The Big Tech firms with their platform ecosystems have become dominant by controlling the technological infrastructure on which we rely. The Internet was supposed to free us from intermediaries, but it gave birth to powerful digital gatekeepers that dominate markets at the expense of all stakeholders but their shareholders. The platform owners do not adhere to traditional rules of competition, and since they offer free services without restricting output, antitrust regulation is ill equipped to cope with them. They suppress competition with exclusionary practices such as self-preferencing their offerings, acquiring competitors, and penalizing vendors that work with competitors. The vendors offer value-adding complementary products and services, but do not receive their fair share. They pay high service fees to the platform owner that exploits its superior data access to compete with them. The Epic Games case revealed that even the most powerful vendors can be excluded from the platform.
For consumers, the free service comes at a high price. The dominant platform owners expand vertically and horizontally, restrict consumers’ choices while increasing switching costs, and eventually reduce quality and increase prices. As apparent with Meta, advertising revenue receives priority over consumer welfare, leaving users struggling with fake news and unsafe content. The owners of the Big Tech firms are among the richest individuals, and their software engineers are well compensated. However, the platform owners have exploited employees who are underpaid, overworked, and silenced. Platform owners such as Uber and Wolt made their contractors dependent and deprived them of employee rights before doubling the platform’s commissions. Employee welfare in traditional industries has worsened as well.
Policy making and regulation are in the works, but the slow wheels of justice cannot catch up with elusive platform owners that modify their business models at will. Lax measures such as trusting these firms to regulate themselves are naïve.
It is time to consider a new approach to cope with the grip of platform owners. My book, The Cooperative Economy, available from Routledge, proposes a solution.