The rise of digital platform companies is a global phenomenon in the era of the digital economy. While platform companies bring convenience to society, they also pose the risks of monopolies, cut-throat competition, and infringement of user rights. This raises new challenges for digital platform governance.
Digital transformation is sweeping across all industries, as large digital platforms extend their services to encompass every facet of social life. The public nature of digital platforms gradually becomes apparent in this process. Public infrastructure exhibits two key characteristics. First, the industries have relatively high access thresholds, and the operators lack competitors. Second, the services provided are essential to the public, with users’ economic behavior and social interaction relying heavily on it.
Evaluated against these criteria, it becomes apparent that large digital platforms already possess the basic features of public infrastructure. Firstly, network effects are evident in the operation of these platforms, and the collection and analysis of big data necessitate strong technological support, which constitutes a high access threshold for the digital market. Secondly, users are obviously vulnerable and dependent in contrast to operators’ control over them.
While digital platforms operate within the private sector, they are also endowed with a social and public nature due to the scope and nature of their services. However, given their private ownership, platform companies tend to utilize data to generate profits, with the ultimate goal of maximizing corporate interests. This results in a tension between their public nature and profit-orientation.
The Anti-Monopoly Committee of the State Council of the PRC released anti-monopoly guidelines for the platform economy in February, 2021. A series of laws and policies regarding data protection, antitrust, anti-unfair competition, and protection of labor rights were issued in the same year by a number of Chinese government departments. Subsequently, China’s internet regulatory agencies launched special rectification actions for the internet industry, focusing on issues such as excessive concentration of platform operators and exclusive dealing.
As platform companies continue to grow and serve as public infrastructure, they need to assume public responsibilities such as platform transparency and data sharing. Unlike public institutions, large digital platforms cannot be freely available to the entire society. Imposing a legal obligation on these platforms to open up to all competitors would significantly dampen the innovation enthusiasm of platform companies.
The business of digital platform companies is primarily based on innovation, and their innovative products continuously give rise to new social functions and corresponding services. The key to antitrust governance of digital platforms lies in finding a balanced approach that not only safeguards the innovativeness of platform companies, but also prevents monopolistic practices that hinder fair competition.
In China, regulatory authorities in charge of the supervision and management of digital platform companies include the People’s Bank of China, the Ministry of Industry and Information Technology, the State Administration for Market Regulation, among others. Platform antitrust governance currently lacks inter-departmental coordination, and a policy coordination mechanism has yet to be built. It is advisable to set up a comprehensive regulatory agency to better monitor and evaluate the market behavior of platform companies, thus enhancing the alignment of policies regarding standardization of data use, user rights protection, and antitrust.
According to the Advocacy Coalition Framework, balanced governance requires that the government create a rational, open, and normalized dialogue system to promote policy compromise and policy learning. A collaborative governance framework which incorporates social regulatory forces should be constructed in addition to laws, regulations, and administrative supervision and management.
Social regulatory forces typically come from social supervision and industry self-regulation. The concept of an “algorithmist,” proposed by Viktor Mayer-Schönberger, a professor of internet governance and regulation at the University of Oxford, can be used as a reference point. An algorithmist is not an individual technical expert. The name refers to technical institutions that specialize in big data and monitor the transparency of data operations. The government can conduct technical consultations with algorithmists on the use of big data in the public sphere, thereby introducing social supervision into platform governance.
Both external and internal algorithmists could be employed. The former offers services such as big data audits and application security monitoring. The latter are responsible for overseeing the big data activities of digital platforms from within the company. They are tasked with conducting internal reviews of data operation compliance prior to the intervention of administrative and legal regulation. Incorporating social regulatory forces into the collaborative framework for platform governance can help platform companies develop an awareness of social responsibility, contributing to the balance between economic benefits and social value in the long run.
Zhao Kang is an assistant research fellow at the Institute of Journalism and Communication at CASS.