I. Introduction
Digital markets have transformed how consumers access information, communicate, and purchase goods and services. Platforms such as search engines, online marketplaces, social media networks, and app stores now serve as essential gateways between businesses and users. Their scale, speed, and global reach are extraordinary. As these platforms expand, many develop strong market positions that resemble dominance. Although dominance is not illegal, competition law prohibits firms from using that dominance to restrict or distort competition.
Understanding how dominance works in digital markets is essential because these markets behave differently from traditional industries. Features such as network effects, data-driven business models, and multi-sided market structures can magnify the power of leading platforms and make competition more fragile. This article explains how dominance arises in digital markets, the common forms of abuse, and how regulators across the world are responding.
II. Understanding Dominance in Digital Markets
A. Key Economic Features of Digital Markets
Digital markets have several characteristics that make them different from conventional industries. The most important is network effects. A platform becomes more valuable as more people use it. For instance, a social network with millions of users offers far greater utility than one with a few thousand. These effects help large platforms grow quickly and make it hard for new entrants to attract users.
Another defining feature is the role of data. Digital platforms collect vast amounts of information about user behavior. This data allows them to personalize services, improve algorithms, and target advertisements. Control of data becomes a competitive advantage that new entrants struggle to match.
Many digital platforms operate multi-sided markets. They connect different groups—such as users, advertisers, app developers, or merchants—through one integrated system. Decisions affecting one side often influence the others. As a result, evaluating market power or competitive harm becomes more complex.
These elements combine to create high barriers to entry. Dominant platforms can entrench their position not only through size, but through the data they control, the habits they shape, and the structural dependencies they create.
B. How Competition Law Defines Dominance
Under most competition laws, including EU Article 102 TFEU and U.S. antitrust rules, dominance refers to the ability of a firm to act independently of competitive pressures. It is about having substantial market power, not just a large market share.
Determining dominance in digital markets is more difficult than in traditional sectors. Many services are offered for free, so price-based measures of market power are less useful. Instead, regulators focus on control of data, user lock-in and switching costs, platform dependency of business users, and access to essential digital infrastructure.
Once dominance is established, the next step is assessing whether the platform has abused that position by engaging in practices that harm competition or consumers.
III. Common Forms of Abuse of Dominance in Digital Platforms
A. Self-Preferencing
Self-preferencing occurs when a dominant platform favors its own products or services over those of competitors. This can happen through higher ranking in search results, better visibility, or privileged access to data and interface features. For merchants, app developers, or content creators who depend on the platform to reach customers, such behavior can significantly reduce their ability to compete.
B. Exclusive Deals and Foreclosure
Dominant platforms may impose exclusive agreements on business users, device manufacturers, or advertisers. These agreements can prevent partners from using rival platforms or make switching more difficult. Because consumers often rely heavily on default settings, even subtle forms of exclusivity can shut out competitors. Over time, this may lead to market foreclosure, where rivals fail to achieve the scale needed to compete effectively.
C. Tying and Bundling Practices
Tying requires users or businesses to use one product as a condition for accessing another. Bundling combines multiple services into a single package. Digital platforms may use tying or bundling to extend their dominance into adjacent markets. Examples include requiring developers to use a platform’s payment system, or bundling operating systems with proprietary apps. These practices may limit consumer choice and raise barriers for new entrants.
D. Data-Based Abuses
Control over data can also lead to abuse. Dominant platforms may collect more data than necessary, restrict access to essential data that competitors need, or use data from business users to compete against them.
These practices make it extremely difficult for rivals to offer similar levels of personalization or service quality. Data-based abuses are uniquely powerful in digital markets because data advantages compound over time.
E. Predatory and Zero-Price Strategies
Some platforms offer their services at zero monetary price. Although this benefits users in the short term, it can function as a form of predatory strategy. Platforms may subsidize free services using profit from other business lines, or by monetizing user data. Over time, competitors who cannot offer free services may exit the market, leaving the platform with a dominant position that it can later exploit.
IV. Regulatory and Enforcement Approaches
A. European Union
The EU has taken a proactive role in regulating digital platform dominance. Traditional enforcement under Article 102 TFEU has been supplemented by the Digital Markets Act (DMA). The DMA identifies certain large platforms as “gatekeepers” and imposes clear, ex ante rules that prohibit practices like self-preferencing, restricting switching or multi-homing, and combining data across services without consent.
The DMA reflects a shift toward preventive regulation, recognizing that slow investigations may not keep pace with rapid technological change.
B. United States
U.S. antitrust enforcement continues to rely primarily on the Sherman Act and the Federal Trade Commission Act. While historically cautious about intervening in digital markets, U.S. agencies have recently intensified scrutiny of large platforms, focusing on exclusionary contracts, data-driven advantages, and monopolistic behavior.
U.S. law still emphasizes consumer welfare, often measured through price effects. Because many digital services are free, this creates challenges in demonstrating harm. However, modern enforcement is increasingly considering non-price harms such as reduced innovation or loss of privacy.
C. Global Developments
Countries worldwide—including the United Kingdom, India, Australia, Japan, and South Korea—are introducing new rules to manage digital platform power. Many are adopting hybrid systems that combine traditional competition enforcement with targeted regulations. Common priorities include improving transparency, ensuring data portability and interoperability, and preventing anti-competitive conduct before it occurs.
Given the global nature of digital markets, cooperation between authorities is becoming essential.
V. Key Challenges in Regulating Digital Platform Dominance
A. Defining Digital Markets
Market definition is often the first step in competition analysis, but digital markets complicate this process. Because many services are free and multifunctional, traditional methods based on pricing or substitution may not capture competitive dynamics accurately. Regulators must consider user engagement, data flows, and ecosystem effects.
B. Balancing Innovation and Control
Regulators must ensure that interventions do not discourage innovation. Digital platforms often grow by integrating new features or services. Distinguishing between legitimate business expansion and anti-competitive leveraging is challenging. The legal framework must remain flexible enough to support innovation while protecting fair competition.
C. Measuring Harm Without Prices
In markets where users pay with attention or data instead of money, measuring harm becomes difficult. Issues such as reduced privacy, lower service quality, and decreased consumer choice must be evaluated. Competition authorities continue to debate the extent to which these non-price harms fall within antitrust analysis.
D. Speed of Enforcement
Digital markets evolve quickly. Long investigations risk becoming outdated before they conclude. This has motivated several jurisdictions to adopt ex ante rules for dominant platforms, but such rules must be carefully designed to avoid overregulation.
VI. Conclusion
Digital platforms bring tremendous benefits, but their unique structural features also create risks of dominance and abuse. While having a strong market position is not unlawful, misusing that position can harm competition, innovation, and consumers. The forms of abuse seen in digital markets—self-preferencing, exclusivity, tying, data-based conduct, and predatory strategies—reflect the complex economics of digital ecosystems.
Regulators worldwide are adapting, using a mix of traditional competition law and new digital-market regulations. As these markets continue to evolve, the challenge will be to maintain fair competition while preserving the innovation that makes digital platforms valuable.
