Authors: Prof. Alain Strowel (UCL and USL-­‐B) with Prof. Wouter Vergote (USL-­‐B)

Abstract

Digital platforms are playing an increasing role in the economy by allowing new entrants, including non-­‐ professional operators, to offer content, goods, services or capital to the users of the platform. By facilitating the match between numerous suppliers and users, platforms allow new uses of existing resources owned by individuals (‘my data, my car, my home, my used items, my money…’) and thus support market exchanges. They also create new market opportunities, including some labor, if not real jobs. Bringing new entrants to the market and enrolling a ‘new‘ workforce (the car drivers, the house owners, the owners of used goods, etc.) or mobilizing ‘new’ capital (in the hands of private persons) often has a disruptive effect on existing markets and operators, be it the taxi companies, the hotels, the traditional distributors of goods or the financial institutions.

Before examining the economic and legal disruption generated by platforms, the paper will focus on the issue of their definition. The notion of ‘platform’ is indeed widely used by academics, by public authorities and by commentators (including in the press), but we still lack a of public authorities and by commentators (including in the press), but we still lack a of a workable definition. For the purposes of this paper, we will concentrate on profit-­‐seeking global businesses (as best illustrated by Uber). Our focus will be the so-called “uberisation” of the economy, by which we mean the de-structuration of the value chain by new intermediaries which, through the use of digital technologies (mainly apps, smartphones and online payment systems), capture part of the value at the detriment of traditional operators.
In the second part of the paper, we will articulate some views on the economics of digital platforms, how those operators challenge existing firms and how the economic analysis should better take into account the network effects of digital platforms, the agility of the platforms, as well as the volatile market changes. Those considerations remain very sketchy and general, as economic analysis is still developing, in theory and around particular case studies.

In the third part, we will focus on regulation and highlight the legal disruption created by those platforms. The impressive deployment of platforms and their growing market power in many sectors have prompted decision-­‐makers, especially in France and Germany, to advocate the adoption of new regulation. This has become a debated and even politically laden topic. Caution against any premature regulatory push is recommended.

We argue that any regulatory overhaul should first rely on a sound economic analysis of the markets. However, according to us, the response to the question in the title of this contribution is positive. Some regulatory action is desirable. That said, legislators, in particular at the EU level, must focus on the right issues calling for public intervention. We identify the laws on data as a primary area for possible action at EU level.

Our contribution partly responds to the late 2015 consultations initiated by the European Commission and the UK House of Lords on “the regulatory environment for platforms”. It also builds on the recent studies conducted by consultation bodies in France and Germany.

Image by Chad Kainz (Creative Commons Attribution 2.0 Generic)

 

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