MODELS AND METHODS IN MODERN SCIENCE
International scientific-online conference
157
ESTABLISHING THE DOMINANT POSITION OF DIGITAL
PLATFORMS IN THE INTERNAL MARKET OF THE EU
Davlatova Guliza Shavkat qizi
PhD student at Tashkent State University of Law
e-mail: gprimova97@gmail.com
ORCID: 0009-0003-7496-7628
https://doi.org/10.5281/zenodo.14538988
The topic is current because digital platform operators are quickly taking
over the European single digital market, and several players, including the
European Commission and European National Competition and Consumer
Authorities (like Finland) , have voiced concerns about consumer safety and
competition in the single digital market. Compared to more traditional business
models, digital online platforms may grow rapidly and adapt to changing
environments more quickly since they are more dynamic than traditional firms.
The market for online platforms is a continuously changing industry. One million
EU companies currently sell goods and services online, and over half of small
and medium-sized businesses that sell through online marketplaces do so
internationally, according to data from the European Commission. At a growth
rate of around 14%, the European business-to-consumer (B2C) e-commerce
turnover was predicted to reach approximately €602 billion in 2017.
The European Commission's report states that the EU's official policy for
the digital single market legislation is to defend consumer interests and
guarantee fair competition in the market.
Since creating a digital single market was one of the goals of the Juncker
Commission, the European Union is now working on a number of legislative
initiatives aimed at the digital platform economy. In order to protect the four
fundamental freedoms of the European Union—the free movement of capital,
goods, people, and services as well as the use and access to these digital online
platform services under fair competition, the Digital Single Market initiative
aims to expand the application of Article 26(2) TFEU to the internet.
Political action is required to encourage the growth of the digital platform
economy, and as a result, European enterprises currently incur high expenses to
comply with regulations, which is detrimental to the EU's attempts to achieve its
economic goals. The method used in this thesis is to examine the laws now in
effect inside the European Union and its Economic Zone, as well as how the
Commission handles defining a dominant position for digital online platforms
that function within the internal market.
MODELS AND METHODS IN MODERN SCIENCE
International scientific-online conference
158
Digital platforms are complicated organizations that can function concurrently
in several markets that are intricately intertwined. As a result, defining the
relevant market and the abuse of dominance in that particular market can be a
crucial task for any legislation, giving EU competition law provisions more
weight. The focus of the thesis is on European Union law, European competition
law, and policies. It also discusses the current meanings of these terms and
offers suggestions for potential legislative amendments.
To put it plainly, many of the provisions are too ambiguous, which can result in
significant penalties for big companies like Apple, Google, Amazon, and Intel that
are not based in the European Union. As a result, the modern definition of
dominant market position needs to evolve under competition law regulation
since the companies currently operating in the market lack precise means and
instructions how to avoid breaking competition rules.
The thesis anticipated conclusion is that there is insufficient clarity in the
legislative framework pertaining to the concept of the dominating position for
digital online platforms. In addition to discussing the problems arising from the
absence of a legal framework and how it impacts practice, the evaluation will
concentrate on whether or not this statement is supported. The most optimal
solution would be to discover that the case law has supplied complete advice on
the topic.
Digital Online Platform
Since the idea of a digital two-sided platform, sometimes known as a multi-sided
platform, is still developing, I believe it is important to investigate whether a
platform should be considered a separate legal concept and, if so, what that
notion should represent. As a general rule, a digital platform should only
establish its own concept if it is able to recognize several legal organizations that
have similar characteristics and, as a result, need to be reviewed differently than
traditional businesses. It is evident from examining the many definitions that
platforms must function in a multifaceted market in order to qualify as
“platforms”.
In contrast to typical parallel markets, where a corporation has a single vertical
interaction with a group of customers, a platform operating in such a market has
at least two different client groups (market parties) with which the platform has
a horizontal relationship.
A business is a digital online platform, according to Kalimo & Majcher, if it
generates indirect network effects among its many clientele. When one
consumer group’s demand is reliant on another's demand, this is known as an
MODELS AND METHODS IN MODERN SCIENCE
International scientific-online conference
159
indirect network effect. For instance, the more vendors (producers) there are,
the more consumers (users) marketplace platforms draw. Direct network
effects, on the other hand, happen on the same side of the market and include a
correlation between the size of one client group and the number of other
customers on that side.41 If there are more customers, network effects are good;
if there are fewer users, network effects are negative.
There is disagreement in the literature, nonetheless, over whether the definition
of a digital platform necessitates multidirectional indirect network effects or if
parallel indirect network effects suffice. It has also been suggested that a
platform-neutral pricing structure is necessary for a definition of a digital online
platform. When a platform establishes prices that are charged by various
market participants at varying levels, this is known as an unneutral pricing
system.
The goal of the unneutral pricing structure is to convert indirect network effects
into operating profit as much as possible. Some or all of the costs of another
client group (money side) will be borne by the group of customers whose
demand is the most inelastic, that is, whose demand is not greatly impacted by
little price changes. In turn, the other market receives services at prices lower
than the marginal cost, either for free or at extremely cheap costs (subsidy side).
The definitions in the third and, in my opinion, most pertinent major group state
that the digital internet platform serves as a middleman between two or more
client groups. For instance, Apple manufactures its own computers on the
market, but Microsoft defers to independent manufacturers. Because of this,
Microsoft works in a three-way market for end users, software suppliers, and
hardware makers, while Apple operates in a two-way market between end users
and software providers.
The intermediary platform's purpose is restricted to facilitating direct
communication between customer groups; it has no legal or commercial stake in
the legal relationships between customer groups. Important aspects of the two-
way client interaction, such price and contractual conditions, are not under the
intermediate platform’s control. According to the definition of a digital online
platform, it must have a minimum of two consumer groups that connect with the
platform for various reasons.
Since it establishes the degree to which customer demand is interdependent and
convergent, a thorough analysis of the various platforms’ goals to unite the
parties is required. This in turn establishes whether it is necessary to specify one
relevant market or several cases. Platforms are frequently separated into
MODELS AND METHODS IN MODERN SCIENCE
International scientific-online conference
160
transactional platforms and non-transactional platforms in the economic
literature. A transaction platform is a digital network platform designed to
connect various market players for an instantaneous and visible transaction.
The objective and comprehension of the transaction platform substitutes are
similar across various client groups. For instance, users of one payment card
platform might switch to another, and users of another marketplace platform
might switch to another. A platform cannot do business without the cooperation
of every single consumer group due to the multidirectional positive indirect
network effects generated by transactional platforms. As a result, transaction
platforms cannot leave some markets without leaving others, in contrast to
conventional vertically integrated businesses that operate in parallel
marketplaces.
Social media and content platforms are examples of non-transactional platforms
that serve as middlemen between various market actors to facilitate non-
transactional interactions. Market players’ opinions about which services take
the place of the platform’s services vary, as do the motivations of various
platform customer groups to engage with the platform ecosystem. Since
beneficial network effects are only produced in one direction, non-transactional
platforms can likewise function without the assistance of an additional
consumer base. The platform can continue to function as a traditional business
rather than a digital internet platform if it divests from another customer group.
Another similar, but less widely used breakdown is based on the platform’s
position as either a party integrator or an audience provider. The features of so
called matching platform are similar to those of transaction platforms, but the
concept of matching platform is broader, including transactional platforms, with
the purpose of enables other direct and visible interaction between different
market participants. The concept of an audience providing platform (advertising
platform) is similar to that of non-audience providers definition of transaction
platforms, and the purpose of such platform is to enable one attracting the
attention of another customer group.
References:
1.
Kilpailu- ja kuluttajavirasto, Alustat kilpailu- ja kuluttajaoikeudellisessa
tarkastelussa, Kilpailu- ja kuluttajaviraston selvityksiä 4/2017. accessible:
https://www.kkv.fi/globalassets/kkvsuomi/julkaisut/selvitykset/2017/kkv-
selvityksia-4-2017-alustat.pdf
2.
European Commission, Online Platforms, 2019 available at
https://ec.europa.eu/digital-singlemarket/en/policies/online-platforms
MODELS AND METHODS IN MODERN SCIENCE
International scientific-online conference
161
3.
Report from the Commission to the European Parliament, The Council, The
European Economic and Social Committee and the Committee of the Regions
Report
on
Competition
Policy
2018
https://ec.europa.eu/competition/publications/annual_report/2018/part1_en.
pdf
4.
Communication from the commission to The European Parliament, The
Council, The European Economic and Social Committee and the Committee of
the Regions, Online Platforms and the Digital Single Market Opportunities and
Challenges for Europe COM/2016/0288.
5.
Kalimo, H., Majcher, K. (2017). The concept of fairness: linking EU
competition and data protection law in the digital marketplaces. In European
Law Review, Vol. 42(2), 2017.
6.
Filistrucchi, Lapo & Geradin, Damien & Damme, Eric & Affeldt, Pauline.
(2013). Market Definition in Two- Sided Markets: Theory and Practice. Journal
of Competition Law and Economics. 10. 10.1093/joclec/nhu007.
7.
Luchetta, Giacomo, 2012. Is the Google Platform a Two-Sided Market?
23rd European Regional Conference of the International Telecommunication
Society,
Wien,
Itävalta.
1–4
July
2019.
Accessible:
http://hdl.handle.net/10419/60367.
8.
Rochet, Jean-Charles – Tirole, Jean, 2004. Two-Sided Markets: An
Overview. Mimeo, IDEI University of Tolouse 2021. Accessible:
https://web.mit.edu/14.271/www/rochet_tirole.pdf
9.
Eisenmann, Thomas – Parker, Geoffrey – Van Alstyne, Marshall W., 2006.
Strategies for Two-Sided Markets. Harvard Business Review On Point Article.
Harvard Business School Publishing Corporation, Harvard, October. (Eisenmann
et al. 2020).
10.
Monopolkommission, 2015. Competition policy: The challenge of digital
markets. Special Report No 68. Special Report by the Monopolies Commission
pursuant to section 44(1)(4) of the Act Against Restraints on Competition 2015.
p.
20
Accessible:
http://www.monopolkommission.de/images/PDF/SG/s68_fulltext_eng.pdf.
11.
Hagiu, Andrei – Wright, Julian, 2015. Multi-Sided Platforms. Harvard
Business
School
Working
Paper
15-037,
2015.
Accessible:
http://www.hbs.edu/faculty/Publication%20Files/15-037_cb5afe51-6150-
4be9-ace2- 39c6a8ace6d4.pdf.
12.
Evans, David S. and Schmalensee, Richard, The Antitrust Analysis of Multi-
Sided Platform Businesses (January 30, 2013). Roger Blair and Daniel Sokol,
MODELS AND METHODS IN MODERN SCIENCE
International scientific-online conference
162
eds., Oxford Handbook on International Antitrust Economics, Oxford University
Press, Forthcoming; University of Chicago Institute for Law & Economics Olin
Research Paper No. 623. Available at SSRN: https://ssrn.com/abstract=2185373
13.
Bundeskartellamt, (2016)Working Paper: Market Power of Platforms and
Networks,
accessible:
https://www.bundeskartellamt.de/SharedDocs/Publikation/EN/Berichte/Thin
k-Tank-Bericht- Langfassung.pdf?__blob=publicationFile&v=2
