Regulatory Challenges of Online Platforms and their Impact on Traditional Business Models

Global reach, low marginal and distribution costs, economies of scope, and growing returns to scale are all advantages of digital platforms. Serving more customers in conventional marketplaces requires paying for physical distribution. On the other hand, manufacturing in digital markets especially information services imply minimal variable costs and fixed expenses. This makes it possible for digital platforms to grow quickly. In order to better understand customer preferences and likes and provide higher-quality services, platforms gather user data and apply machine learning algorithms. Larger platforms outperform smaller ones because algorithmic technologies' predictive capacity performs better on larger datasets. Because of this, bigger platforms may charge more for their tailored advertising services.