pre-installation arrangements and technical ecosystem restrictions when assessing market power.

10. Google Shopping

Google Search (Shopping), European Commission Case AT.39740 (2017)

The European Commission investigated Google's treatment of comparison-shopping services in general search results.

The Commission concluded that Google had given its own comparison-shopping service more favourable positioning and display while rival comparison-shopping services were subject to Google's generic search algorithms.

Importance

The case is important for the concept of ecosystem self-preferencing.

A digital ecosystem controlling an important gateway may simultaneously participate in downstream markets that depend upon that gateway.

This creates a central competition-law question:

Can the ecosystem controller use its gateway position to provide advantages to its own downstream service?

The case demonstrates that competition authorities can examine how ranking architecture and platform design affect competitive opportunities.

11. Apple App Store — Music Streaming

European Commission, Case AT.40437 – Apple App Store Practices (Music Streaming)

The proceedings concerned conditions applicable to music-streaming application developers distributing applications through Apple's App Store.

The Commission examined restrictions affecting developers' ability to inform users about alternative subscription options.

In 2024, the Commission found that Apple's anti-steering provisions constituted an abuse of a dominant position under EU competition law and imposed a substantial fine.

Importance

The case illustrates the competitive significance of controlling an ecosystem gateway.

Where an app store provides an important route between developers and users, rules governing communication, payments and customer relationships can affect downstream competition.

The case is therefore relevant to autonomous ecosystems where a central platform establishes the rules under which third-party businesses interact with consumers.

12. Eastman Kodak Co. v. Image Technical Services, Inc.

504 U.S. 451 (1992)

Although Kodak predates modern autonomous digital platforms, it provides an important foundation for ecosystem and aftermarket analysis.

Independent service organizations repaired Kodak equipment and required replacement parts. Kodak adopted policies restricting the availability of certain parts to independent service providers.

Kodak argued that competition in the primary equipment market constrained its behaviour in the aftermarket.

The U.S. Supreme Court rejected the proposition that competition in the primary market necessarily prevented market power in aftermarket parts and services.

Importance

The case demonstrates that market power can potentially exist within a secondary or dependent market even where the broader primary market is competitive.

This principle is highly relevant to autonomous ecosystems involving:

• software subscriptions;
• repair services;
• replacement components;
• cloud storage;
• app distribution;
• digital accessories; and
• post-purchase services.

Consumers may become locked into an ecosystem after making their original purchase.

13. United States v. Terminal Railroad Association

224 U.S. 383 (1912)

Several railway companies obtained control over important terminal facilities in St. Louis. Because geographical conditions made those facilities particularly important for competing railway companies, control over them could affect market access.

The Supreme Court required arrangements that provided competitors access on appropriate terms.

Importance

Although the case concerns railway infrastructure rather than digital markets, its underlying reasoning is useful when analysing digital bottlenecks.

Modern equivalents can potentially include control over:

• operating systems;
• APIs;
• authentication systems;
• payment infrastructure;
• application stores;
• datasets; or
• computing infrastructure.

Competition authorities nevertheless have to apply modern legal standards rather than automatically treating every important digital facility as an essential facility.

14. Commercial Solvents v. Commission

Joined Cases 6/73 and 7/73

Commercial Solvents controlled an important raw material used for manufacturing a pharmaceutical product. After deciding to participate itself in the downstream market, it stopped supplying an existing downstream customer.

The European Court accepted that a dominant undertaking's refusal to supply an indispensable input could, in the circumstances, constitute an abuse where the conduct risked eliminating downstream competition.

Importance

The case is relevant to vertically integrated autonomous ecosystems.

A company might simultaneously control important infrastructure and compete with businesses requiring access to that infrastructure.

Competition law may therefore examine whether restrictions on access are capable of excluding downstream competitors.

15. Oscar Bronner GmbH v. Mediaprint

Case C-7/97

Bronner concerned access to a nationwide newspaper home-delivery system.

The European Court of Justice adopted a demanding standard for requiring a dominant company to provide competitors access to its infrastructure.

The judgment emphasized factors including whether access was indispensable and whether realistic alternatives existed.

Importance

Bronner is especially important because it prevents competition law from automatically requiring dominant companies to share valuable assets with competitors.

Applied to autonomous ecosystems, merely showing that access to an API, dataset, platform, AI model, or technical infrastructure would make competition easier is generally insufficient under the Bronner-type indispensability framework.

The distinction between useful and indispensable access is therefore crucial.

16. IMS Health GmbH & Co. OHG v. NDC Health

Case C-418/01

IMS Health involved intellectual-property rights relating to a structure used for presenting pharmaceutical sales information.

The European Court examined the circumstances under which refusal by a dominant undertaking to license intellectual property could constitute an abuse.

The judgment reinforced the principle that compulsory access to intellectual property is exceptional.

Importance

The case has considerable relevance to modern autonomous ecosystems because ecosystem operators may control:

• software interfaces;
• databases;
• proprietary technical standards;
• algorithms;
• intellectual property; and
• other digital resources.

Competition law must therefore balance protection of innovation and intellectual property against circumstances where control over an indispensable resource may eliminate effective competition.

17. Interoperability and Autonomous Ecosystems

Interoperability means the ability of different products or services to communicate and function together.

It can be extremely important in autonomous ecosystems.

For example, a third-party smart device might require access to an operating system's technical interfaces. An AI application may require API access. A payment service might need compatibility with mobile hardware.

Restricting interoperability can potentially strengthen ecosystem lock-in.

However, mandatory interoperability can also create legitimate concerns involving:

• cybersecurity;
• privacy;
• intellectual property;
• system integrity;
• investment incentives; and
• product quality.

Competition authorities therefore need to distinguish genuine technical restrictions from strategically exclusionary restrictions.

18. Autonomous AI Agents and Market Power

A developing issue concerns autonomous AI agents capable of selecting products, comparing services, negotiating transactions, making purchases, or choosing applications for users.

If one ecosystem controls the AI agent through which consumers interact with digital markets, traditional concepts of consumer choice could change significantly.

The agent might determine:

• which products consumers see;
• which seller receives an order;
• which payment system is used;
• which applications are selected;
• which information sources are consulted; and
• which competing services receive access to consumers.

Control over autonomous agents could therefore become another important gateway.

Competition authorities may eventually need to examine whether agent recommendations are neutral or systematically favour services belonging to the ecosystem controller.

19. Algorithmic Ecosystem Expansion

Autonomous ecosystems can expand through algorithms rather than direct managerial decisions.

Machine-learning systems may automatically:

• optimize rankings;
• allocate advertising;
• recommend ecosystem services;
• adjust commercial terms;
• determine access conditions; and
• personalize offers.

Competition law generally focuses on the conduct attributable to undertakings rather than treating an algorithm as an independent legal actor.

Consequently, companies cannot necessarily avoid competition-law responsibility simply because a particular market outcome was produced through an automated system.

Governance, design, monitoring, incentives and deployment of autonomous systems therefore become important considerations.

20. Barriers to Entry

An autonomous ecosystem may produce several barriers simultaneously.

Data barriers

New entrants may lack comparable information for training algorithms or improving services.

Network barriers

Users may prefer platforms where other users and developers are already present.

Technical barriers

Competitors may require interoperability with proprietary interfaces.

Financial barriers

Building competing cloud, computing or AI infrastructure may require substantial investment.

Switching barriers

Consumers may have accumulated applications, purchases, subscriptions, data and connected devices.

Reputation barriers

Consumers may trust established ecosystems with payments, personal information and automated decisions.

These factors should generally be considered together rather than independently.

21. Market Definition Problems

Traditional competition analysis normally begins by defining a relevant product and geographic market.

Autonomous ecosystems complicate this process because several services may be supplied together.

Authorities may need to determine whether competition occurs between:

1. individual products;
2. platform services;
3. ecosystem clusters;
4. multi-sided platforms; or
5. complete ecosystems.

For example, competition between mobile ecosystems may occur simultaneously at the level of operating systems, applications, browsers, payments, devices and cloud services.

A narrow market definition can identify specific bottlenecks, while an ecosystem-level analysis can reveal competitive constraints that may be overlooked by examining products separately.

22. Abuse of Dominance

Under systems such as Article 102 TFEU, dominance itself is not prohibited.

The principal concern is abuse of a dominant position.

Potential forms of ecosystem abuse may include:

• exclusionary tying;
• discriminatory access conditions;
• unjustified interoperability restrictions;
• exclusionary exclusive dealing;
• certain forms of self-preferencing;
• predatory strategies;
• refusal to supply indispensable inputs;
• restrictions increasing artificial switching costs; and
• leveraging market power into neighbouring markets.

Each practice must be assessed according to the legal test applicable to the jurisdiction and conduct concerned.

23. Innovation Versus Competition

One of the most difficult questions is distinguishing legitimate ecosystem innovation from exclusionary conduct.

Integrated ecosystems can generate substantial benefits:

• seamless user experience;
• improved security;
• lower transaction costs;
• faster innovation;
• integrated hardware and software;
• better personalization; and
• simplified consumer choices.

Competition law should therefore not treat integration itself as evidence of wrongdoing.

The central issue is whether the undertaking is competing through superior products and innovation or using existing market power to prevent effective competitive constraints from developing.

24. Remedies

Where unlawful ecosystem conduct is established, authorities may consider different remedies.

Behavioural remedies may include:

• removing restrictive contractual provisions;
• allowing greater interoperability;
• modifying default arrangements;
• providing non-discriminatory access;
• permitting alternative distribution methods; or
• preventing exclusionary contractual arrangements.

Structural remedies are more significant interventions and may involve separation or divestiture of business activities. Such remedies normally require particularly careful legal and economic analysis.

Modern competition regulation may also impose obligations concerning data portability, interoperability, transparency, and access to certain platform functions.

25. Key Principles Derived from the Case Laws

The cases discussed above establish several principles useful for autonomous ecosystem analysis.

First, market power may originate from interconnected products rather than a single isolated service.

Second, network effects can create powerful barriers to entry but are not inherently anticompetitive.

Third, control over an important gateway can affect competition in neighbouring markets.

Fourth, technological integration may generate efficiencies but can also become exclusionary depending on how it is implemented.

Fifth, consumer lock-in and switching costs can strengthen market power.

Sixth, dominant firms are not generally required to share every valuable asset with competitors. Compulsory-access doctrines usually impose demanding requirements.

Seventh, control over interfaces, data, operating systems, application distribution and technical standards can become strategically important for competition.

Eighth, market power alone is generally not equivalent to unlawful conduct. Competition law ordinarily requires the additional elements specified by the relevant prohibition, such as abusive or exclusionary conduct.

26. Conclusion

Autonomous ecosystem market power represents an important development in competition law because economic power increasingly arises from interconnected digital environments rather than isolated products.

An undertaking controlling an operating system, app store, data infrastructure, payment service, cloud system, AI technology, connected devices and technical interfaces may obtain competitive advantages that reinforce one another. Network effects, data accumulation, defaults, interoperability restrictions and consumer switching costs can further strengthen that position.

Cases such as United States v. Microsoft, Google Android, Google Shopping, Apple App Store (Music Streaming), Eastman Kodak v. Image Technical Services, Terminal Railroad, Commercial Solvents, Oscar Bronner, and IMS Health provide important legal principles for analysing these problems.

The central competition-law question is not whether an autonomous ecosystem has become large or successful. The more important inquiry is whether substantial market power is being maintained or extended through conduct prohibited by the applicable competition rules.

As AI agents and increasingly autonomous digital services become capable of making commercial decisions for users, competition analysis is likely to focus increasingly on control over gateways, interoperability, data, defaults, technical standards and algorithmic decision-making. Competition law will therefore need to preserve effective competitive opportunities while avoiding intervention that unnecessarily discourages technological integration and genuine innovation.