Working Paper: CEPR ID: DP18177
Authors: Francesco Decarolis; Muxin Li
Abstract: This paper offers an analysis of the impacts of public regulations of internet search. Through a theoretical model, we consider three regulations adopted by the EU. The first is the Android choice screen implemented in the European Economic Area in 2020. The other two are the recently adopted Digital Markets Act (DMA) and Digital Services Act (DSA). We find that interventions involving user choice, like the Android choice screen, can be strengthened by other interventions focused on search engine quality and data portability. Since the regulations in the DMA target these multiple dimensions simultaneously, we expect it to deliver the strongest and most effective impacts on the online search market. We also argue that the impacts of the regulations may vary over different time horizons: when first implemented, the DSA may simply direct users to search engines with better privacy protection, but over time it has the potential to change user tastes for privacy and, hence, drive search engines to invest more in privacy protection.
Keywords: Antitrust; Online Advertising; Platform Competition
JEL Codes: L81; L13; M37
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| The Android choice screen (C52) | Google's market share (L17) |
| The Android choice screen (C52) | Number of users considering alternative search engines (L17) |
| Number of users considering alternative search engines (L17) | Google's market share (L17) |
| DMA (C69) | Competition among search engines (L17) |
| DMA (C69) | User consideration of alternatives (D91) |
| DMA (C69) | Search engine quality (L15) |
| DMA (C69) | Data portability (L15) |
| User consideration of alternatives (D91) | Competition among search engines (L17) |
| DSA (Y10) | User preferences toward privacy (D11) |
| User preferences toward privacy (D11) | Search engine investment in privacy features (K24) |