Platform businesses bring together distinct but interdependent sets of users in such a way as to improve the welfare of each side of the market. Their central value proposition is the reduction of transaction costs, which increases the number of viable exchanges in the market.
The rapid growth and large size of the leading online platforms has given rise to concerns from regulators and policymakers. Three areas of controversy stand out in particular: market definition, market power, and platforms’ use of data.
Regulators and competition authorities have historically maintained a comparably light-touch approach towards digital industries. However, a number of recent announcements signal a more interventionist outlook, with potentially chilling consequences for competition and innovation in the digital sphere.
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EPICENTER, the European Policy Information Center, is an independent initiative of six leading think tanks from across the European Union. It seeks to inform the EU policy debate and promote the principles of a free society by bringing together the economic expertise of its members.