How Digital Platforms Abuse Market Power: The Need for Stronger Regulations
Автор: Даша Шаховська • Январь 7, 2025 • Реферат • 1,035 Слов (5 Страниц) • 25 Просмотры
How Digital Platforms Abuse Market Power: The Need for Stronger Regulations
Over the past decade, digital platforms have disrupted the economy worldwide, changing how businesses reach their consumers. Firms like Amazon, Apple, and Google have gained enormous market power and used it to attain leading positions in their sectors. As much value these platforms create through convenience and innovation, serious questions have emerged on how they exercise their power to limit competition, reduce choices for consumers, and reinforce their dominant position in their respective sectors. Such practices as anti-steering, most-favored-nation (MFN) clauses, and self-preferencing have recently been at the center of attention in several jurisdictions due to their deleterious effect on fair competition.
The range of practices of digital platforms, including anti-steering, where platforms like Apple forces app developers to not steer users toward alternative payment options outside the platforms, raise a number of competition concerns. One example is that in the App Store, Apple prohibits developers from informing users about cheaper ways to pay for services on their websites. The results are that app developers have to use the in-app purchase systems of the platforms, which charge high commissions. This has been criticized for reducing consumer choice and inflating prices. Besides, the investigations of the Japan Fair Trade Commission and U.S. courts have found these anti-steering provisions anti-competitive; it has also been ruled in both instances that such provisions prevent consumers from accessing better deals in Epic Games vs. Apple.
Another very common practice is the use of MFN clauses that prevent companies from charging better prices on other platforms. In the case of Amazon, the company has utilized these clauses in its marketplace with retailers, who had to match or provide lower prices on Amazon than elsewhere. This dampens competition in that it ensures rival platforms cannot offer consumers better prices or better terms and therefore typically means fewer choices for buyers at higher costs. It is in the face of such concerns that actions have been taken by both the European Union and Japan, placing pressure on Amazon to give up such clauses. Despite these, however, cases are still coming up, pointing to the deficits of the existing legislation in this area.
Perhaps the most egregious abuse of market power from digital platforms is self-preferencing, whereby a company favors its own products or services over those of competitors. Several investigations have targeted Amazon over allegations that it bumps up the products of sellers using its delivery service while pushing down the products of other third-party retailers. Equally, it has been fined for prioritizing its own comparison shopping service in its search results over those of its competitors, reducing choice for consumers. In this regard, these business practices distort competition; artificially granting the platform's own products an unfair competitive advantage, which inevitably squeezes out smaller rivals.
Then, there is large-scale exploitation of user data on such platforms. Large platforms, like Meta, formerly known as Facebook, and Amazon, attain extraordinary volumes of data through operating businesses and users on their platforms. This seriously gives them a competitive advantage as they use this data for the purpose of entering new markets and then dominating those markets. For instance, Amazon has been accused of taking the data generated by third-party Marketplace sellers and using it to develop its own product and pricing strategies, thereby becoming a competitor to those very same vendors. Likewise, Meta has come under criticism for reaping insights from advertisers to enhance its services at the expense of businesses reliant on advertising across its platform. These would mean that such practices raise ethical and legal concerns about the balance of power between platforms and their business users.
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