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Digital economy

Economic regulation of major digital platforms : The best way to kill the European digital economy




As European leaders applaud the success of Airbus, an aerospace giant in a duopoly with Boeing, they are about to prevent any possibility of similar success in the digital sector, writes Pierre Bentata (pictured, below).

A Franco-Dutch proposal, now gaining European attention, aims at imposing specific regulations on the major digital platforms, in order to limit their market power. The target of such a regulation is pretty obvious: the big American “tech” companies, and in particular the so-called GAFAM - Google, Apple, Facebook, Amazon and Microsoft - and NATU - Netflix, Airbnb, Twitter and Uber.

Pierre Bentata

Pierre Bentata

According to several reports, these companies enjoy a monopolistic position that ultimately harms European users. More precisely, these companies of accused of controlling the markets on which they operate, based on their important market shares. Yet, the same reports concede being enable to define those markets. In this context, it is argued that a specific regulation should be introduced for platforms deemed too large: a true regulation by size, based on criteria such as turnover, market share and diversity of the services offered, which never takes into consideration consumers’ satisfaction or the economic benefits for the society as a whole.


In practice, once define as a "structuring" digital platform, the company will be required, among other things, to provide information on its algorithms (as we would ask a chef to reveal the secret of the recipes), to share its data with its competitors, and even more important, to present their business development strategies in advance to a European regulator who will decide whether the strategy is prohibited or not, depending on its likeliness to significantly increase the companies’ market share. (This last proposal has been defined as the introduction of a new “abuse of monopolization” specifically designed for large platforms). In short, although they deny it, the promoters of such regulations only have one goal: regulating the large platforms because they are large, regardless of the reason for their success and the existence of competitors.

Besides the legal risk of total arbitrariness on the part of the regulator - how to objectively assess the impact of a company on its consumers based solely on its size ? -, and the political risk of a tit-for-tat escalation in trade protectionism - as was the case with the "GAFA tax" - what will be the obvious consequences of this new regulation?

From a purely economic point of view, it will maintain status quo instead of promoting competition. This is due to the fact that no nascent platform will be willing to grow and take the risk of ending up on the "black list". In addition, the concept of “abuse of monopolization” implies that any potentially effective strategy, which would therefore result in an increase in market share, could be prohibited: in other words, only clearly ineffective strategies would be authorized, i.e. those that no one will take!

In this status quo, or rather this slump, the big losers will be the European citizens, deprived of the current dynamic of innovations and developments in the services provided by the platforms. Indeed, what the promoters of regulatory solutions forget is that the reason why major platforms keep innovating and investing in new solutions lies on the fact that they all compete to satisfy consumers who have the choice between dozens of competitors. While most of the people do their research on Google Search, it is not due to the lack of alternatives - Qwant, DuckDuckGo, Ecosia, Yandex, Yahoo - but to the efficiency of the former. Likewise, those who don't like Amazon can easily turn to Walmart, Otto, or eBay, to name only the most famous. And the same reality prevails in all areas: browsers, "cloud" services, streaming platforms or social networks. In fact, there are hundreds of competitors, and these "giants" themselves are in fierce competition with each other.

With a regulation aiming at limiting the size of the platforms, all of this will end. Platforms will no longer have the possibility to innovate and will no longer have the right to improve their services, since this would increase their attractiveness. This will also slow down the emergence of new digital solutions that could improve teleworking and strengthen individual autonomy.

Instead of promoting the rise of major European digital platform, this regulation will deprive Europeans of the platforms they value and use every day. And to benefit from innovations and new services, they will have to take a plane and go to the United States and China. Hopefully, they’ll take an Airbus to do so.

Pierre Bentata is professor of economics and president of Rinzen Conseil. He holds a Ph.D in economics and an LL.M is civil law. He is a specialist of the economic analysis of regulation and has published several reports on the digital economy and digital platforms.

Digital economy

Digital euro: Commission welcomes the launch of the digital euro project by the ECB



The Commission welcomes the decision taken by the Governing Council of the European Central Bank (ECB) to launch the digital euro project and start its investigation phase. This phase will look at various design options, user requirements and at how financial intermediaries could provide services building on a digital euro. The digital euro, a digital form of central bank money, would offer greater choice to consumers and businesses in situations where physical cash cannot be used. It would support a well-integrated payments sector to respond to new payment needs in Europe.

Taking into account digitalisation, rapid changes in the payments landscape and the emergence of crypto-assets, the digital euro would be a complement to cash, which should remain widely available and useable. It would support a number of policy objectives set out in the Commission's wider digital finance and retail payments strategies including the digitalisation of the European economy, increase the international role of the euro and support the EU's open strategic autonomy. Based on the technical co-operation with the ECB initiated in January, the Commission will continue to work closely with the ECB and the EU institutions throughout the investigation phase in analysing and testing the various design options in view of policy objectives.

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Digital economy

New digital resource launched to support health, social care and industry innovation



Achieving Innovation is a new resource developed by Life Sciences Hub Wales to inform and guide those working across industry, health and social care innovation. It summarises key research, provides critical insights and delivers fresh perspectives from cross-sector thought leaders.

This new digital resource reviews the wealth of knowledge available about innovation in health and social care to equip those who need it with the most relevant and important information. Life Sciences Hub Wales has worked closely with contributors spanning health, industry, academia and social care providing input.

Innovation is perceived by many stakeholders as essential for catalysing system-wide change and making a difference to patients and people. A recent survey commissioned by Life Sciences Hub Wales for Beaufort Research found that 97% of health and social care regarded innovation as being very important, alongside 91% of industry.


However, barriers can make innovation more difficult, including a lack of common language, resources, and cross-sector engagement. Life Sciences Hub Wales has created the Achieving Innovation resource to help address these challenges, identifying evidence-based solutions and answers to help navigate the innovation ecosystem and futureproof our health and social care systems.

The resource is set to be regularly updated with new material, and launches with a:

Cari-Anne Quinn, CEO of Life Sciences Hub Wales, said: “This new resource can play a key role in helping stakeholders of all backgrounds navigate the health and social care ecosystems in Wales and beyond. Innovators hold the key to large-scale transformation of health, care and wellbeing in Wales and this resource will support them in achieving this.”

Minister for Health and Social Services, Eluned Morgan, said: “Innovation plays a critical role in supporting our health and social care sectors in Wales to deliver new ideas and technologies in partnership with industry. I welcome Life Sciences Hub Wales new ‘Achieving Innovation’ resource as a key tool for innovators who are working to overcome real challenges and grasp exciting new opportunities. When we established and funded Life Science Hub Wales, innovation was at the heart of its ethos - this ethos has played a key role in our recovery and response to the impact of COVID-19.”

Dr. Chris Subbe, Acute, Respiratory and Critical Care Medicine Consultant at Betsi Cadwaladr University Health Board and Senior Clinical Lecturer at Bangor University, said: “I was delighted to contribute to the Achieving Innovation resource by exploring the importance of making innovation an everyday habit.

In this time of exceptional pressures on our ability to provide quality care we need to find ways to develop talent and ideas from wherever they come. This new resource should empower multidisciplinary innovators from industry and healthcare backgrounds with the information, context and language required.”

Darren Hughes, Director of Welsh NHS Confederation, said: “We welcome the new Achieving Innovation resource from Life Sciences Hub Wales, as we have seen the impact of innovation and service transformation in response to the Covid-19 pandemic. The resource supports a deeper understanding of innovation and complements our multi-agency report prepared by Swansea University, The NHS Wales COVID-19 Innovation and Transformation Study Report, which draws from a vast evidence-base of staff experiences from across NHS Wales, examining why and how they innovated and looking at practical recommendations to further this agenda.

“As we embark on recovery, it’s imperative that we capitalize on opportunity to improve service delivery, efficiency, patient outcomes, staff wellbeing, and encourage a culture of learning and sharing best practice across organisational boundaries.”

The resource comes at an exciting time for innovation in Wales, with the launch of the Intensive Learning Academies earlier in 2021. The first of their kind in the world, these world-leading academies are delivering innovation-focussed taught courses, research and bespoke consultancy services, with Life Sciences Hub Wales supporting relevant partners.

If you would like to explore the Achieving Innovation resource, click here

About Life Sciences Hub Wales

Life Sciences Hub Wales aims to make Wales the place of choice for health, care and wellbeing innovation. We help to advance innovation and create meaningful collaboration between industry, health, social care, government, and research organisations.

We want to help transform both the health and economic wellbeing of the nation:

  • Accelerating the development and adoption of innovative solutions that support the health and social care needs of Wales, and;
  • partnering with industry to advance economic improvement across the life sciences sector and drive business growth and jobs in Wales.

We do this by working closely with health and social care colleagues to understand the challenges and pressures an organization may face. Once identified, we then work with industry to help source and support the development of innovative solutions to respond to these challenges with agility.

Our team provides bespoke advice, signposting and support to accelerate all innovation journeys, whether supporting a clinician with a bright idea or a multinational life sciences organisation.

Life Sciences Hub Wales helps to catalyse system-wide change by convening and orchestrating a cross-sector innovation ecosystem. These connections enable us to create valuable networking and matchmaking opportunities.

To find out more, click here.

About the Achieving Innovation resource

The resource launches with:

  • Eight Insights for Achieving Innovation- article collating key insights and themes from across the resource.
  • Directory summarizing support and organisations available in Wales.
  • A narrative review of innovation evidence and literature.
  • A policy review of the Welsh government’s approach to innovation.
  • Blogs authored by leaders from across health, industry and social care focussing on innovation.
  • Podcasts where thought leaders discuss the challenges and opportunities of innovation.

Survey Reference:

A recent survey commissioned by Life Sciences Hub Wales for Beaufort Research found that 97% of health and social care regarded innovation as being very important, alongside 91% of industry.”

Beaufort Research were commissioned by Life Sciences Hub Wales to conduct an anonymous survey into cross-sector stakeholder perceptions around the organisation and the wider life sciences sector in early 2021. This was undertaken to help inform Life Sciences Hub Wales’ future strategic direction.

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Digital economy

Economic analysis of Digital Markets Act



The European Commission has presented a proposal for The Digital Markets Act (DMA). Its goal is to create fair and competitive digital markets in the EU. It aims to achieve this by introducing new ex-ante regulations that will automatically apply to so-called "gatekeepers". The gatekeepers are to be large internet platforms that meet selected size criteria, writes Robert Chovanculiak, PhD.

In a new joint publication entitled Economic Analysis of Digital Markets Act, prepared by four think tanks: INESS (Slovakia), CETA (Czech Republic), IME (Bulgaria), and LFMI (Lithuania), we point out the shortcomings of the DMA and highlight the possible unintended consequences of this regulation. In addition, we also suggest a way to modify the proposed procedure for regulating internet companies.

Among the main shortcomings is the very definition of 'gatekeepers'. They do not really occupy a dominant position within the economy as a whole. Even within digital services, there is intense competition between platforms against each other, while at the same time their position in the market is constantly being challenged by new innovators.


The only space where gatekeepers have the ability to influence the rules of the game is on their own platform. However, even though they have full control over setting the terms and conditions for users, they have no incentive to set them unfavourably. This is best seen when it comes to various practices that the DMA proposal restricts or outright prohibits.

In the study, we show that these business practices are time-tested and are legitimately used by many companies in the offline world. Moreover, there are a number of economic explanations in the literature as to why these business practices are not a manifestation of anti-competitive behaviour, but instead provide increased welfare for both the end and business users of the platform.

We therefore recommend that the DMA rethinks the centralization and automation of the entire process of identifying "gatekeepers" and individual prohibited business practices. From the perspective of the CEE region, it is important to maintain the dynamic element of competition. This can be achieved by replacing the static and ex ante approach in the DMA with a polycentric approach where national capacities are involved in decision making while maintaining an open regulatory dialogue in which internet companies themselves have the opportunity to participate.

Robert Chovanculiak, PhD is an analyst at INESS and lead author of the Economic Analysis of Digital Markets Act.

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