Eps 1: innovation, data and competition in the context of digital platforms
| Host image: | StyleGAN neural net |
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| Content creation: | GPT-3.5, |
Host
Heidi Chapman
Podcast Content
In February 2019, the FTC also announced the creation of a working group to monitor competition in the technology industry and enforce action where warranted. In Europe, a panel of experts was set up in April 2019 for the European Commission to explore how competition policy can evolve to further support innovation for consumers in the digital age. The Digital Competition Expert Panel published its report on the UK in March 2019, Unlocking Digital Competition, which analysed and recommended the potential opportunities and challenges that the emerging digital economy could pose to competition and competition policy.
With the ever-increasing collection of data on consumers and their preferences, digital platforms have sparked a debate on whether antitrust enforcement needs to be modernised. It has been argued that the tech giants that operate these platforms serve as gatekeepers in the digital economy. The fact that they exclude access to key inputs and discriminate against their own products and services has led to calls for regulation and enforcement of platform neutrality.
Although these platforms can pose a threat to competition, they create huge benefits for users. Concerns have been raised about the potential damage that could be done by technology giants buying small start-ups that may not be competitors today but could become a threat to competition in the future. Because Internet platforms have different business models from traditional companies, antitrust policy is more likely to deal with real threats than imagined threats.
This is reflected in the fact that platforms offer goods and services and that rapid technological development has invested large sums of money in improving these services. These techniques are crucial for digital businesses, which rely heavily on forecasting of various kinds to provide their users with their services.
These mergers are expected to be more efficient - and increase efficiency, as they could allow incumbents to improve these forecasts, the study said.
The emergence of a data-driven economy has led to an unprecedented level of innovation that benefits consumers and businesses in Canada. However, it also results from the growing market power of certain platforms that can act as gateways into the digital economy. Such improvements in external growth, complemented by increased collection of personal data, can help companies strengthen their dominant position in their markets and create insurmountable barriers to entry for competitors. Concerns have been raised about the need to adapt competition policy and enforcement tools to address this problem.
This issue has been the focus of policy in recent years as calls for stronger regulation of data collection and data protection have grown louder.
Although data is a critical asset in the market, a more dynamic perspective is needed when evaluating the services offered by different platforms. We hear from leading experts on how data - related issues - can and should be assessed by competition authorities. When we identify the possible ways in which mergers could negatively affect competition, we take into account the role of data in the associated monetisation strategies. However, it can be difficult to assess the impact of a merger on the quality and value of services offered by another platform and the potential impact on competition.
If a digital platform cannot achieve this, it will not be able to compete with the large incumbents in existing markets. There is no retroactive merger because the target company would have become a viable competitor.
This may be one of the reasons why digital platforms are driving the growth in market capitalization. Most digital platform companies have seen a significant increase in capital investment and a decrease in the number of competitors in their market.
First, the digital platforms business model imposes digital transformation as an absolute prerequisite, enabling many consumers to access finance that is not normally available. Digital platforms represent technology-based systems and infrastructures that act as a marketplace and connect multiple actors, both internal and external, from customer to supplier.
Based on quality, quantity and networking, these platforms allow for the creation of a network of intermediaries such as banks, cooperatives, insurance companies, financial institutions and other financial service providers. Digital platforms offer a variety of value advantages, including the ability to reach a broader user base, thus benefiting from greater scalability, lower transaction costs and network effects.
In general, digital platforms are expected to foster innovation and collaboration between partners, suppliers and customers by facilitating communication and coordination between stakeholders.
The business model for innovation on digital platforms is expected to overlap with the open business models developed by companies such as Google, Facebook, Amazon, Microsoft, Google Play and others. Open innovation theory has evolved in recent years, with a focus on the role of open business models in the development of digital platform models. The supporting researchers developed maturity models for these business models and found that the platform model is the most successful model in terms of innovation and competition in both paid and free services. They note that, if not, the "digital platform" in its current form is likely to cease to exist and move to a more traditional model.