More Competition or More Regulation of Digital Markets?

What is it about?

This article examines whether today’s digital markets need more competition law enforcement, more regulation, or a combination of both. It argues that many of the problems associated with large digital platforms—such as market concentration, lock-in effects, the power created by data accumulation, and the use of artificial intelligence—are not entirely new. Rather, they reflect well-known forms of market failure, including network effects, negative externalities, information asymmetries, and heightened risk and uncertainty. The article explains that competition law and regulation serve different purposes. Competition law reacts to harmful conduct after it occurs, while regulation can intervene in advance to shape market structures where competition alone cannot work effectively or quickly enough. In digital markets, the speed of technological change and the tendency for “size to beget size” make purely ex post enforcement insufficient.

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Photo by Markus Spiske on Unsplash

Photo by Markus Spiske on Unsplash

Why is it important?

The article assesses recent EU initiatives, especially the Digital Markets Act and emerging AI regulation. It concludes that the key challenge is not to stretch competition law beyond its proper role, but to design a clear and coherent regulatory model for digital markets and AI that complements competition law. The focus should be on addressing genuine market failures, protecting fundamental rights, and clarifying the respective roles of EU institutions and Member States.