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Begin New Search Topic Markets Political Geography Global Focus Content Type Working Paper Publishing Institution Bruegel Publication Year within 10 Years Publication Year within 5 Years

1. Platform mergers and antitrust

Author:
Geoffrey Parker, Georgios Petropoulos, and Marshall Van Alstyne
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Platform ecosystems rely on economies of scale, data-driven economies of scope, high quality algorithmic systems, and strong network effects that frequently promote winner-takes-most markets. Some platform firms have grown rapidly and their merger and acquisition strategies have been very important factors in their growth. Big platforms’ market dominance has generated competition concerns that are difficult to assess with current merger policy tools. We examine the acquisition strategies of the five major US firms—Google, Amazon, Facebook, Apple and Microsoft—since their inception. We discuss the main merger and acquisition theories of harm that can restrict market competition and reduce consumer welfare. To address competition concerns about acquisitions in big platform ecosystems we develop a four step proposal that incorporates: (1) a new ex-ante regulatory framework, (2) an update of the conditions under which the notification of mergers should be compulsory and the burden of proof should be reversed, (3) differential regulatory priorities in investigating horizontal versus vertical acquisitions, and (4) an update of competition enforcement tools to increase visibility into market data and trends.
Topic:
Markets, Digital Economy, Internet, Economy, and Innovation
Political Geography:
Global Focus and United States of America

2. Platform mergers and antitrust

Author:
Geoffrey Parker, Georgios Petropoulos, and Marshall Van Alstyne
Publication Date:
01-2021
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Platform ecosystems rely on economies of scale, data-driven economies of scope, high-quality algorithmic systems and strong network effects that typically promote winner-take-most markets. Some platform firms have grown rapidly and their merger and acquisition strategies have been very important factors in their growth. Market dominance by big platforms has led to competition concerns that are difficult to assess with current merger policy tools. In this paper, we examine the acquisition strategies since their inception of the five major US firms – Google, Amazon, Facebook, Apple and Microsoft. We discuss the main merger and acquisition theories of harm that can restrict market competition and reduce consumer welfare. To address competition concerns arising from acquisitions in big platform ecosystems this paper sets out a four-step proposal that incorporates: (1) a new ex-ante regulatory framework, (2) an updating of the conditions under which the notification of mergers should be compulsory and the burden of proof should be reversed, (3) differential regulatory priorities in investigating horizontal versus vertical acquisitions, and (4) an updating of competition enforcement tools to increase visibility of market data and trends.
Topic:
Markets, Regulation, Digital Economy, Economy, Business, and Innovation
Political Geography:
Global Focus

3. Towards efficient information sharing in network markets

Author:
Georgios Petropoulous, Bertin Martens, Marshall Van Alstyne, and Geoffrey Parker
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
Digital platforms facilitate interactions between consumers and merchants that allow collection of profiling information, which drives innovation and welfare. Private incentives, however, lead to information asymmetries resulting in market failures both on-platform, among merchants, and off-platform, among competing platforms. This paper develops two product-differentiation models to study private and social incentives to share information within and between platforms. We show that there is scope for ex-ante regulation of mandatory data sharing that improves social welfare better than competing interventions, such as barring entry, break-up, forced divestiture or limiting recommendation steering. These alternate proposals do not make efficient use of information. We argue that the location of data access matters and develop a regulatory framework that introduces a new data right for platform users, the in-situ data right, which is associated with positive welfare gains. By construction, this right enables effective sharing of information together with its context, without reducing the value created by network effects. It also enables regulatory oversight but limits data privacy leakages. We discuss crucial elements of its implementation in order to achieve innovation-friendly and competitive digital markets.
Topic:
Markets, Science and Technology, Data, and Information
Political Geography:
Global Focus

4. Market power and artificial intelligence work on online labour markets

Author:
Néstor Duch-Brown, Estrella Gomez-Herrera, Frank Mueller-Langer, and Songül Tolan
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
The views are those of the authors and should not be regarded as stating an official position of the European Commission. Frank Mueller-Langer gratefully acknowledges financial support from a research grant of the University of the Bundeswehr Munich. We investigate three alternative but complementary indicators of market power on one of the largest online labour markets (OLMs) in Europe: (1) the elasticity of labour demand, (2) the elasticity of labour supply, and (3) the concentration of market shares. We explore how these indicators relate to an exogenous change in platform policy. In the middle of the observation period, the platform made it mandatory for employers to signal the rates they were willing to pay, as given by the level of experience required to perform a project: entry, intermediate or expert level. We find a positive labour supply elasticity ranging between 0.06 and 0.15, which is higher for expert-level projects. We also find that the labour demand elasticity increased while the labour supply elasticity decreased after the policy change. Based on this, we argue that market-designing platform providers can influence the labour demand and supply elasticities on OLMs with the terms and conditions they set for the platform. We also explore the demand for and supply of AI-related labour on the OLM under study. We provide evidence of a significantly higher demand for AI-related labour (ranging from +1.4 percent to +4.1 percent) and a significantly lower supply of AI-related labour (ranging from -6.8 percent to -1.6 percent) than for other types of labour. We also find that workers on AI projects receive 3.0 percent to 3.2 percent higher wages than workers on non-AI projects.
Topic:
Markets, Science and Technology, Internet, Artificial Intelligence, and Labor Market
Political Geography:
Global Focus