Antitrust and User Union in the Era of Digital Platforms and Big Data

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See all articles by Lin William Cong

Lin William Cong

Cornell University - Samuel Curtis Johnson Graduate School of Management; National Bureau of Economic Research (NBER)

Simon Mayer

University of Chicago - Booth School of Business

Date Written: June 1, 2022

Abstract

Firms' production function in the digital era entails customers' network adoption and data contribution. We model platform competition with endogenous pricing, user heterogeneity, network effects, infrastructure investment, and data collection and sharing, thereby providing a unifying framework to evaluate data-related antitrust policies. Similar to and interacting with network effects, data feedback, while improving service quality, may concentrate market power. Platforms thus strategically underprice initially but subsequently overcharge users, and can ``collude'' through data sharing. Meanwhile, because users are dispersed, they do not internalize the impact of their actions (e.g., data contribution and sharing) on (i) future service or product quality which affects all users, (ii) concentration of market power, and (iii) platforms’ incentives to innovate and invest in data infrastructure. We show that data sharing proposals (e.g., open banking and data vendor) and user privacy protections (e.g., GDPR and CCPA) fail to address inefficiencies in data-driven platform competition. We propose user union as a radical but effective solution for antitrust and consumer protection: a representative governing body coordinates users' contribution to the platforms and maximizes user surplus.

Keywords: Data Sharing, Data Trust, Digital Economy, Network Effect, Open Banking, Platform Competition, Privacy

JEL Classification: L41,L50

Suggested Citation

Cong, Lin and Mayer, Simon, Antitrust and User Union in the Era of Digital Platforms and Big Data (June 1, 2022). Available at SSRN: https://ssrn.com/abstract=

Lin Cong (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

HOME PAGE: http://www.linwilliamcong.com/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Simon Mayer

University of Chicago - Booth School of Business ( email )

5807 S Woodlawn Ave
Chicago, IL 60637
United States

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