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

Abstract

We model platform competition with endogenous data generation, collection, and sharing, thereby providing a unifying framework to evaluate data-related regulation and antitrust policies. Data are jointly produced from users' economic activities and platforms' investments in data infrastructure. Data improves service quality, causing a feedback loop that tends to concentrate market power. Dispersed users do not internalize the impact of their data contribution on (i) service quality for other users, (ii) market concentration, and (iii) platforms’ incentives to invest in data infrastructure, causing inefficient over- or under-collection of data. Data sharing proposals, user privacy protections, platform commitments, and markets for data cannot fully address these inefficiencies. We propose and analyze user union, which represents and coordinates users, as an effective solution for antitrust and consumer protection in the digital era.

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

JEL Classification: L10, L41, L50, O30