ACADEMIC RESEARCH IN MODERN SCIENCE
International scientific-online conference
112
MODERN SOURCES OF MARKET POWER OF DIGITAL PLATFORMS:
CONCLUSIONS FOR ANTIMONOPOLY REGULATION
Bekzod Kh, Ummatov
Diplomat University, Tashkent, Uzbekistan
https://doi.org/10.5281/zenodo.13888603
Keywords:
business activity, antimonopoly regulation, competition,
monopolies, business law, business law
Currently, digital platforms are functioning in one way or another in many
global and local markets. The scientific literature argues that in the modern
digital age, they are the dominant form of doing business [Gawer, 2022]. The
need for additional regulation of digital platforms is being actively discussed by
researchers and antitrust authorities around the world [Baker, 2021; Ciriani &
Lebourges, 2021]. The largest digital platforms are characterized by significant
market power, but its manifestations and sources have not been fully studied
[Flew, Gillett, 2021]. The focus of this study is precisely the second issue, in
connection with which its purpose is to identify new potential sources of market
power of digital platforms and provide appropriate recommendations for their
accounting to regulatory authorities. The first part of the study provides a
detailed theoretical analysis of the activities of digital platforms in the context of
antimonopoly regulation issues. To do this, we first consider in detail the types
of markets in which digital platforms operate [Shastitko, Markova, 2020], as well
as the issue of defining their boundaries [Markova, 2022]. Then, based on a
review of the literature, classical sources of market power of digital platforms
are identified. These include, for example, the presence of a network effect on
the market, brand loyalty, and increased returns on scale and investment
[Bamberger, Lobel, 2017]. Based on the analysis of relevant theoretical
literature, the hypothesis is put forward that big data and exclusive contracts
should be attributed to potential sources of market power of digital platforms. It
is argued that they can form new barriers to entry and strengthen existing ones.
In the second part of the study, various methods of empirical analysis are used
to confirm the hypothesis put forward. To identify the relationship between big
data and the market power of digital platforms, the possibilities of their use in
business processes, as well as real antitrust proceedings related to the use of big
data by digital platforms, are analyzed. The assessment of the relationship
between exclusive contracts and market power is based on the author's
econometric model published in [Levakov, 2023].
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International scientific-online conference
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The model identifies and evaluates the positive relationship between the
share of exclusive contracts and the market share of the digital platform in the
market. At the same time, it is customary in the scientific literature to associate a
firm's market share with its market power [Rhoades, 1985]. Based on the
analysis, it is argued that both big data and exclusive contracts can be
considered as potential sources of market power for digital platforms, creating
additional barriers to entry into the market. In the issue of regulating the use of
big data, first of all, it is necessary to solve the issue of their classification. Quite
often they are defined as public goods [Taylor, 2016], which creates obstacles
to their effective regulation within the framework of antimonopoly legislation.
As a possible solution to this problem, some categories of big data can be
classified as club benefits [Radinsky, 2015]. The need for additional investments
to conclude exclusive contracts has the most negative impact on new players in
the market. Analyzing trends in exclusive contracts can also be a powerful tool
for monitoring the state of the competitive environment in digital markets. Since
they are concluded in advance, they allow you to predict the market shares of
digital platforms in the future. Regarding the state of Russian antimonopoly
legislation regarding the regulation of digital platforms, it can be concluded that
it is currently insufficiently developed. The changes associated with the
introduction of the term "network effect" at the legislative level can be positively
assessed from this point of view. However, it is worth noting that in order to
minimize the negative effect on competition, these changes had to be made
much earlier
References:
1.Baker J.B. (2021). Protecting and fostering online platform competition: the
role of antitrust law // Journal of Competition Law & Economics, 2, 493–501.
2. Bamberger K.A., Lobel O. (2017). Platform market power // Berkeley
Technology Law Journal, 3, 1051–1092.
3. Ciriani S., Lebourges M. (2018). The market dominance of US digital platforms:
antitrust implications for the European Union. Available at SSRN 2977933.
4. Flew T., Gillett R. (2021). Platform policy: Evaluating different responses to
the challenges of platform power // Journal of Digital Media & Policy, 2, 231–
246.
5. Gawer, A. (2022). Digital platforms and ecosystems: remarks on the dominant
organizational forms of the digital age. Innovation, 1, 110–124.
6. Taylor L. (2016). The ethics of big data as a public good: which public? Whose
good?. Philosophical Transactions of the Royal Society A: Mathematical, Physical
and Engineering Sciences, 2083.
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International scientific-online conference
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7. Radinsky K. (2015). Data monopolists like Google are threatening the
economy // Harvard Business Review, 2.
8. Rhoades S.A. (1985). Market share as a source of market power: Implications
and some evidence // Journal of Economics and Business, 4, 343–363.
