You don’t go to Facebook because of the design of its user interface, its reputation or the quality of its service. You go there, because all your friends are there. Economists call this “network effects”.
Get these network effects right and you will have a global digital monopoly in a decade – get them wrong, and you will get nowhere even if you have developed the best services.
In an unregulated or “misregulated” environment, network effects benefit the biggest digital platforms. Self-regulation won't address this; prescriptive overregulation will – in some respects – make the problem even worse.
This is not supposed to be so. Instead of self-regulation or overregulation a smarter regulatory approach is necessary to address the problem at its root.
Platforms should be opened up to eliminate the unfair competitive advantage of network effects, and making networks work for each and every market player.
Removing network effects from the equation should allow meaningful competition among platforms along criteria that matter to consumers and society at large. So that each of us can have a platform we can only dream of.
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