PhD Defense J. van den Boom LLM

The digital sector is a cornerstone of the modern economy, and regulating digital enterprises can be considered the new frontier for regulators and competition authorities. To capture and address the competitive dynamics of digital markets we need to rethink our (competition) laws and regulatory strategies. The thesis develops new approaches to regulating digital markets by viewing them as part of a network industry. By combining insights from our experiences with existing regulation in telecommunications with insights from economics literature and management theory, the thesis concludes by proposing a new regulatory framework called ‘progressive ecosystem regulation’.

The thesis is divided in three parts and has three key findings or contributions. The first part explains why digital platforms such as Google’s search engine, Meta’s social media platforms and Amazon’s Marketplace are prone to monopolization. Here, the thesis develops a theory of ‘digital natural monopoly’, which explains why competition in digital platform markets is likely to lead to concentration by its very nature.

The second part of the thesis puts forward that competition in digital markets persists, even if there is monopoly in a market. Here, the thesis develops a conceptual framework for competition between digital ecosystems, which consists of group of actors and products. Digital enterprises compete to carve out a part of the digital network industry where they can exert control, and their strong position in a platform market can be used offensively or defensively to steer competition between ecosystems. The thesis then sets out four phases of ecosystem competition, which helps to explain when competition in the digital network industry is healthy and when it is likely to become problematic.

The third and final part of the thesis brings together these findings and draws lessons from our experiences of regulating the network industry for telecommunications. Based on the insights developed in the thesis it puts forward a proposal for ‘progressive ecosystem regulation’. The purpose of this regulation is to protect and empower entrants from large digital ecosystems so that they can develop new products and innovate disruptively. This regulatory framework would create three regulatory pools: a heavily regulated, lightly regulated and entrant pool. The layered regulatory framework allows regulators to adjust who receives protection under the regulation and who faces the burdens relatively quickly, so that the regulatory framework reflects the fast pace of innovation and changing nature of digital markets. With this proposal, the thesis challenges and enriches our existing notions on regulation and specifically how we should regulate digital markets.