The Dark Side of Self-Preferencing: Unfair Competition and Dominance

In today's digital age, companies are constantly seeking ways to stay ahead of the competition and gain a competitive edge in the market. One strategy that has become increasingly popular is self-preferencing, where a dominant player gives preferential treatment to its own products or services over those of competitors. While this may seem like a harmless practice, it can have far-reaching consequences that undermine fair competition and lead to dominance.

What is Self-Preferencing?

Self-preferencing occurs when a company uses its market power to favor its own products or services over those of rivals. This can take many forms, including:

• Favouring in-app purchases from the company's own store
• Providing better search results for the company's own products
• Offering exclusive deals and discounts to the company's own customers

The Impact on Competition

Self-preferencing can have a devastating impact on competition. By giving its own products preferential treatment, a dominant player can stifle innovation and limit consumer choice. This can lead to a range of negative consequences, including:

• Reduced competition: When consumers are directed towards a company's own products, they are less likely to explore alternative options.
• Higher prices: Self-preferencing can lead to higher prices for consumers as companies use their market power to charge more for their preferred products.
• Reduced innovation: With fewer customers exploring alternative options, there is less incentive for companies to innovate and improve their products.

The Rise of Unfair Dominance

Self-preferencing can also contribute to the rise of unfair dominance. When a company uses its market power to favor its own products, it can create an uneven playing field that makes it difficult for smaller competitors to succeed. This can lead to a range of negative consequences, including:

• Reduced consumer choice: As dominant players stifle innovation and limit competition, consumers are left with fewer options.
• Stifled innovation: With few competitors remaining in the market, there is less incentive for companies to innovate and improve their products.

Conclusion

Self-preferencing is a practice that can have far-reaching consequences for fair competition and consumer choice. By giving preferential treatment to its own products, a dominant player can stifle innovation, limit consumer choice, and contribute to unfair dominance. As consumers and policymakers, it's essential to recognize the dangers of self-preferencing and take steps to promote fair competition in all markets. Only through fair competition can we ensure that companies continue to innovate and improve their products, benefiting both consumers and the economy as a whole.