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The Institutional Constraints of Platform Regulation

By  |  June 6, 2022

Recent suits against “BigTech” and expert reports about the digital economy have created a particular interest in the regulation of technology firms. Many argue that enforcers should apply antitrust laws to restrain what could be monopolistic practices. This is especially the case with digital platforms such as Facebook and Amazon. Part of the interest in regulating BigTech stems from a renewed awareness of competition policy and the potential expansion of its scope. For instance, some enforcers have deemed privacy intrusion an exploitative abuse of dominance.

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    Antitrust law is based on a set of broad standards that are often hard to interpret to preserve market rivalry. And this endeavor only focuses on a concrete actual or potential market failure: monopoly power. It is well-known that antitrust cases are brought before generalist courts in most jurisdictions. If assessing whether a merger substantially lessens competition is hard for a judge or a tribunal, imagine how hard it can be to determine the equilibrium effect of a legal remedy to protect people’s privacy or how effective a remedy to tackle disinformation can be.

    For related but different reasons, Senator Bennet recently introduced the Digital Platform Commission Act of 2022 in both the Senate and the House to create a new agency (the Federal Digital Platform Commission) to deal with the regulation of the technology sector. In the preamble, it is clear that anticompetitive conduct is just one of many harms the Act intends to deter, which include “undercutting small businesses;” “abetting the collapse of trusted local journalism;” “enabling addiction and other harms to the mental health of the people of the United States, especially minors;” “disseminating disinformation and hate speech;” “undermining privacy and monetizing the personal data of individuals in the United States without their informed consent;” and “in some cases, radicalizing individuals to violence.”

    According to Senator Bennet, current American institutions are inadequate for regulating the technology sector. Bennet centers his argumentation on the fact that the Federal Trade Commission (FTC) and the Department of Justice (DOJ) are focused on antitrust cases and do not address many of the industry’s most pressing issues, such as disinformation and children’s safety. Nevertheless, a clear advantage of a specialized agency is that experts enforce the regulations and make new rules. 

    The Digital Platform Commission Act of 2022 emphasizes the relevance of expertise by considering an 18-member Code Council that would develop behavioral codes, technical standards, and other policies for digital platforms that are either voluntary or enforceable. This Code Council would include representatives of digital platforms, non-profit organizations, academics, engineering, computer science, and other pertinent experts. It could propose new codes or standards to the Commission, which could adopt, reject, or modify them. Besides, the Commission could “recruit and train any software engineer, computer scientist, data scientist, or other individual with skills or expertise relevant to the responsibilities of the Commission” for purposes of monitoring violations. Oddly, these experts would be uncompensated. Platform markets are complex. Thus, having people with the relevant knowledge to enforce and create rules is essential for achieving the lawmakers’ goals. 

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