Dependency in the Digital Age? The Experience of Mercado Libre in Latin America

Abstract

Using Mercado Libre (MELI), Latin America’s platform leader, as an illustrative case, this article analyses the effect of regional platforms on development by considering their interplay with both global leaders and local actors. Building on the Dependency Theory, we identified that MELI structurally depends on algorithms and computing power provided by US Big Tech. Nonetheless, we also found that MELI is at the frontier in applied data analysis solutions tailored for its businesses. Together with a privileged access to personalized and cross-fertilized market and financial datasets, its internal and purchased technologies are the source of asymmetric relationships with its platforms’ users. Seen together, we conceptualize MELI’s place in digital capitalism as extractivist with local actors and, just like local elites when the Dependency Theory was formulated, MELI is complicit with global powers. But, unlike those elites’ firms, MELI is not technologically laggard and its value capture is underpinned by its technological advantage. We thus conceive (digital) dependency as multiple layers of economic power where leading firms from the peripheries occupy intermediate and interconnecting positions. And while these regional leaders operate at the technological frontier, this manuscript shows that economic power relations based on technological asymmetries remain crucial for studying underdevelopment.