Regulating Digital Platforms in Europe – A White Paper

Abstract

This paper is intended to address the economic and legal challenges of regulating digital "platforms, and leads to the following conclusions.

The concept of platform covers broad range of services and business models that have very little in common. Before considering regulatory measures targeting platforms, further work is required to define exactly what services or activities should be covered by regulation, and why. If a new regulatory category is created, it should be done at a European level in order to avoid fragmentation within Europe.

Economic literature shows that classic indicia of market power do not necessarily apply to multi-sided business models. There is no consensus as to whether open or closed ecosystems maximize social welfare. Economists disagree as to whether the accumulation of user data creates barriers to entry that require regulatory intervention. Caution is therefore required before concluding that platforms create a market failure requiring special regulation.

We have seen no evidence of harmful conduct by platforms that is not already covered by existing law. Obligations of fairness already exist in data protection, consumer protection and commercial law, and those principles have been applied by courts to online platforms. Competition law has been used successfully to address abuses of dominant position or anticompetitive agreements imposed by platforms. Emergency procedures exist, and have been used, to address immediate competitive harms.

Further work on platform regulation should include evidence-based analysis of the harms actually created by platforms and what legal tools already exist to deal with them. Analysis should also include consideration of self- or co-regulatory solutions, and an evaluation of the potential harms created by new regulatory measures, including the risk of error, and adverse effects on the Internet ecosystem.

Keywords: Digital Platform, Regulation, Competition

JEL Classification: L4, L86, L96