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

Thank you for your attention!

pieter.nooren@tno.nl

report available at http://bit.ly/1OdotO6

Additional slides

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Multiple platforms in audiovisual ecosystem

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