Data Neutrality, Data Supply, and Market Competition

This National Bureau of Economic Research working paper by Hanming Fang and Soo Jin Kim analyzes the economic impacts of data neutrality regulations on platform markets. The authors examine how such rules affect downstream competition, data production incentives, and consumer welfare. They distinguish between weak data neutrality, which mandates equal data quantity for affiliated and unaffiliated sellers, and strong data neutrality, which also requires equal pricing. The study finds that weak neutrality is often ineffective because platforms can still exclude competitors through discriminatory pricing. While strong neutrality broadens market access and intensifies competition, it simultaneously reduces the platform's incentive to refine and produce high-quality data. Consequently, the resulting reduction in available data may outweigh the benefits of increased competition, potentially lowering overall welfare. The findings highlight a critical policy trade-off: regulators must balance the goal of fair competition against the need to maintain incentives for generating valuable data inputs. This research contributes to ongoing debates in industrial organization and antitrust economics regarding digital platform regulation.