By redefining the way enterprises create and deliver value, economic digitization has not only changed the internal operating mode of enterprises, but also changed the entire economic field. This series of changes are realized by constructing new forms of enterprise value chains and relationships between enterprises in the digital ecosystem and digital market.
The digital platform is the engine of this change: the digital market is not just another market channel. It represents a change in the way companies create value and provide value to end users, as well as the change in the way the market competes.
The emergence of the digital market is based on the digital platform, which ensures its operation by formulating access rules and coordinating the behavior of participants. Although its market coordination ability is extremely beneficial to the overall economic development and consumers, it also creates risks due to the concentration of market power. Therefore, policymakers need to identify the market power of the platform.
Economic activities in the field of the digital economy mainly occur in multilateral markets. These markets emerge around digital platforms and are organized by digital platforms to promote value creation and exchanges between different user groups. Since one group joining the platform network will increase the participation value of the other group on the platform and the return on the scale of participation of different users, an indirect network effect arises at the historic moment. In the end, it may lead to a "winner-takes-all" (WTA) situation. Therefore, the multilateral market is prone to a centralized or monopolistic structure.
Although platform monopoly may be the result of platforms competing in order to create greater value for users, from the perspective of competition supervision, large platforms may use the scale of their user networks to consolidate their dominant position, thereby curbing competition. In order to compare the impact of the network scale of these platforms, policymakers have proposed a number of expected remedies, including restricting large platforms from expanding to other markets, restricting their participation in platform markets controlled by them as providers of goods or services, and splitting large technology companies while designating the technology platform as a "platform utility company", etc.
It has been speculated that the larger the scale of a platform, the stronger its indirect network effect, which grows almost exponentially. Therefore, the winner-takes-all is inevitable. However, recent studies have shown that these dynamic changes are more complex, so some people have begun to question the logic of winner-takes-all. In addition, many factors can interrupt the increasing process of network effects, which means that the value does not always increase with the expansion of the network scale, and of course, it does not increase exponentially, but platforms with smaller network scales can often successfully compete with large platforms.
