Abstract: With the advent of the digital age, platform governance has emerged as a core issue. This paper delves into the complexities and multi-dimensionality of platform governance and how to strike a balance between public and commercial interests.
The Digital Transformation and the Rise of Global Platforms
In the backdrop of digitization and globalization, business operational models and structures are undergoing profound transformations. This digital shift represents a fundamental shift in how firms function, connect, and provide value. It goes beyond a simple technological change.
Global digital platforms are leading this shift, particularly Google, Facebook, and Amazon. Their impact is growing not only in terms of user base but also in reshaping the face of the digital economy. These platforms’ ecosystems have developed into complex, interwoven networks of suppliers, partners, and clients. The network that underpins the digital economy not only coexists but also co-creates and trades value (Jovanovic, Sjödin, & Parida, 2022).
The ability of these systems to use modern network technology is their strength. They are not only channels for commercial exchanges; they are also conduits for knowledge distribution, connecting people from many geographies and cultures. More crucially, they are critical components of data-driven operations, utilizing massive volumes of data to draw insights, innovate, and create personalized experiences (Fenwick, McCahery, & Vermeulen, 2019).
Balancing Public and Commercial Interests in the Digital Age
However, with great power comes great responsibility. The transition to digital services, while laden with opportunities, is rife with challenges. One of the most important issues is achieving a proper balance between public (ecosystem-wide) and commercial (individual or company-specific) interests.
Open systems, for example, exemplify the ethos of the digital era. They encourage creativity by creating a collaborative environment in which ideas may be openly discussed and developed upon. The openness of these systems, though, can be a double-edged sword. While they promote innovation, they may also create privacy and security problems. In an age where data is the new oil, safeguarding its security and users’ privacy is critical (Jovanovic, Sjödin, & Parida, 2022).
This delicate balance between public and commercial interests is further complicated in competitive markets. Platforms, in their quest for dominance, might engage in practices that, while commercially viable, might not align with the broader public interest. This paper delves deeper into this issue, investigating the social and infrastructural roles of platforms and how they navigate the intricate dance between public and commercial interests in fiercely competitive markets.
Social and Infrastructural Roles of Platforms: Platform Governance during the COVID-19 Pandemic
Platforms, such as Google’s and Apple’s App Store, have transcended their roles as mere technology providers. These major platform companies have begun to exert control and harness innovation, acting akin to political entities. Some have established their roles in society and infrastructure, exerting control at various levels, shaping pandemic app responses, and the relationships between governments, citizens, and other actors (Dieter et al., 2021). They are hubs of interaction for multiple stakeholders, including developers, users, governments, and other organizations. Each stakeholder has unique needs and expectations, and platforms must balance between satisfying these. Although the quick adoption of tracking applications during the COVID-19 pandemic has also shown conflicts between data privacy and public health, this has not stopped the public from becoming alarmed. For instance, the Australian Competition and Consumer Commission (ACCC) took Google to federal court last year and fined it 60 million dollars this year for misleading some consumers (affecting approximately 1.3 million Australian users) about its collection and use of personal location data on Android phones (Byrne, 2022). This incident underscores the importance of effective platform governance for major tech companies. As technology advances, the collection and use of user data become increasingly intricate, necessitating clear rules and guiding principles to ensure user privacy and data security. Similar to the European “bourgeois” internet governance model, there’s an emphasis on minimizing negative online behaviors and ensuring privacy, potentially at the cost of stimulating innovation (O’Hara & Hall, 2018).
Moreover, as a commercial entity, Google is driven by profit motives. When commercial interests collide with public concerns (for example, user privacy), striking a balance becomes critical. In such cases, public interests should take precedence, because user trust is the backbone of any economic model. Hence, “Pandemic Platform Governance” emerged, aiming to ensure a balance between public and commercial interests and enhance transparency. This includes publicly disclosing decision-making criteria and clarifying the responsibilities of companies for apps that might harm the public. Users must be completely informed about how their data is gathered and used by companies, according to (Dieter et al., 2021). The necessity of raising user awareness about data privacy and empowering them to make informed decisions is also emphasized by this governance policy.
In conclusion, platform governance’s importance has been highlighted and proven by the COVID-19 pandemic. As technology advances and data collection tactics evolve, striking a balance between safeguarding user privacy and supporting technical innovation will become more difficult. To stay up with the ever-changing environment, regulators and IT companies must constantly alter and update their strategies and standards. This necessitates a delicate balancing act to ensure that the needs of all stakeholders are met.
Public and Commercial Interests in Competitive Markets: The Google Antitrust Lawsuit as a Case Study
Recently, Google was sued by the U.S. Department of Justice and a number of state prosecutors on charges that it had abused its dominating position in the internet search market by suppressing competition and inhibiting innovation (Williams, 2023). As a global tech behemoth, Google’s dominance in the search market makes it an almost unavoidable platform. However, Google’s “hegemonic behavior” of making its search engine the default on numerous devices is what gave rise to this antitrust case. When a company’s market dominance deters potential competitors from entering the market or allows it to engage in unfair competition, it may be harmful to healthy market competition. Moreover, if a company achieves market dominance due to its superior products, services, and technology, benefiting consumers, then such dominance in itself doesn’t compromise public interests (Etlinger, 2021). Thus, ensuring consumers can choose the best products that create value is fundamental to the healthy development of a market economy. In addition to confronting competitors, extreme monopolistic practices can stifle healthy industry competition and innovation, raise the cost of intra-industry disputes, and affect customer welfare. Maintaining platform fairness and transparency, as well as limiting the abuse of market power, become critical components of platform governance in these instances.
This antitrust lawsuit against Google might set a precedent for other tech companies. As the tech industry continues to grow, ensuring large tech companies don’t abuse their market positions, protecting innovation and competition, and swiftly responding to market feedback representing public interest points (typified by concepts like “frictionless regulation”) (Popiel & Sang, 2021) will be pivotal topics for future platform governance. This may need digital businesses clearly displaying their business strategies and collaboration agreements, as well as taking steps to guarantee they are not abusing their market positions. While antitrust rules are intended to ensure fair market competition rather than penalize successful businesses, intervention may be required when healthy market competition is threatened.
Conclusion
The rise of the platform economy is reshaping corporate governance. Traditional models, designed for linear businesses, are now challenged by the interconnected nature of platform-based operations. Platform governance isn’t just an adaptation of traditional corporate governance; it’s a new model crafted for the digital era. This model encompasses a wide spectrum: governments that regulate, the public that engages, and various stakeholders within these digital ecosystems.
Digital platforms face a dual challenge. They aim to grow users and increase revenue while also upholding public interests like information authenticity and user privacy (Fenwick, McCahery, & Vermeulen, 2019). Striking this balance is crucial for their sustainable growth. Given the global reach and rapid evolution of technology, new international standards and protocols may be needed. These would ensure a healthy digital environment, protect public interests, and foster business innovation.
References
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