On top of that, some worry this position becomes self-sustaining because the data the platforms collect gives the companies an advantage their rivals cannot overcome. Some advocates claim this harms consumer welfare and innovation. Second, because of network effects, many platform markets have one or two dominant players. Some people are concerned that platforms could compete unfairly by using data about sales by third-party sellers to decide whether to develop and sell competing products. First, certain companies, such as Amazon, sell directly to customers but also run a platform that connects third-party suppliers to customers. The rapid growth of large platforms has caused some activists, scholars, and political officials to worry about their impact on competition. There is a well-established literature on the nature and role of these platforms, with the consensus being they offer users tremendous benefits, largely by reducing the transaction costs of finding other parties to interact with. For example, shopping malls, job placement services, credit card companies, and newspaper classified ads are all two-sided markets.
Some important distinctions are the degree to which a platform relies on advertising revenue versus fees, its rules for managing suppliers and content, and its relationship with consumers. Others primarily allow users to communicate with each other (Facebook and TikTok) Thus, each platform has created its own rules for optimizing these interactions. Some sell products (Amazon and eBay) or services (Task Rabbit and VRBO). Although many platforms run marketplaces that match buyers and sellers (Amazon and Etsy), other platforms try to connect people interested in dating (Zoosk), renters with owners (Airbnb), advertisers with viewers of content (YouTube and Facebook), and app developers with phone users (Apple and Google).ĭifferent platforms have different business models, and interact with different parties in different ways. Internet platforms are online businesses that facilitate commercial agreements between two or more sides of the same market-often buyers and sellers of a particular good or service. Studies Arguing for Tighter Antitrust Regulation