The offering of financial services by digital platforms carries several risks to competition. These structures can be either one-sided (i.e. all value is extracted from one side, like in a social network) or two/multi-sided (i.e. both providers and consumers benefit from an increase in variety or in size on the other side of the platform). The most important competition issues that digital platforms can be a source of are:
- Network and ecosystem effects, when the possession of market power in one industry favors the obtention of dominance in a related market;
- Gatekeeping, when the platform owner can act as a licensor and restrict access to its possible competitors;
- Self-preferencing, if the platform owner also offers financial services and nudges consumers to his offerings over third-party providers; and
- Big data repurposing, when the platform owner captures large amounts of data and uses it either in or outside of the platform, to gain an unfair advantage over competitors which also participate in the platform.
Country Examples
Safaricom used its controlling position in Kenya in anticompetitive ways., After having obtained market dominance with its M-Pesa platform, Safaricom launched several financial products on top of it, such as M-Shwari and KCB M-Pesa (both credit and savings) and Masoko (an e-commerce platform)1. Additionally, the company abused its power by overcharging and being opaque price-wise on transactions that used their network2.
1. Paelo, A. and S. Roberts (2022), “Competition and Regulation of Mobile Money Platforms in Africa: A Comparative Analysis of Kenya and Uganda”, Review of Industrial Organization, Vol. 60/3, pp. 463-489, https://doi.org/10.1007/s11151-022-09858-x.
2. Bossone, B. et al. (2021), Developing Digital Payment Services in the Middle East and North Africa: A Strategic Approach, World Bank Group, Washington, DC, http://documents.worldbank.org/curated/en/206121625810043720 (accessed on 30 August 2025).
