Communications networks and other platforms are valuable in large part because of their users. One effect of this is that networks that already have the most users tend to grow even larger. Left unchecked, this can cause significant competition problems and leave individual private companies in charge of vital communications infrastructure.
Even if antitrust law can break up platforms, we still need interoperability. The starfish problem, discussed at length in “The Case for the Digital Platform Act,” is that a single fragment of a broken-up company could still grow into a monopoly or, at best, two or three companies, which would still be an oligopoly. Platform markets are prone to becoming highly concentrated because of network effects–for example, people like being able to communicate and share with a large number of friends easily. Without some form of pro-competitive regulation, the best way to do that would be for everyone to be on the same network.
But there is a solution to this problem: interoperability. With interoperable networks, users can switch from one service provider to another without losing touch with their friends and family. With interoperable networks, users do not have to pick the provider that the people they know already use. Interoperability preserves the benefits of large scale communications networks, without creating excessive concentrations of private power.
Interoperability can be complex, and the way we make services like telephony and email interoperable might be different from the way we make other kinds of services interoperable. Sometimes interoperability has been imposed by law. At other times, markets settle on interoperable standards without legal intervention. With today’s major platforms, it does appear that some outside push is needed to ensure that consumers benefit from interoperable systems.
Senator Mark Warner’s bill, the ACCESS Act, introduced today, is a very smart approach that establishes general interoperability requirements for large providers. It ensures that users will not be stuck in the walled garden of particular private platforms, establishing the technical baseline that we will need to increase platform competition without fragmenting and isolating the user base. It does not dictate to platforms how they should function, and leaves plenty of room for platforms to compete with each other by creating new features and capabilities.
Two important considerations bear mentioning. First, this bill preserves the ability of platforms to offer secure, end-to-end encrypted communications. Security and interoperability are not either/or options. Second, this bill preserves the ability of states to issue their own interoperability rules that go further than the federal standard. However, we do think the bill would be improved if it had specific language stating that states remain free to impose additional requirements on platforms.
Interoperability is not the only new law we need to deal with consumer protection and competition issues as they relate to digital platforms. Most fundamentally, we need a dedicated regulatory authority to promote competition in digital platforms by issuing rules that create space for competitors to today’s dominant digital platforms to thrive. Interoperability is a crucial tool for that regulatory authority. And we still need a comprehensive federal privacy law to protect a person’s privacy and autonomy in the digital world. But some of the problems that arise with today’s mega-platforms are fundamentally market structure issues. This bill shows how to address them.
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