Market dominance of GAFA companies and challenges posed to competition policy

With the innovation brought by digital transformation and the so-called “Big Data era” a need for changes is demanded, with greater concern over the consequences that the growing power of digital companies could provoke. Online platforms became very big in the last ten years, with a speed rate of growth without precedents and they became part of people’s everyday life thanks to their being economically convenient and accessible by everyone has an Internet connection. While in the US the problem is still unseen or underestimated because of their Schumpeterian approach to competition, EU Commission in the last years is actively moving to reestablish fair competition, by acting against some major digital platforms (Google was particularly targeted), introducing new regulations to protect users’ data (GDPR) and discussing about future steps. The work focuses on online platforms in general and in particular on the four biggest online platforms known as GAFA: Google, Amazon, Facebook and Apple; the aim is to investigate how these companies were able to dominate their market and expand their domain into other adjacent markets too in a very short period of time, discussing whether they used or are using anticompetitive instruments to do so and whether their exponential growth brings competition issues or problems of other nature. The first chapter will give an overall picture of online platforms and of the market in which these companies operate, that is generally a two-sided or a multi-sided market, explaining the peculiarities of these markets; it will analyze the main characteristics of online platforms, in order to explore how they acquired dominance in a very small period of time. The second chapter will focus on GAFA companies, their history and the business model that lead each of the four giants to success. In the third chapter a description of the Antitrust authorities in US and UE will be provided; focusing on UE Antitrust, the chapter will continue picturing the regulatory framework along with the problems in applying it to digital platforms; then an analysis of various cases opened against GAFA companies will follow. The fourth chapter will go into further details in our evaluation and it will explore the “weapons” online platforms can exploit to be dominant avoiding scrutiny at the same time. After a general assessment, two case studies will be investigated as an example. The last chapter aims to propose and discuss potential solutions through analyses collected from different sources, outlining problems and possible outcomes for every solution. The entire regulatory framework will be put into discussion and a list of the players that have a role in the future of digital economy regulation will be provided.