FCCA review: Platforms pose similar competition and consumer problems as traditional operating environments

There are several competition and consumer legislation issues related to platform economies. The Finnish Competition and Consumer Authority (FCCA) review highlights the personal information of consumers in particular, the control of which consumers have lost or handed over to companies. The problems associated with platforms cannot be solved by means of new regulation, but by ensuring efficient enforcement of the existing provisions.

Platform economies have changed the traditional relationships and roles between buyers and sellers, and production and offering of commodities. The FCCA actively monitors the development of platforms to remain up to data on the impacts of platforms on the functioning of the market. The FCCA has now prepared a review of what kind of competition and consumer perspectives are currently associated with the companies and consumers operating on platforms.

Platforms make the everyday lives of consumers easier and boost the efficiency of companies by, for example, reducing the time and trouble required for examining different alternatives and making contracts. However, similar competition and consumer problems may occur on platforms as in traditional operating environments. They may make the market entry of competitors more difficult and operators may become dependent on services provided by other actors. As for consumers, they may have fewer choices if the platform they use the most does not communicate with other platforms, or they are tied to a specific platform for a fixed period of time.

The personal information of consumers has become an instrument of exchange that consumers hand over to companies in exchange for digital services. Algorithms using the data steer online trade, marketing and customer service of companies. However, in most cases the way algorithms function is not visible to consumers. Data is provided in a form that benefits all parties involved, when it provides foundations for user-centric service design, and it is not treated merely as a compensation or commodity.

Problems related to platforms have raised the question whether specific legislation should be prepared for platforms. The FCCA has a critical view of special regulation, since many of the existing rules and regulations are already applicable to the operation of platforms. Unnecessary or wrong regulation may be harmful to both consumers and competition. Instead of new regulation, attention should be paid to up-to-dateness of existing regulation, commodity and technology neutrality, enforcement, and efficiency of monitoring.

Read more:

Review of platforms from the perspective of competition and consumer legislation, FCCA Reports 4/2017

How to regulate platforms? Article by Jarkko Vuorinen, Senior Research Officer, FCCA, in the Ajankohtaista kilpailusta (in Finnish only; Topical views on competition) blog