by EBRU GOKCE DESSEMOND
GENEVA, Feb 13 2020 (IPS) – Digital platforms are at the centre of the global economy and daily lives of consumers.
A handful of these platforms have become dominant in specific markets
without facing meaningful competition. They include Amazon as a
marketplace, Facebook in social networking, Google in search engines and
Apple and Google in application stores.
Digital platforms rely on big data and are characterized as multisided markets with economies of scale, network effects and winner-takes-all features.
These firms offer their products for “free” on one side of the market and earn revenues from online advertising and selling user data on the other side of the market.
The growing market power of these platforms raises concerns not only for consumers and smaller businesses but also for competition authorities.
Consumers not in control
Consumers can no longer control the use of their data. Smaller
businesses face unfair market conditions, where they compete with big
platforms that offer services by self-preferencing their own products.
It is now widely recognized that these markets cannot self-correct.
What needs to be done?
One effective response is competition law and policy that promotes open and accessible markets with fair and reasonable terms for businesses. This goal is more pronounced in highly concentrated digital markets, where large platforms’ market power is enduring.
The most important competitive threats to monopolists are likely to come from new entrants, which are vulnerable to exclusionary conduct or anticompetitive acquisitions.
Governments should have in place relevant policies and legal frameworks to overcome different challenges of the platform economy. These include competition, consumer protection and data protection policies and legislation.
Adapt to new realities
There is a need for adapting competition law enforcement tools to new business realities by revising laws like in Germany and Austria or issuing regulations or guidelines as has been done in Kenya and Japan.
Inter Press Service for more