Digital Platforms An analytical framework for identifying and evaluating policy options Pieter Nooren European Consumer and Competition Day, Amsterdam, April 18, 2016
Digital Platforms
An analytical framework for identifying and evaluating policy options
Pieter Nooren
European Consumer and Competition Day, Amsterdam, April 18, 2016
Background: assignment from Dutch
ministry to create an analytical framework
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Create coherent analytical framework for assessment of
policy questions related to digital platforms
Platform types: strategies,
revenue models
Opportunities offered by
platforms: products and
services
Risks introduced by
platforms: which risks,
under which circumstances
Role of government, given
opportunities and risks?
Role of current and potential
new instruments?
Effects of instruments on
‘level playing field’ Role of European and
national instruments?
Digital platforms are growing in many
sectors …
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… and raise many questions
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We have developed a framework for
analysis of digital platform cases
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Platform types
and
characteristics
Public
interests
Instruments
and
application
We focus on aspects that differentiate digital platforms from regular businesses
The analysis framework promotes a complete
and consistent analysis of key platform aspects
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Check of our on-line voting tool
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1. Platform types and characteristics
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Examples of platforms: Facebook (1)
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users
data & algorithms
advertisers
€
indirect network
effects
direct
network
effect
other apps
& platforms
Examples of platforms: Facebook (2)
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Direct network effects
Revenue model
- direct payment
- advertising
- access to
- acquisition
Data and Content
- internal usage
- external usage
Indirect network effects
Use of platform by other
applications or platforms
Platform characteristics
Examples of platforms: Apple (1)
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users
other apps &
platforms
data
own apps
Examples of platforms: Apple (2)
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What are the characteristics of
Apple’s platform? Direct network effects
Revenue model
- direct payment
- advertising
- access to
- acquisition
Data and Content
- internal usage
- external usage
Indirect network effects
Use of platform by other
applications or platforms
Platform characteristics
What is Apple’s main revenue model?
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users
other apps
&
platforms
data
own apps
Revenue model
- direct payment
- advertising
- access to
- acquisition
€
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Where are network effects important in Apple’s
platform?
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users
other apps
&
platforms
data
own apps Direct network effects
Indirect network effects
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Do other apps and platforms depend on the
Apple platform?
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users
other apps
&
platforms
data
own apps Use of platform by other
applications or platforms
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How does Apple use data in its platform?
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users
other apps
&
platforms
data
own apps Data and Content
- internal usage
- external usage
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These and other examples show lots of variation
in digital platforms
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Direct network effects
Revenue model
- direct payment
- advertising
- access to
- acquisition
Data and Content
- internal usage
- external usage
Indirect network effects
Use of platform by other
applications or platforms
Direct network effects
Revenue model
- direct payment
- advertising
- access to
- acquisition
Data and Content
- internal usage
- external usage
Indirect network effects
Use of platform by other
applications or platforms
Direct network effects
Revenue model
- direct payment
- advertising
- access to
- acquisition
Data and Content
- internal usage
- external usage
Indirect network effects
Use of platform by other
applications or platforms
Direct network effects
Revenue model
- direct payment
- advertising
- access to
- acquisition
Data and Content
- internal usage
- external usage
Indirect network effects
Use of platform by other
applications or platforms
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Each platform is different – look at the underlying characteristics
• Starting point: the business and revenue model of
the platform owner
• The characteristics themselves are well known from
many other digital and non-digital environments
• These characteristics play out stronger and
develop faster for digital platforms
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Coarse typology of digital platforms
Reseller / distributor
Marketplaces (peer-to-peer)
Social networks Platform of platforms
Network effects No (or limited) network effects
Indirect network effects
Direct and indirect network effects
Indirect network
effects (in multiple directions)
Use of platform by other platforms
None None Limited High, other platforms
depend on the platform
Product and service
markets affected New/mature Mature New New/mature
Case in this study:
2. Public interests
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The government needs to step in when public interests need to be promoted or protected
Public interest Interpretation in this study
Sufficient competition and
innovation
Ensuring static and dynamic efficiency through competition
and innovation
Safeguarding consumer
interests
Promoting consumer choice, offering sufficient levels of
consumer protection and safeguarding fundamental rights.
Freedom from improper
influence
Avoiding unnecessary restrictions by governments, while
safeguarding societal interests through positive obligations
Providing integrity and
continuity
Market players, consumers and government need to be able
to rely on safe and reliable digital communications provided
by networks and services
Example: platform characteristics and public interests
3. Instruments and application
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Many existing instruments can apply to digital platforms
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Many existing instruments can apply to digital platforms
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There are five key considerations in the application of instruments to digital platforms
Topic Considerations
Existing/non-existing
instruments
• What generic or sector specific regulation/instruments are already in
place?
• Are areas not covered and should they be covered?
Application and
enforcement
• Are regulatory frameworks implemented, and are regulators actively
enforcing, or attempting to enforce, regulation to digital platforms?
Static/Dynamic • Digital platforms are in transition and require a more normative/functional
approach instead of overly detailed regulation common to static markets.
Risk/harm
Ex ante/ex post
• Policy question on weight to be attached to certain public interests.
• Risk/harm approach can be used to assess innovation opportunities.
Subsidiarity • How much space have (or should have) national governments to intervene
with generic and sector-specific regulation, taking account of EU
regulation?
• Time horizon: how much time does it take to coordinate on a European
level (static/dynamic)?
Using the framework
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The intended and unintended effects of
instruments are assessed in a return-path analysis
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Wrap-up and key messages
Key messages from our study
• Look at the underlying characteristics of platforms and business models
rather than trying to deal with digital platforms as single category
• Explore existing instruments and options that can be applied to digital
platforms before considering new rules
The analytical framework promotes
completeness and consistency in
policy development
• From characteristics to public
interests and instruments
• And back to assess intended and
unintended effects
Additional slides
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Multiple platforms in audiovisual ecosystem
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