Congress is considering legislation (“the ACCESS Act”) that mandates interoperability in an effort to stimulate competition in digital markets such as social networking. However, as currently written, the legislation is likely to fail in its objective. The reason is that it ignores one of the crucial forces that has allowed firms such as Meta to remain at the top of the social networking space: the indirect network effects from their rich streams of user-generated data that allow them to curate highly engaging content for their users. Moreover, privacy considerations do not justify the strong restrictions on the use of data by firms that interoperate with dominant platforms. Targeted changes to the language of the bill that articulate what I call a “data symmetry principle” that considers privacy would allow entrant platforms to benefit from the rich types of data generated by dominant platforms. This would put would-be entrants on a more level playing field when it comes to scale advantages due to data.
By Cristian Santesteban
In a rare bipartisan effort, Congress is considering legislation (“the ACCESS Act”) whose purpose is to stimulate competition in digital markets by facilitating the successful entry of new platforms. Over time, the idea is that interoperable networks would erode the significant market power of dominant incumbent platforms such as Meta’s Facebook. While I applaud this effort, and I think that interoperab...