Big data as a source of market power of digital platforms

Abstract

Big data is widely used by digital platforms in multi-sided markets, which are often considered monopolistic. Big data is analyzed as a potential source of market power of digital platforms, and its characteristics as an economic resource are considered. Arguments for classifying certain categories of big data (for example, historical data) as club goods are specified. The use of big data by digital platforms has already become the object of antitrust proceedings. Based on the analysis of those cases, as well as the review of scientific literature, the relationship between the market power of digital platforms and their use of big data is examined. Firstly, big data can be used by platforms while implementing the strategy of price discrimination. Secondly, the usage of big data creates barriers to entry for new platforms, which are caused by the lack of access to data and increased spending on hardware, software and hiring personnel. Finally, big data can be used by digital platforms to exert market power on adjacent markets and create discriminatory conditions. Based on this research, recommendations for antimonopoly regulation of digital platforms in Russia are provided. Several structural alternatives to antimonopoly regulation of big data are considered: the requirements for anonymized big data disclosure; the creation of a big data market; the partial restrictions on generating and using big data in certain ways (similar to the new regulation in the EU).