Looking Up in the Data-Driven Economy
6 Pages Posted: 30 May 2017 Last revised: 12 Sep 2017
Date Written: May 26, 2017
With the rise of the super-platforms, we tend to look down (on their effect on consumers) rather than up (their effect on sellers and upstream providers). In looking down it seems like Google, Amazon and Facebook are using their power in the marketplace to deliver great value to us — wrestling lower prices from producers in the case of Amazon, bringing news onto a single platform in the case of Facebook, and organizing the world’s information, in the case of Google.
While these companies appear to be furthering our interests, a closer look reveals how these super-platforms may wield their power downstream to harm us, the consumer. As our book Virtual Competition explores, the super-platforms can use our personal data to better price discriminate and their disincentive to protect our privacy (and promote technologies that do).
Less discussed, but of significant concern, are the upstream effects of these super-platforms. They have the power to harm many of the companies from whom they buy or acquire content — and that harm ultimately harms us.
In looking up rather than down, we see how the super-platforms can squeeze millions of sellers, including photographers, photojournalists, writers, journalists and musicians. Our competition laws deal with this kind of buyer power. These concerns, however, are often low on the enforcement agenda due to the indirect effects on “consumer welfare,” which is often measured by the price you pay for the goods or service. So if we stream the YouTube video ostensibly for “free,” the assumption is that our welfare is maximized. In the digital age, as this essay argues, that urgently needs to change.
Keywords: e-monopsony, e-scraper, antitrust, competition law
JEL Classification: K21
Suggested Citation: Suggested Citation