Controlling Market Power in Digital Business Ecosystems: Incorporating Unique Economic and Business Characteristics in Competition Analysis and Remedies

Digital business ecosystems (“DBEs”) reflect the culmination of progressive changes in business models over the last 40 years. Coupled with the unique economic characteristics of the DBEs, these features amplify concerns arounds their ubiquity and significant market power. This article argues that existing competition analysis and proposed remedial approaches miss important implications of the complex business model and unique economic characteristics of DBEs. These include pervasive market failures, economies of scale in cloud computing technology, and algorithmic preference-shaping, all of which have myriad implications for assessing and controlling market power. If unaccounted for, these features will likely lead to competition analysis and policy approaches that do not appropriately target the source of DBE market power and vast capacity for expansion and growth.

By Diana L. Moss¹

I. INTRODUCTION

Digital business ecosystems (“DBEs”) reflect the culmination of progressive changes in business models and organizational structure over the last 40 years. DBEs feature collaborations of entities, primarily through digital architectures of information and communication technologies. Leading examples of large DBEs are Facebook (social networking), Google (search), and Amazon (e-commerce). Other powerful DBEs, however, are on the rise, including Zillow (real estate) and Optum (healthcare technology). The ubiquity and significant market power of large DBEs is t