Interoperability is being put forward as a structural remedy to resolve issues of market power in networks — particularly, social media. When network effects are present, this means that it is possible that having one or a few operators is not only what arises but also efficient at any given point in time. Regulators can only be assured that a situation is efficient if there is potential competition that can bolster innovation by incumbents. A degree of interoperability to make any centralised outcomes contestable even if it does not lead to lower concentration per se. For social media networks, it is suggested that the principle of allowing the portability of identity (similar to interconnection in telecommunications) would be an appropriate goal with respect to the practical implementation of interoperability.
By Joshua Gans
Social media was built for network effects. Launch a social media platform, and its entire success is built upon whether people use it to interact with other people (regardless of knowing them personally or not). From a media perspective, the content is (mostly) provided by users, but the attention garnered and a platform’s ability to monetize it through advertising rivals all forms of old media where the content was created by skilled practitioners. The difference is that user-generated content has the potential to be ‘two-way.’ That is, I provide content intending that others will interact with it and vice vers...