Current focus theme of the Platform Observatory: impact of the COVID-19 crisis

The COVID-19 pandemic has accelerated the pace of digitalisation, since confinement measures and closure of frontiers have led most sectors of the economy and society to move their activities online. Although digitalisation of traditional sectors could already be observed before the COVID-19 pandemic, the latter has significantly accelerated its pace and created a situation of “natural experiment” where the opportunities and limits of the online platform economy could be explored.

The Platform Observatory is therefore conducting research on the impacts of the COVID-19 crisis on the platform economy, looking more specifically at three key dimensions of impacts:

  1. Assessment of the economic impacts of the COVID-19 crisis on online platforms, their business users and end users, including the immediate, medium and potential long-term effect;
  2. Possible impact on the structure of digital markets and existing incentives for mergers and acquisitions (M&A) activities by large online platforms;
  3. Assessment of existing or potential political impact of COVID-19.

Due to the lockdown measures, most activities (work, communication, education, entertainment) have moved online. The pandemic has led to an increase in the use of online services and an increase in the breadth of users, including users who were not using such services before (or not as much). As the COVID-19 crisis is lasting, the shifts in consumer behaviour may last as well. Closure of shops and travel restrictions have impacted many sectors of the economy. Businesses in the tourism, hospitality, transportation and event-focused sectors have experienced the hardest economic shocks, while retailers had to turn to ecommerce to pursue their activities and may have increased their dependency on online platforms. The impact of the COVID-19 crisis on online platforms has been linked to the changes in consumer behaviour and businesses users’ economic situation and dependence. Figures show that the largest platforms have been quite resilient and registered profits during the crisis.

The pandemic and resulting economic crisis may have produced different effects on M&A activities. While M&A have stalled in the sectors most affected by the crisis, in other sectors and especially the digital sector, the number of M&A deals shows an overall continuation of previous strategies. Another trend that should be scrutinised will concern the potential acquisitions of failing firms.

Digital issues have been high on the EU political agenda for the past decade, but by increasing the pace of digitalisation, the COVID-19 crisis has highlighted existing issues such as the spread of illegal and unsafe products or the effects of disinformation. The upcoming pieces of legislation to be proposed as part of the Digital Strategy, including on consumer protection and competition, will undoubtfully take into account the impacts and lessons from the crisis, and could build on some of the preventive actions and good practices implemented during the pandemic.

It is expected that the study will be concluded and published on the Platform Observatory website in February/ March 2021.

Current focus theme of the Platform Observatory: impact of the COVID-19 crisis