Why doesn’t Europe have home-grown digital platforms on the scale of Google, Uber, Airbnb or Facebook? Could platforms do a better job than the public sector in providing transport or traffic management – and if so, why shouldn’t they?
These are some of the many open questions about platforms, despite an explosion of interest in them, and a rapidly-growing body of research. Digital platforms are taking off in many countries and many sectors of the economy. Platforms create immense value, for their customers and also for their suppliers. Yet all too often they are seen only through the lens of the ‘disruption’ of incumbents, resulting in a narrow debate about whether platforms should be more heavily regulated.
Platforms do not ‘fit’ with the traditional structures of social provision, taxation and employment protection. So there is an extensive and – given the speed of change – urgent research and policy agenda.
The right questions are:
- what policy framework will ensure the immense benefits are encouraged and widely shared;
- what will help create new platforms, and sustain healthy competition and innovation;
- and how can unwelcome aspects of platform behaviour be avoided?
In the public debate there has been a tendency, perhaps understandable, to focus on the platforms’ threats to established ways of doing business. Much of this boils down to the issue of trust and a fear of the new. Instead of clamping down on platforms, the first step for regulators is to require platforms to provide the data needed for an independent assessment; almost all the data available so far has been that provided by the platforms themselves. That way, policies can be created based on their contribution to productivity and growth and above all, to the welfare of the many millions of people using them.
Platforms aren’t going away. What’s most important is to ensure the knowledge and policies are in place to take advantage of the opportunities. Europe needs more of them, and the sooner we have a policy landscape establishing the principles of competition and regulation, the better.
This blog is an extract from Diane Coyle’s latest report, ‘Making the most of platforms: a policy and research agenda’ which will be available in full shortly on the website of the Jean-Jacques Laffont Digital Chair at the Toulouse School of Economics.
Diane Coyle is a professor of economics at the University of Manchester, has served on the BBC Trust, the Competition Commission and the Migration Advisory Committee, and is the author of a number of books on economics including ‘GDP: A Brief but Affectionate History’.