Pieter Nooren (TNO); Nicolai van Gorp (Ecorys); Nico van Eijk, Institute for Information Law (IViR, University of Amsterdam)
The increasing economic and societal impact of digital platforms - such as Google, Apple, Uber, AirBnB, Netflix, etc - raises a number of questions for policy makers. On the one hand, digital platforms offer efficiencies and opportunities for innovation. On the other hand, they challenge existing policy frameworks by disrupting markets and concerns are raised about whether the current regulatory approaches and instruments suffice to promote and safeguard public interests.
We suggest that European policy makers should not focus so much on trying to define a digital platform but rather recognise that platform economics is only one element of a much broader set of characteristics of the entire digital business model. Each business model makes strategic choices in how it operationalises platform economics in order to exploit direct and/or indirect network effects. This choice is made simultaneously with other strategic choices related to other characteristics of the business model, such as how data is being used, what revenue model is applied, etc. Each of these characteristics may involve a risk or opportunity for public interests. When developing policies that aim to address one particular public interest, this affects the balance between the business model’s characteristics and may have unintended effects on other public interests (or worse, undermine and wipe out an entire digital business model). It is therefore crucial to recognise the heterogeneous nature of digital platforms. In particular, one should stay away from attempts to force digital platforms into a single category, as the positive and negative impacts on public interests differ from case to case.
We have developed a practical framework that provides structured guidance for policy makers when designing policies in relation to the digital economy. Our framework differentiates from other approaches in that we take the digital business models as the starting point for the analysis. The framework has been applied to a number of case studies in the European context.
The framework consists of three pillars:
1. Platform characteristics
2. Public interests we distinguish four: competition and innovation, consumer interests, freedom from improper influence, and integrity and continuity of applications.
3. Policy options broadly characterized into: removing obsolete instruments, using existing instruments (stricter enforcement or tailor their application to the digital economy), and adopting new instruments.
The analysis starts with determining the platform characteristics, relate each of these to public interests, and formulate policy options. Next, the framework requires following a return-path analysis for assessing a) how the interventions impact on the business model, b) whether it has the desired effect in public interests, and b) does not have undesired side-effects on public interests. Using this practical analytic framework, policymakers have a tool for more balanced decision making in the context of digital platforms.
