Digital economy generates new forms of competition and monopolism

Transformation of traditional markets and big data potential require new approaches to antimonopoly regulation

Head of FAS Industry Control Department Nelli Galimkhanova discussed transformation of competition at the session on Monopolies of digital economy. How should the state give protection on digital markets?”, which was part of the Open Innovations Forum.

She pointed out: “We see that industrial enterprises increasingly feel arrival of digital economy. So far, however, “digital” antimonopoly cases exist only in the field of information technology”.

As an example of using big data in the light industry, Nelli Galimkhanova reminded of the business-model adopted by “Zara”. It was based on the new collection sale data, superfast supply chain, and shortening the production cycle, enabling to catch up with consumer tastes and fully avoid the risks associated with demand uncertainty.

She emphasized that business-model tend to transform, establishing a “breakthrough” business model, which according to Head of FAS Industry Control Department is a “new competitive force of Industry 4.0”. Big data and digital technologies result in high-speed decision-making, building up communications with buyers or suppliers and control from both demand side and supply side.

“This is the so-called “sharing” economy. Companies that do not have big premises or assets are of high value, for instance, Forbes wrote that in August 2016 capitalization of  Airbnb valued US$ 30 billion, which is considerably more than, for example, capitalization of well-known global hotel chains”, said Nelli Galimkhanova.

Competition evolves together with industrial revolutions. Head of FAS Industry Control Department explained that during Industry 1.0 is was price competition, Industry 2.0 –economy of scale, Industry 3.0 – resulted in non-price competition, and new Industry 4.0 – puts behavioral economics at the forefront.

“We need to take into account possible irrational conduct of economic entities”, stated Nelli Galimkhanova, talking about changes in investigation of antimonopoly cases.

Among challenges to antimonopoly regulation Nelli Galimkhanova mentioned high speed of industry changes, “Breakthrough” business-models, sectoral edge blurring, and changes in value orientation.

“The antimonopoly body is based on analysis of the state of competition, while the nature of sectoral competition is changing and new barriers emerge. Therefore, approaches to regulation and market analysis also should change. The speed of antimonopoly regulation should be increased in general”, summed up Nelli Galimkhanova.