In recent years, the issue of creating regulations for online platforms has been actively discussed, which are becoming popular trading platforms for professional and non-professional sellers. They represent a set of technological solutions in the digital space of the Internet based on digital data collection. A prime example is networking giant Amazon, which uses its data to optimize algorithms (Björkegren and Farronato). At the same time, the dominance of today’s online companies is directly dependent on the network data they have.
As connections expand, so does the competitiveness of giant platforms such as Google, Facebook, and Amazon. As a result, companies dependent on larger businesses are under their actual influence. However, the traditional antitrust policy lacks the leverage to regulate network platforms for a number of reasons (Björkegren and Farronato). First, online markets can naturally lean towards one of the dominant networks, leaving the platform in a monopoly right while not violating antitrust laws.
In addition, some platforms offer data access free of charge to attract users and create network effects. In such a case, the established antitrust rules defining consumer welfare are not relevant to these platforms for assessing market power (Björkegren and Farronato). Many platforms, such as Google Search or Facebook, can be used for free instead of charging a fee from another group of users, such as advertisers. Moreover, markets’ restrictions change really fast and usually unpredictably, which requires a more flexible response to all changes (Björkegren and Farronato). Thus, the question of what kind of competition big companies like Amazon should face is high on the global political agenda now.
However, recent developments in US politics, for example, Lina Khan became the chairman of the US Federal Trade Commission, are counting on things to change. It is assumed that significant technologies may be in a position where they will have to protect their assets as wealth for their systems or be forced to risk losing everything. World governments have the power to control business and can create opportunities to query and study digital data. That is done either by existing or new regulators that have been asked to specialize in digital markets (as it is proposed to the United States).
Big partnerships can significantly affect the business of codependent businesses. It often leads to mergers or acquisitions, which, in fact, do not have much potential. Statistically, 50 to 80 percent of unions are unsuccessful (McAdams et al.). As discussed above, companies in partnership with large enterprises are often at a disadvantage. For example, the emergence of new products from the fledgling car accessories company Fortem led Amazon to launch a similar outcome (Björkegren and Farronato). That negatively affected the further development of smaller entrepreneurs.
Mergers, often driven by growth opportunities, cost-cutting, and technological change, can have a number of positive effects. However, the Federal Government is sometimes quite aggressive in controlling mergers, which it cannot currently do with the online marketplace (McAdams et al.). It may be because too much power is being concentrated in too few hands. For effective regulation of network platforms, access to their data is necessary. Having data on multiple competing platforms can measure interchangeability and switch costs and retrospectively learn about mergers that have already occurred. Even rough information can provide an opportunity for policymakers to assess and possibly influence network platforms.
Works Cited
Björkegren, Daniel, and Chiara Farronato. “To Regulate Network-Based Platforms, Look at Their Data.” Harvard Business Review, 2021. Web.
McAdams, Tony, et al. Law, Business, and Society 13th Edition. McGraw-Hill Education, 2021.