Digital Regulation Platform
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Explanation of externalities on digital platforms

Explanation of externalities on digital platforms

Introduction One of the reasons why digital platform are special is the presence of externalities. Externalities (which are also known as network effects[1]) are an economic concept: they are a cost or benefit of an economic activity experienced by a third party which has no relation with the one causing the activity. Externalities arise from digital platforms because they act as economic agents matching two distinct groups of users, one on each side of the platform.[2] The users on one side have no direct relationship with the users on the other side of the platform, but each is affected by…

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M&A activity of the main digital platform providers

M&A activity of the main digital platform providers

Introduction In recent years, the main digital platform providers have been considerably active in the field of mergers and acquisitions (M&A). Over the period 2015-2017, the leading digital platforms, Google, Apple, Facebook, Amazon, and Microsoft (GAFAM) acquired 175 companies (Gautier and Lamesch 2020). This intense M&A activity of the main digital platforms has brought to the forefront the adequacy of existing merger control tools. Can M&A regulation be tightened so as to prevent the digital platforms retaining and extending their already substantial market power? Source: Gautier and Lamesch 2020. Are regulators watching? Some of the M&A activity of GAFAM (and…

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