Chasing Unicorns: The Rise, Power, and Regulatory Challenges of Tech Monopolies
Posted: 21 Nov 2016 Last revised: 19 Feb 2018
Date Written: November 18, 2016
Once upon a time, unicorns existed only in the realm of fantasy. Now, as more platform-based technology companies (think Uber and Airbnb) obtain billion dollar valuations, unicorns are set to transform the global business environment. Due to their size, widespread popularity, and expertise in both collecting and extracting value from big data, these platforms plow through existing legal regimes while operating under a veil of secrecy. To manage the threats to consumer privacy and the stability of markets posed by these new tech monopolies, regulators must update their approaches to antitrust and Internet law. In particular, they must move away from methods of assessing competition based on price, question deeply held notions of Internet exceptionalism, and move toward a regime of platform neutrality.
Privacy risks caused by and the concentration of power among platforms are developing areas of interest for academics, businesses, and regulators, yet the legal scholarship here is quite underdeveloped. This Article steps in to enhance our understanding of the interrelation between privacy and market concentration in the context of platforms and makes four unique contributions. First, it builds upon prior scholarship to identify the distinct Internet-enabled forces that allow platforms to rapidly acquire users and their data. This in turn creates a flywheel effect that permits platforms to better predict consumer behavior, capture attention, and increase revenues through the sale of information about and access to users.
Second, this Article describes in detail how existing antitrust and Internet laws fail to address platforms' threats to privacy and fair competition. Third, it presents a case study on EU approaches to concerns about privacy and competition and applies the theories of Nobel Laureate Jean Triole to platform activities to better understand alternative methods of regulation. The Article concludes by offering recommendations to regulators based on the lessons extracted from the preceding sections.
With the ever-increasing influence platforms have over our lives, it is now more important than ever to properly situate the monopolistic nature of platforms, prevent their distortion of private and public spheres, and end the unnecessary chase between unicorns and regulators.
Keywords: sharing economy, regulation, oligopolies, Tirole, privacy, technology, innovation, law
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