Network Effects and the Dynamics of Digital Markets in the Data Economy

With the advent of the digital age, data has become one of the most powerful tools shaping markets. The article examines how data is crucial for online platforms in gaining dominance, as well as several characteristics of online markets that play a role in competitiveness. Throughout the article, network effects, multi-sided markets, switching costs, and lock-in effects are discussed as examples of how these factors might affect innovation and restrict competition. The purpose of the article is to provide an overview of digital markets’ challenges and highlights recent regulations intended to promote a competitive digital markets.