Policy Note 34: Regulating digital platforms in the interests of consumers
More and more products and services are being offered on digital platforms such as Airbnb, Booking.com, Ebay and Uber. "Digital business models often bring new providers onto the market and competition is more intense. Consumers benefit from this through more choice and lower prices," says Tobias Thomas, Director of the economic research institute EcoAustria. Online platforms reduce the costs of initiating business and increase transparency on the market. Resources can also be better utilized, as is the case with car sharing, for example. "Overall, sales, income and the prosperity of an economy increase," says Thomas.
However, established providers complain in many places that existing regulations, e.g. in the areas of labor, environmental or tax law, are being undermined in the course of digital business models. "It is the task of the state to ensure fair competitive conditions for traditional and new providers. An unreflected extension of existing regulations to new business models makes just as little sense as complete liberalization without taking into account relevant aspects such as security or consumer protection," says Thomas. Particularly in times of technological progress, it is important to constantly review which existing regulations are still necessary, which can be relaxed and where new regulatory requirements have arisen.
For example, digital platforms and networks can tend to form monopolies, as their size alone can represent a barrier to market entry for new providers. On the other hand, navigation systems mean that detailed knowledge of the road network could be dispensed with in cab driver training. In this area, the recent decision to extend price regulation to hire car companies also prevents lower prices for passengers and better capacity utilization. Instead of protecting certain groups of providers, competitive framework conditions should be designed in the interests of consumers and the prosperity of the economy as a whole, concludes an EcoAustria policy note published today.
