Internet platforms such as Google Search, Facebook, Amazon Marketplace, Uber or AirBnB are enormously successful. This has sparked the interest of policymakers and competition authorities. Surprisingly, the public debate around Internet platforms lacks some fundamental insights.
The study "The Impact of Internet Platforms in Germany" by WIK is the first one to shed light on the economic impact of Google, Facebook, Amazon, Uber, AirBnB, and other relevant platforms in Germany. Besides this analysis, WIK presents a new approach to consistently identify and analyse platforms.
The results are surprising. For instance, the origins of the Top65 platforms in Germany do not support the alleged dominance of American Internet platforms. In fact, 32 of the Top65 Internet platforms in the German market have their headquarters in Germany; 19 of them have their headquarters in the United States.
However, German platforms focus primarily on the German market. They generate on average 74% of their revenues in Germany. American Internet platforms generate only around 6% of their revenues on the German market.
In total, the Top65 Internet platforms in Germany generate revenues of more than €33bn. That is around one tenth of their global revenues of €320bn. Although this figure appears to be small as compared to other industries in Germany, the impact of Internet platforms is significantly larger than their revenues indicate.
There are always at least two markets that these companies serve. Thus, their economic impact multiplies with their significant spillover-effects into other industries. Our study provides an in-depth discussion of the spill-over effects of Google, Facebook, Amazon, Uber, AirBnB, and others.
Besides our estimate of their economic impact, we also present a new approach to identify and analyse Internet platforms: the WIK Data Revenue Attention Model (DRAM).
The DRAM is meant as a complementary tool for established competitive analyses such as SSNIP tests. Unlike traditional approaches, our model has been developed specifically for the analysis of Internet platforms. It covers both their exogenous and endogenous effects. Endogenous effects are understood in a functional way based on the roles that users of the platform can take on, and the streams of data, revenue, and attention that they exchange to create value added. Exogenous effects are split into enablers and spill-over effects in our model. Both can take three forms: economic, technological, and societal.
The DRAM provides a more intuitive understanding of Internet platforms than traditional approaches. It enables a structured and consistent identification, description, and analysis of Internet platforms. WIK plans to further develop this model in the coming months.
The full report is available for download (in German only).
