An increasing proportion of the global economy is represented by platforms: for example, marketplaces, app stores, payment networks, ridehailing and delivery apps, advertising exchanges, freight, and accommodation booking sites. What these businesses have in common is that they do not only sell a product of their own. A marketplace sells buyers to sellers and sellers to buyers; an advertising exchange sells audiences to advertisers and advertisers to publishers. Economists refer to them as ‘two-sided markets’ and have studied them for more than two decades.
The framework is standard in competition economics, where it shapes market definition and the assessment of market power, and in the strategy literature on subsidising one side of a market to attract the other. However, disputes involving two-sided platforms have not to date been a significant feature of the arbitration landscape. That is likely to change, in which case the valuation of platforms may well take centre stage.
In “The Valuation of Two-Sided Platforms in Arbitration,” published by ICC United Kingdom’s Pulse newsletter, author Ryan Williams introduces arbitration practitioners to some of the factors that may need to be taken into account when performing such valuations.
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