In the tech industry, first-movers often come to occupy large market shares, potentially leading to a natural monopoly in the given market. Firms might also vertically and horizontally integrate, acquiring other businesses in pursuit of efficiency gains or a competitive edge. Though maybe a red flag for competition regulators, whether such efforts by digital platforms cause measureable harms to consumers is not always easy to determine. At its heart, competition regulation seeks to limit the harms of monopoly – limited choice, high prices, and lack of innovation. This is done with the aim of maximizing consumer welfare. Regulators, in pursuing digital platforms, believe that they are doing just that. But platforms, even those that are very large, rarely fit neatly into the monopoly box. Platforms might offer unpriced services to users, and competitors are just a click away. Further, the pace of innovation is often break-neck. Firms that do not change with the times quickly lose market share – evidenced by the fact that the tech landscape of today is vastly different from even five years ago. Despite the unique nature of tech markets, competition regulation is generally pursued with traditional regulatory tools. But this leads to insufficiently dissuasive enforcement actions, with litigation processes that move slowly compared to the pace of change in the digital economy. Whether these efforts to rein in digital platforms actually boost consumer welfare – which should be a guiding question for regulators – is unclear. This is especially true where digital platforms ‘disrupt’ traditional markets with low prices, efficiency gains, and innovation.

An Obsession with Building Trade Platforms

My bleak assessment of the odds of government-led platforms does not mean, however, that governments have no role to play in encouraging the growth of digital trade in their domestic economies. Rather than invest money in building flawed platforms, governments need to focus with laser-like intensity on building the right domestic infrastructure and policy settings to support digital trade. For many governments, this starts with clear knowledge and understanding of what the digital economy looks like today and what sort of support will be needed for the future. Officials need to remember that firms deliver both goods and services online and build systems to support both types of companies. Another default decision made by many governments seems to be to insist that individuals be given coding skills. If companies are going to be competing online, it makes sense to officials that firms need the ability to craft webpages, apps, and other complicated pieces of programming. While this is not entirely wrong, for most smaller firms today, there are already ample free or low-cost solutions that solve most basic needs for companies moving online. Many firms no longer need a website at all, but can set up virtual storefronts on a range of platforms.