The Effectiveness of Regulations on the Dual-Role Retailer’s Data Use for Sellers

Abstract

Recent regulatory scrutiny has highlighted concerns regarding Amazon’s use of market data in competing with its sellers through its private-label operations, prompting the introduction of new data governance policies across multiple jurisdictions. Motivated by this development, this paper examines the effectiveness of regulations governing platform data use. We study two policies: Policy S, which prohibits the retailer’s use of market data while granting exclusive access to sellers, and Policy RS, which allows shared data access between the retailer and sellers, reflecting emerging industry practices. These policies are evaluated against a baseline case with no data restrictions. Our analysis shows that while Policy S effectively restricts platform data use and protects sellers, it also generates strong incentives for the retailer to engage in strategic responses, including contractual adjustments and policy circumvention, as it represents the least favorable outcome for the platform. Policy RS, in contrast, emerges as a practical compromise that better aligns platform and seller incentives. We further show that the effectiveness of data regulations depends on the contractual environment and the platform’s ability to adjust its organizational structure. A key insight is that the retailer can undermine regulatory intent through subtle but systematic strategies, such as steering sellers across contract forms and exploiting regulatory ambiguities. These effects become more pronounced under the wholesale contract. Our findings highlight that recent regulations may be insufficient if they do not account for strategic platform behavior. We find that recent data regulations face important challenges, as they may not prevent the retailer from exploiting contractual flexibility and regulatory loopholes. We therefore provide guidance for designing more robust regulatory frameworks with clearer conditions and enforcement mechanisms that explicitly incorporate contract structure and limit opportunities for regulatory circumvention, thereby strengthening protection against unfair competitive practices by dominant platforms.