User-Generated Data Network Effects and Market Competition Dynamics

This Article defines User-Generated Data ("UGD") network effects, distinguishes them from the more familiar concept of traditional network effects, and explores their implications for market
competition dynamics. It explains that UGD network effects produce
various efficiencies for digital service providers ("data platforms")
by empowering their services' optimization, personalization, and
continuous diversification. In light of these efficiencies, competition
dynamics in UGD-driven markets tend to be unstable and lead to
the formation of dominant multi-industry conglomerates. These processes will enhance social welfare because they are natural and efficient. Conversely, countervailing UGD network effects also empower data platforms to detect and neutralize competitive threats,
price discriminate among users, and manipulate users' behaviors.
The realization of these effects will result in inefficiencies, which
will undermine social welfare. After a comprehensive analysis of
conflicting economic forces, this Article sets the ground for informed policymaking. It suggests that emerging calls to aggravate
antitrust enforcement and to "break up" Big Tech are ill-advised.
Instead, this Article calls for policymakers to draw inspiration from
traditional network industries' public utility and open-access regulations.