As dominant intermediaries in technology mediate markets, platforms wield considerable influence over the ecosystems of businesses and services that rely on their infrastructure. Their control over engagement data and ad-supported business models gives them the power to change entire industries on a whim. The disruption is especially acute when vertically integrated platforms like Amazon control both the marketplace and the underlying cloud computing infrastructure.
The scale-free network dynamics that characterise digital platforms pose unique difficulties for traditional competition policy. A new regulatory approach is needed; one that reconstitutes the power dynamics and accountability frameworks governing platforms.
Key elements of this approach include:
- Establishing clear exit rights for users and reducing switching costs to new platforms through enforced adversarial interoperability;
- Mandating transparency to prevent exclusionary conduct;
- Reverting to fundamental principles of contract law that require actual consensus for terms and conditions; and
- Protecting late investors in platform-dependent businesses.
Even proactive interventions like designating platforms as common carriers may be insufficient. Bolder actions redefining the relationships between platforms, users and dependent businesses are required to address the root causes of platform decay and associated information disorder.
This policy brief provides a searching analysis of the pernicious effects of concentrated digital platform power. It offers a framework for the regulatory changes needed to promote a more equitable and resilient digital economy that is less hospitable to information disorders.
