Competition in the Digital Economy and Artificial Intelligence Era: Challenges for a Fair Digital Market and Recommendations for Vietnam

Abstract

This study examines how the digital economy transforms business competition and proposes sustainable solutions for emerging challenges. Using an interdisciplinary approach combining economic theory, legal frameworks, and technological assessment, it identifies four key disruptions to traditional competition: algorithmic collusion enabling price-setting without explicit agreements; data power abuse creating market entry barriers through strategic data control; self-preferencing practices allowing platforms to favor their services over competitors; and “killer acquisitions” eliminating future threats by acquiring potential competitors. Results reveal critical gaps in current competition laws, including difficulties defining relevant markets for digital services with network effects, limitations of traditional price-based analysis in zero-price markets, challenges measuring consumer welfare in “free” services, and tensions between protecting competition and encouraging innovation. For Vietnam as an emerging digital economy, the study recommends a comprehensive regulatory strategy: establishing a Digital Economy Unit within the Vietnam Competition Authority; expanding market dominance criteria beyond market share to include data control and network effects; introducing specific anti-competitive behavior rules; implementing transaction-value thresholds for merger control to capture high-value, low-revenue acquisitions; and adopting flexible regulatory approaches for technological change. These recommendations balance fair competition with innovation encouragement. The analysis is particularly relevant to dual transformation toward digitalization and sustainability, as digital platform concentration can either promote or hinder green innovation and sustainable development. The study demonstrates competition law reform's crucial role in supporting both digitalization and environmental sustainability objectives, with significant implications for Vietnam’s broader sustainability agenda.