A substantially similar version of this blog was published on the blog of my employer, Public Knowledge.
Last year, Public Knowledge and Roosevelt Institute published my book, The Case for the Digital Platform Act, I argued there that we could define digital platforms as a distinct sector of the economy, and that the structure of these businesses and the nature of the sector combined to encourage behaviors that create challenges for existing antitrust enforcement. In the absence of new laws and policies, the digital platform sector gives rise to “tipping points” where a single platform or small oligopoly of platforms can exercise control over a highly lucrative, difficult-to-replicate set of online businesses. For example, despite starting as an online bookseller with almost no customers in 1994, Amazon has grown to an online e-commerce behemoth controlling approximately 40% of all online sales in the United States and enjoying a market capitalization of $1.52 trillion. Google has grown from a scrappy little search engine in 1998 to dominate online search and online advertising — as well as creating the most popular mobile application system (Android) and web browser (Chrome).
Today, Public Knowledge released my new paper on digital platform regulation: Mind Your Own Business: Protecting Proprietary Third-Party Information from Digital Platforms. Briefly, this paper provides a solution to a specific competition problem that keeps coming up in the digital platform space. Continuing accusations against Amazon, Google, and other digital platforms that connect third-party vendors with customers, that these platforms appropriate proprietary data (such as sales information, customer demographics, or whether the vendor uses associated affiliate services such as Google Ads or Amazon Fulfillment Centers) and use this data collected for one purpose to privilege themselves at the expense of the vendor.
While I’ve blogged about this problem previously, the new paper provides a detailed analysis of the problem, why the market will not find a solution without policy intervention, and a model statute to solve the problem. Congress has only to pass the draft statute attached from the paper’s Appendix to take a significant step forward in promoting competition in the digital marketplace. For the benefit of folks just tuning in, here is a brief refresher and summary of the new material.
A side note. One of the things I’ve done in the paper and draft statute in Appendix A (Feld’s First Principle of Advocacy: Always make it as easy as possible for people to do what you want them to do) is to actually define, in statutory terms, a “digital platform.” Whatever happens with this specific regulatory proposal, this definition is something I hope people will pick up on and recycle. One of the challenges for regulating a specific sector is to actually define the sector. Most legislative efforts, however, think primarily in terms of “Google, Facebook, Amazon, maybe Apple and whoever else.” But digital platforms as a sector of the economy includes not just the biggest providers but the smallest and everything in between. With all due respect to Justice Potter Stewart, you can’t write legislation that defines the sorts of actors covered by the legislation as “I know it when I see it.”
More below . . .