Deglobalization of the Internet: Myth or Reality?

Andrey E. Shastitko () and Natalia S. Pavlova ()
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Andrey E. Shastitko: Lomonosov Moscow State University; Russian Presidential Academy of National Economy and Public Administration
Natalia S. Pavlova: Lomonosov Moscow State University; Russian Presidential Academy of National Economy and Public Administration

Journal of Modern Competition, 2024, vol. 18, issue 4, 65-82

Abstract: The article shows that, along with technical restrictions on access to internet resources around the world, including due to the use of geo-blocking, new deglobalization factors have emerged associated with the spread of digital platforms and the creation of digital ecosystems. The effect of these factors is based on the exploitation of the bounded rationality of platform users and on the difficulties of solving the problem of collective actions of users, which together create new switching costs and impede the development of competition. The approaches of new institutional economic theory and theory of industrial organization are used as the methodological basis for the study. The main strategies of ecosystem leaders to increase the costs of switching for users and to “lock” them into the ecosystem are described: from strategies less dangerous for competition, such as recommendation systems or bonus programs, to more dangerous ones - in particular, strategies to prevent innovations that would make it easier to multihome or to switch between ecosystems. The article demonstrates how traditional theories of harm developed in antitrust can be used to explain the “sharing” of users between ecosystems, and what effects are unexplained and require further theoretical elaboration. In particular, the applicability of the concepts of input foreclosure and aftermarkets to the analysis of ecosystem behavior strategies is analyzed. New approaches from foreign methodological documents in the field of antitrust related to market analysis and merger assessment are considered as ex ante control measures. It is shown that, despite some progress in practice, a number of questions remain unanswered, including at the theoretical level. The article may be of interest to both regulatory authorities and antitrust experts.

Keywords: internet; digital platforms; digital ecosystems; competition; theory of harm; network effects (search for similar items in EconPapers)
Date: 2024
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DOI: 10.37791/2687-0657-2024-18-4-65-82

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