Recap: 1st Cross-Disciplinary Management Meeting: Digital Platforms and Policy

The 1st Cross-Disciplinary Management Meeting on Digital Platforms and Policy took place on 27th of May 2022 at LSE. The event aimed to bring together management scholars from different backgrounds to discuss and exchange ideas on platform management and competition. In this article, we summarize the points that were discussed in each of the sessions.

Session 1 – How has thinking changed in the past few years?

This discussion delved into the shifting perspectives on regulation in the digital platform. It highlighted the complexities of platform competition and the control that leading players wield over entire value chains. The debate included arguments for and against stricter regulations, weighing the need for enforcement against the potential impact on innovation presented in the table below:

Arguments for more regulation Arguments against more regulation
– Give back a part of platform’s success; make everyone more prosperous
– Reduce financial strength of platforms (no one is going bankrupt)
– Need to stop platforms becoming multiplatform markets -> reduce market power to make platforms more neutral
– Fostering cross-platform competition and push for more verticals -> spread power across more firms
– Rules might limit the platform to some extent, but can also incentivize others to go beyond the dominant platforms and compete with them
– Might stop a major force of innovation
– Regulation is not only for GAFAM; currently unclear how it does affect other, smaller, or emerging platforms
– Consumer harm: currently there is a huge consumer surplus in many platforms like Google search or email that is not really measured (compared with the high salary of a professional football player but brings joy to many people)
– Unclear effectiveness of regulations; “If some of the largest mergers would have been prohibited; do we really believe that the leaders would not be the dominant platforms?”

The session also tackled the ongoing challenges related to the regulation of digital platforms.

  • Difficult to identify suitable metrics to determine need for regulation
  • Antitrust — balancing enforcement and innovation.
  • Balancing control in terms of platform creating value and enabling others to create value.
  • Platforms as institutions with state-like power
  • Multiple  [SD1] legal systems both in a given jurisdiction and across jurisdictions
  • Minimal plurality — all within the platform value-chain. Comparison drawn with the plurality of 8-14 Century of Islamic Golden Age.
  • The role of the state in the technologies creating the value[1].
  • Difficult to forecast the implications of regulatory changes.

    • How does regulation affect the power balance within and between platforms? E.g., in heavily regulated cities, drivers “ally” with Uber against the regulation that they perceive against their own interests; however, in weakly regulated cities, drivers coordinated and coalesced among themselves to counter Uber’s power and even boycott some of its own rules
    • How does it affect performance measures of the platforms (innovativeness, quality…)?
    • And what about competition among (GAFA) platforms, ie., would “standardization” of practices induce more competition also across platforms also instead reduce their degrees of freedom and thus constraint the way they compete?  [CC2] 

  • The “telecomization” of the digital platforms is a risk à ie., platfrom amrkets might become neutral intermediary networks similar to what happened in telco. This might greatly reduce innovation dynamics and evolution of the network itself. But competition for the market (ie., innovation around those networks) is the most interesting and powerful.
  • Regulatory “holidays” — examples of innovations provided leeway, such as streaming.[2]
  • Metric to determine consumer harm? Regulation vs enforcement.
  • Some innovations more important than others – issue of equal distribution of value.
  • Consumer surplus calculations – Brynjolfsson’s consumer value experiment.[3]
  • Consumer harm tipping point? Consumer awareness and attitude to private data harvesting.[4]
  • Finding other ways than “formal regulations”

    • Provide collective right of actions for complementor organizations; association for different complementors 

The differing approaches between regions, such as the EU and US, were also discussed, along with the task of encouraging collaboration among platforms. The conversation touched on sensitive topics such as the regulation of marketplace listings and acquisitions and the need to address unfairness. The final conclusion emphasized the crucial role that academic research plays in informing and guiding discussions and policy decisions in the rapidly evolving world of digital platforms.

[1] Mazzucato, M. (2011). The entrepreneurial state. Soundings, 49(49), 131-142.

[2] See also examples in: Goldsmith, J. L., & Wu, T. (2006). Who Controls the Internet?: Illusions of a Borderless World: Oxford University Press, USA.

[3] Discussed in: Brynjolfsson, E., & McAfee, A. (2014). The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies: WW Norton & Company.[4] For a somewhat polemic entry in the debate, serving as inspiration for Netflix’s The Social Dilemma, see: Zuboff, S. (2019). The age of surveillance capitalism: The fight for a human future at the new frontier of power. London: Profile Books.

Session 2 – Where do we go from here in terms of research and policy?

The second session of the meeting explored the future direction of research and policy. Participants delved into the specific areas of research that different disciplines, including marketing, strategy, management, and law, would like to prioritize.

The table summarizes the main areas that each discipline needs to research further:

Discipline Areas that need to focus on
Marketing – Algorithmic bias; can algorithms collude, how are they automated
– Consumer protection, data collection, and privacy
– How to target without the data? How do you compensate for loss of data?
– Self-regulation: how can platforms align themselves with consumer interest? (e.g., adjust pricing, having internal teams)
– To what extent do marketers have an incentive to provide customer value (vs. prioritize their own interests
Strategy – Quant side of strategy research; methods intensive side; Platforms and platform regulation fits fairly well
– How do you prepare for regulation; is there an anticipatory behavior?; announcement, when put in law, when enacted -> see if there are effects.
– Look at abandoned regulation and then what happens when it goes back to initial situation.
– How firms can try to influence regulation (lobbying of platforms)
Evolution of platform dominance over time; many platforms today are gradually updated not “major” changes or cycles
Management – Huge systems related to marketing; recommender systems, algorithms
– Platforms: shift in interests from how to run platform better to dealing with issues (such as user issues, regulation etc.) -> would like to see more on these aspects of regulation (e.g., effects of regulation such as in Uber case)
– Timeliness and impact of regulation
Law – More on enforcement of regulation in platforms and how to implement it
– A focus on merger control and platforms

What are the key areas of future research required from the policy side?

  • Empirical side; think about market interventions; data operability etc.
  • Online choice architecture; relationship between online choice architecture and competition
  • Privacy enhancing technologies -> how do they work
  • Algorithms, e.g. in audit -> how you can do that
  • GDPR as a one size fits all approach -> how to ensure that it makes it easier for smaller businesses as well

Challenges faced by researchers

In this session, some of the main challenges of researchers have been brought up. One of the major challenges is data access. For example, scraping data from forum posts is often not allowed, making it difficult for researchers to gather the data they need to conduct their research. Another challenge is that researchers’ findings may not align with what regulators want to hear, leading to difficulties in having their research recognized and impacting policy-making. Lastly, a challenge faced by researchers is finding a good way to contribute as a management community. There is uncertainty about what their role should be, with questions about how they can focus on competition that goes beyond economics and whether they should standardize on methods, metrics, etc.