Should We Regulate Digital Platforms? A New Framework for Evaluating Policy Options

Abstract

The economic and societal impact of digital platforms raises a number of questions for policymakers, including whether existing regulatory approaches and instruments are sufficient to promote and safeguard public interests. This article develops a practical framework that provides structure and guidance to policymakers who design policies for the digital economy. The framework differs from other approaches in taking the digital business models of platforms as the starting point for the analysis. The framework consists of three pillars, namely determining a platform's characteristics, relating these to public interests, and formulating policy options. The framework then invokes a return-path analysis for assessing how the interventions affect the business model, whether it has the desired effect on public interests, and ensuring it has no undesired side-effects on public interests. The framework puts forward two key messages for current discussions on digital platforms. First, one should look at the underlying characteristics of platforms rather than trying to understand digital platforms as a single category. Second, policymakers should explore existing rules and policy options, as they seem fit to deal with several characteristics of digital platforms in a time frame that matches the rapid development of platform technologies and business models.