Perceptions versus Reality: Regulating Digital Platforms

Digital platforms, also known as “online intermediation services,” are increasingly important for European businesses, bringing wide-ranging benefits to both individual consumers and to the participating companies. More and more new platforms are arising – in areas such as manufacturing and healthcare. Not surprisingly, as digital platforms have become more numerous and significant, they have come under the scrutiny of regulators. In particular, the European Commission has been examining the perception that European business users are being treated unfairly by digital platforms. The result was a recently
proposed new regulation “promoting fairness and transparency for business users of online intermediation services.”

In this paper, we first analyze the economic and commercial constraints facing digital platforms. In particular, we focus on two economic imperatives: First, platforms have a strong incentive to maintain user trust. Second, platforms have a strong incentive to keep transaction-related costs under control.

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