How policy makers can deal with digital platforms

21 Mar 2016

At the request of the Dutch Ministry of Economic Affairs, a TNO-led consortium has built a framework that provides structure and guidance to policy makers that deal with digital platforms, such as Facebook, Apple and Netflix. The framework puts forward two key messages for the current national and European discussions on digital platforms.

The framework, developed in close collaboration with partners Ecorys and IViR, integrates the technical, economic and regulatory perspectives that policy makers need to weigh. The framework addresses the full spectrum of public interests that are affected positively or negatively by the rapid development of digital platforms, including competition between companies, innovation, consumer choice, safeguards for privacy and integrity of data and applications. These and other public interests play a central role in the discussions on digital platforms and the actions that national and European policy makers should… or should not take.

Look at the underlying characteristics of platforms rather than trying to deal with digital platforms as single category

The key point in our framework that differentiates it from other approaches is that we take the technical and business models that platforms use as the starting point for analysis. This means that we look at platform characteristics that capture the technical and business models of specific platforms, such as the revenue model (direct payment, advertising, revenue share), direct and indirect network effects, use of data (internal, external, curation/editorial control), dependence of other companies on a platform, and more. Our platform case studies show that different platforms use different approaches and combinations here. It is therefore crucial to recognise the heterogeneous nature of digital platforms. In particular, one should steer clear of attempts to force digital platforms into a single category, as the positive and negative impacts on public interests differ from case to case. Another observation is that the key platform characteristics are well known from other industries and cases. Certain characteristics, such as network effects and use of data, do play out more pronounced and faster in digital platforms.

Explore existing rules and options that can be applied to digital platforms before considering new rules

The framework uses an all-encompassing approach and includes all available options: remove instruments that have lost their value, use available instruments or re-interpret them to tailor their application to digital platforms, stricter enforcement, and finally, adopting new instruments. A particular emphasis is put on exploring existing options, as they seem fit to deal with several characteristics of digital platforms in a time frame that matches the rapid development of platform technologies and business models.

Minister Kamp builds on findings from the study in his letter to Parliament

In his letter to Parliament, Minister Kamp of Economic Affairs builds on several of the findings from our study and announces that he plans to introduce the framework in the European context during the Dutch Presidency of the European Union in the first half of 2016. He concludes that where specific problems involving platforms occur, government should align its interventions with the sector and region where the problem occurs rather than base its intervention on a generic platform approach. He concludes there is no such thing as «the platform» and therefore also no single platform regulation. Furthermore, he concludes that there are already instruments available that can be used in digital platform cases. In his view, government should therefore carefully analyse where and how public interests are affected before moving to the introduction of new rules.

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