Regulating data platforms from a value of data approach

Abstract

<p><b>Purpose</b></p><p>This study aims to investigate the impact of ex-ante regulatory interventions on emerging digital markets related to data sharing and combination practices. Specifically, it evaluates how such interventions influence market contestability by considering data network effects and the economic value of data.</p><p><b>Design/methodology/approach</b></p><p>The research uses agent-based modeling and simulations to analyze the dynamics of value generation and market competition related to the regulatory obligations on data sharing and combination practices.</p><p><b>Findings</b></p><p>Results show that while the promotion of data sharing through data portability and interoperability has a positive impact on the market, restricting data combination may damage value generation or, at best, have no positive impact even when it is imposed only on those platforms with very large market shares. More generally, the results emphasize the role of regulators in enabling the market through interoperability and service multihoming. Data sharing through portability fosters competition, while the usage of complementary data enhances platform value without necessarily harming the market. Service provider multihoming complements these efforts.</p><p><b>Research limitations/implications</b></p><p>Although agent-based modeling and simulations describe the dynamics of data markets and platform competition, they do not provide accurate forecasts of possible market outcomes.<br></p><p><b>Originality/value</b><br></p><p>This paper presents a novel approach to understanding the dynamics of data value generation and the effects of related regulatory interventions. In the absence of real-world data, agent-based modeling provides a means to understand the general dynamics of data markets under different regulatory decisions that have yet to be implemented. This analysis is timely given the emergence of regulatory concerns on how to stimulate a competitive digital market and a shift toward ex-ante regulation, such as the regulatory obligations to large gatekeepers set in the Digital Markets Act.</p>