Digital Platforms Regulation: An Innovation-Centric View of the EU’s Digital Markets Act

Abstract

We consider the merits of the recent EU’s Digital Markets Act from the perspective of innovation and value creation. We conceptualize innovation as new interactions being created by the digital platform leading to ‘value creation’, in contrast to facilitating existing interactions or market transactions, which we conceptualize as coordination between business users and end-users leading to ‘value exchange’. We apply this innovation perspective to the DMA to assess two of the most contentious provisions: self-preferencing and data-sharing. We show how these practices reveal great heterogeneity regarding the extent to which they facilitate innovation (and thus value creation) or only affect redistribution of value depending on whether they replace existing interactions (little to negative innovation effect), sustain existing interactions (moderate, positive innovation effect), or they trigger new interactions (large, positive innovation spillovers).

Keywords: DMA; platform regulation; innovation; value creation; value exchange; self-preferencing; data-sharing; interactions

JEL Classification: M1; M2; L1; L4; L5; K21; L12