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While firms pay closer attention to data when they are affected by regulation or when their competitive peers experience data breaches, this increased attention to data doesn’t help them in terms of market valuation. Regulatory compliance iscostly, and that cost exceeds market benefits. The dominant platforms, however, are able to withstand this expense, therebyskewing the competitive arena in their favor bydiscouraging smaller startups. Leiponen suggests that regulation should attempt to balance the scales.
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