This report analyzes the superior bargaining position of digital platform companies and their exploitation of this advantage. Two key characteristics underpin this position: (i) their advanced capacity for data collection and utilization compared to traditional firms, and (ii) their role as rule-setters within the marketplaces they have established.

Existing literature identifies three primary sources of their bargaining power: (i) information asymmetry, (ii) demand-side monopoly power, and (iii) hold-up arising from relationship-specific investments. Due to their superior data collection and utilization capabilities, platform firms are better positioned than traditional firms to exploit information asymmetry, thereby abusing their bargaining position. Additionally, the dynamic nature of platform markets often magnifies demand-side monopoly power. Despite a small market share, platforms can still exert significant market influence depending on user behavior. However, hold-up concerns over relationship-specific investments are less pronounced because platforms, which typically offer standardized terms of trade, find it challenging to enforce customized contract terms tailored to individual business users. Under customized contracts, the likelihood and severity of exploitation through hold-ups become most acute.

Theoretical model analysis reveals that platform firms may have incentives to refrain from using even the information they have acquired to capitalize on their superior bargaining position. Regarding relationship-specific investments, the inability to adopt customized contracts can encourage business users to invest despite the absence of a binding commitment mechanism―in sharp contrast with existing studies on relationship-specific investments and investment delays.

In concludion, this analysis highlights several critical issues that must be addressed to improve the short-term effectiveness and long-term consistency of regulatory measures targeting the abuse of superior bargaining positions by platform firms. First, discussions are needed on victim identification and the impact on the trade order. Current legal precedents requiring the identification of specific victims could hinder efforts to regulate the abuse of superior bargaining positions by platforms. For platforms that set rules for a wide range of counterparties, mandating counterparty specification could significantly limit the regulatory scope for addressing the abuse of superior bargaining positions. In the short term, therefore, it is advisable to alleviate the burden of identifying specific counterparties while still requiring evidence of adverse impacts on the trade oreder, consistent with the Geumbo Development precedent. Moreover, given the multi-sidedness of digital platforms, it is important to consider efficiency-enhancing or pro-competitive effects that may arise in adjacent markets or on the opposite side of the platform when examining instances of superior bargaining position abuse. In the long term, it would be preferable to transition toward regulation through competition law enforcement, such as addressing abuses of market-dominant positions. Acts that harm the trade order against unspecified counterparties are inherently subject to competition law. However, the current reliance on market share as a proxy for market dominance should be replaced by direct measure of market power, and legislative reforms, such as amendments to presumptive provisions, may also be necessary. Finally, to deter and promptly detect abuses of superior bargaining positions by platforms, it is essential to establish a dedicated, permanent oversight bodyendowed with the authority to access data or algorithms as needed.

Preface
Summary

Chapter 1. Introduction
　Section 1. Background of the Study
　Section 2. Key Findings and Structure of the Report

Chapter 2. Characteristics of Platform Businesses and Their Bargaining Position
　Section 1. Bargaining Position and Abusive Practices of Traditional Firms
　Section 2. Characteristics of Platform Businesses
　Section 3. Bargaining Position and Potential for Abuse by Platform Firms

Chapter 3. Economic Analysis of Platform Firms’ Bargaining Position
　Section 1. Incentives for Abuse of Bargaining Position by Traditional Firms
　Section 2. Incentives for Abuse of Bargaining Position by Platform Firms
　Section 3. Comparison of Abuse Incentives between Traditional and Platform Firms

Chapter 4. Key Issues and Case Analysis Related to Platforms’ Bargaining Position
　Section 1. Possibility of Victim Identification and Impact on the Trade Order
　Section 2. The Distinction between Bargaining Position and Market-Dominant Position
　Section 3. Efficiency-Enhancing Effects Derived from Abusive Conduct

Chapter 5. Conclusion and Policy Recommendations

References
Abstract