Measuring the online platform economy in Germany

Online platforms have become one of the most important business models of the digital economy and likely counteracted some of the drop in economic activity during the COVID-19 pandemic. At the same time, platform markets are subject to controversial debates about market power and the need for pro-competitive policy reforms. Despite their rising importance in modern economies, however, a lack of data on platforms' activity complicates the evaluation of their impact on economies and societies. In this paper we aim to improve the understanding of patterns of platform diffusion and market dynamics among online platforms in Germany using proprietary data on website traffic between 2018 and 2021. Our analysis suggests that German platform markets experienced considerable growthover the past years, and especially since the onset of the COVID-19 pandemic. Results also show that the pandemic led to diverging growth patterns between sectors of the German platform economy, reflecting the sectoral heterogeneity of the COVID-19 shock. Finally, while German platforms are numerous, they often fail to reach a critical size to challenge the mostly foreign dominant platforms. We associate this finding with the observation that dominance in platform market typically persists over time, possibly reflecting a lack of market contestability.