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28.12.2021

No. 481: Competition and regulation in the platform and data economy

No: 481: Competition and regulation in the platform and data economy

Authors: Nico Steffen, Lukas Wiewiorra, Peter Kroon, with contribution of Philipp Thoste
(full version only in German)

Summary

Digital technologies and data-driven business models have led to the emergence of a new generation of global market leaders that have built and continue to consolidate their market position by orchestrating digital platforms and ecosystems. New opportunities for value creation to the benefit of users have thus also led to new competition and societal concerns.

This study relies on a structured literature review to systematically analyze the literature on the platform and data economy and to summarize key insights for specific focus topics. In doing so, we first describe the evolution of the understanding of platforms, from the basics to recent advancements. The literature identifies a number of distinctive features of digital platforms, business models and ecosystems that, under certain circumstances, can exacerbate concentration tendencies of traditional platforms. These include in particular business models based on complex algorithms and data use, through which new types of economies of scale and scope can emerge and become entrenched.

These complexities will also pose new challenges to established regulatory interventions and processes. Even the definition of relevant markets and the determination of market power and potential abuses of such can fail in dynamic, structurally interconnected digital markets and value chains. In addition to current approaches to market and dominance definitions, a number of potentially anti-competitive practices and constellations are analysed, such as self-preferencing, horizontal and vertical dual roles, or data-driven acquisition strategies. In doing so, respective remedies, but also their possible undesired side effects, are discussed and finally the European Digital Markets Act (DMA) and other new international regulatory frameworks, whose final implementation in many countries is expected in 2022, are compared.

 

 

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