In recent years, digital platforms like Facebook, Apple iOS and the Amazon Marketplace have grown so big that they have attracted a lot of scrutiny by regulators in regards to their market power. The recent European Digital Markets Act focuses exactly on the market power of these digital platforms by defining a set of criteria for qualifying such platforms as so-called “gatekeepers.” For some analysts and commentators such gatekeeping is reminiscent of the gatekeeping exercised by more traditional utility infrastructures and that, we should, therefore apply similar policies to regulate digital platforms. In this short article, I will discuss where earlier regulation applies to, but also where it becomes highly problematic for, digital platforms. I will conclude with some recommendations going forward.
By Panos Constantinides1
Platforms are based on open innovation and the realization that no internal R&D can ever match innovation that happens outside a firm’s boundaries. Physical product platforms such as airplanes, cars and computer hardware have been around for many decades, enabling different complementors and their supply chains to contribute components and collectively develop stronger value propositions across broader ecosystems. By developing products on a platform (e.g. the Windows-Intel platform), complementors benefit from innovation spillovers, economies of scale and scope while also mitigating some of the risks of innovating...