The platform market is revolutionising the economy of digital products and services. These are new tools that are driving not only the evolution of research in computing and engineering, but also the implementation of new business models and novel ways through which to create value.
Within this landscape, the companies that control these platforms are exponentially increasing their economic strength and their ability to direct future developments in technological innovation. Such a role is raising growing concerns. Firstly, one wonders about the rationale that guides the distribution of the value generated among the different players. Secondly, there is also the fear that Big Tech may exercise 'monopolistic' power, giving rise to increasingly unfair competitive dynamics.
This is why academics and experts in the field are promoting new principles of 'Fairness' and 'Contestability' as a reference point for the creation of a regulatory framework capable of regulating competition within digital markets more effectively. In particular, the European Union's recent Digital Markets Act (or DMA) could have a significant impact not only in relation to Big Tech, but more broadly in regulating the relationships that ensure the healthy operation of the platform economy.
The event, promoted by SDA Bocconi's new Platform Economy & Regulation Monitor, stems directly from this need: to discuss new perspectives on the regulation of markets and innovation in the digital economy. To do so, some of the leading academic experts were invited, as well as representatives of antitrust authorities and Big Tech companies.
After institutional greetings by Paola Cillo, Director of Research for Claudio Dematté Corporate and Financial Institutions, Carmelo Cennamo, Director of the new Platform Economy and Regulation Monitor started the proceedings by immediately providing a specific definition of digital economy. He said: "Digital markets are deeply structured by the presence of central platforms capable of bringing together different types of stakeholders: service and product providers, consumers, companies." And it is this very centrality of these platforms that has generated what Cennamo defines as "The Dark Side of Power", where the very companies that own the platforms are apostrophised as "Gatekeepers", i.e., players capable of "influencing" access to digital markets for new products and services, even going so far as to control entire ecosystems. This begs the question: what relationship exists between innovation and competitiveness? What instruments can safeguard the cardinal principle of fair competition and allow the most innovative players to compete on equal terms with Big Tech?
According to Frédéric Jenny, 'when it comes to innovation and competitiveness in digital markets, it would be necessary to further invest in research and the study of the new relationships that exist between the world's major digital ecosystems and the players connected to them. Integrating two different approaches: the first to examine the competition that exists within a single platform in detail; the second to focus, on the other hand, on the competitive dynamics between different platforms."
In this regard, according to Alexandre De Streel, the Digital Markets Act enacted by the European Union will foster balanced competition both within a single ecosystem and between different platforms. He commented: "On both levels, the fundamental objective of the DMA is to promote not only the quality of innovation, but also its diversification." Diversification as a key factor in protecting the competitiveness of very innovative start-ups, but at a disadvantage compared to the commercial and financial strength of Big Tech.
Antonio Buttà Chief Economist, AGCM, Italy Competition Authority, pointed out that there are a number of assumptions underlying the rules set out in the DMA that are not entirely obvious. According to Buttà, the relationship between competition and innovation, although studied over the years, is complex, non-linear and therefore requires more analysis, especially in the digital landscape. He also emphasised the need to look at the entire innovation ecosystem linked to the platform, rather than at individual markets.
Finally, a brief focus on the role of data: how to exploit its enormous potential and increase competitiveness while respecting consumers and stakeholders in terms of privacy and processing of personal information? A concrete example comes from the United Kingdom, where the Digital Regulation Cooperation Forum has been set up. A body set up to strengthen collaboration between the four major UK regulators. Its aim is to study the interactions between data, privacy, competition, communications and content, in order to provide the market, companies and consumers with clear, transparent regulatory guidance in line with the latest challenges posed by the digital economy.
Continuing on the topic of the role of data in the creation of value and competition, Pierre Regibeau (Chief Economist, DGCOMP, EU Competition Authority) pointed out that we still have limited academic knowledge on the economics of data, particularly on the minimum scale required in order to generate value from data analysis, and where one reaches the point of diminishing returns.
Eliana Garces (Director, Economic Policy, Meta) also participated in the discussion. Moderation was provided by Cristina Alaimo (Academic Expert, Luiss).
SDA Bocconi School of Management