Measurement & economic indicators: Final report

Vili Lehdonvirta, Bernhard Rieder, Elisabetta Raguseo, Doh-Shin Jeon, Inge Graef, Joris van Hoboken

Research output: Book/ReportReport

Abstract

Online platforms play an important role in many European industries, from media and advertising to travel and retail. They allow buyers and sellers of goods and services to find each other, trust each other, and trade with each other. They are likely to be significant gateways for many European small- and medium-sized enterprises (SMEs) to global markets. Due to their pivotal position, there is a risk that they may in some cases also misuse their gatekeeper position. As in any market, public policies could help maximize the benefits and minimize the harms of the online platform economy. The European Union and its Member States are already engaged in such policy making, in domains ranging from consumer protection and fair trading practices to competition and media law. However, a challenge to policy makers and researchers is that there is a lack of data on many aspects of platform companies' economic role and behaviour. Traditional economic statistics, national accounts, and market data are not geared towards observing intermediaries that may produce no goods and hold no stocks themselves, yet still play a central role determining in how they are allocated. The objective of this report is to identify indicators that could be used to monitor the online platform economy for the purposes of policy making and, where considered necessary, further regulation, and to recommend corrective actions in areas where no indicators are available to ensure such data becomes available in the future. We break down the problem of observation into three broad areas that cut across policy domains. The first area is the economic significance of platforms in the context of the broader economy. Within this area, three topics for measurement are considered: the volume of trade mediated by platforms; platform size and importance; and data on data. We recommend that statistical agencies should be empowered to collect data on trade mediated by platforms, for instance in travel and e-commerce. Platform size and “data on data” are active areas of research, where not just new data sources but also more conceptual development is needed; we offer some suggestions in this regard. The second area of observation is the economic power that platforms have over their users. Within this area, three topics for measurement are considered: business dependence on platforms; platform’s share of consumer attention; and acquisitions as competitive strategy. We find that, from a business strategy perspective, business dependence of platforms is conceptually quite well understood, but good data sources and data are lacking. We recommend that both industry associations and statistical agencies invest into collecting suitable data. Platforms’ share of consumer attention is still an area for further research. Beside the standard approaches, we are suggesting more alternative ways, such as measurement via “big data” web traffic. Regarding acquisitions as competitive strategy, including “killer acquisitions” designed to pre-empt future competition, we suggest automated market intelligence data feeds such as an additional way to add puzzle to a jigsaw. However, such data is likely incomplete, and we recommend that the EU considers new obligations on major platforms to report M&A activity to the European Commission, for ex-post research and monitoring purposes, in particular when these M&A are not captured by thresholds in the applicable EU and national merger rules and may therefore never be assessed against their compliance with applicable competition rules. We also propose a number of research questions for furthering the understanding of acquisitions in platform competition and policy. The final area of observation covered in this report relates to the considered consequences of platforms’ economic power: how to measure platform volatility; platform transparency; and other potentially problematic and thus policy-relevant practices. The topic of platform transparency would benefit from further conceptual research to understand for instance the tradeoffs between a public’s need for transparency of powerful actors vs. legitimate private business interests of a platform company. As for other potentially problematic practices, the new EU P2B Regulation that applies as of 12 July 2020 will create new transparency obligations on platforms to disclose data on their internal complaint-handling systems; we recommend that this data be analysed with a view to identifying and assessing any need for further public policy intervention. These initial findings and recommendations were tested in a stakeholder consultation process that helped us to verify the indicators and the overall framework for monitoring the online platform economy for policy and regulation in the future.
Original languageEnglish
PublisherEuropean Commission
Number of pages39
Publication statusPublished - Mar 2021

Keywords

  • Business dependence
  • Share of consumer attention
  • Platform size
  • Platform volatility
  • Platform transparency
  • Acquisitions as competitive strategy

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