Digital platforms have become a major player in today’s society. Most people can’t imagine life without Google, Facebook, LinkedIn or WhatsApp to name a few. Many may argue it has made our existence and ways of communication easier and more fun. Most of these platforms are characterized by having a monopoly. The network effects that the companies experience, allows them to grow exponentially and outperform competitors with their growth model. This has created an ease for consumers as their entire network is active on a few platforms which makes communication relatively easy.
However, there lays some ‘dark’ implications behind these platform monopolies. First and foremost, large quantities of personal data are absorbed by digital platforms. Rather than several firms having small pieces of data, companies such as Facebook and Google have an abundance of personal data of a large part of the global population. Facebook is famously known for the example of the scandal with Cambridge Analytica in the previous decade. Personal data of 87 million Facebook users was mined and scraped without consent (McIntosh, 2019). This highlights the vulnerability of large storage of data in one place such as these platform monopolies.
Another potential danger from digital monopolies is the political influence it can exert on its users. Large scale advertisers can easily influence viewed content of users of a platform. Google and Facebook effectively control the online advertising (Epstein, 2017), and this can turn them in decisive political players regarding advertisements of political nature (Matz et al., 2018). This should be quite concerning, given the relative neutrality large platforms like these should possess in my opinion.
Admittedly, since the General Data Protection Regulation (GDPR) was launched in 2016 by the European Union, some concerns have decreased in terms of data privacy and saw an increase in consumer welfare (Heine, 2021). This, as of 2024, turned out to not be enough, however. Major challenges still exist. One of those is the lack of consistency and effectiveness of authorizing resources (Heine, 2021; Burgess, 2022 & Saqr, 2022). These bureaucratic delays and inefficiencies ultimately lead to little protection of users from digital platform monopolies.
Altogether, I argue that more needs to be done to limit the influence platform monopolies either directly or indirectly impose on our lives. Data privacy and platform neutrality are two principles that have become increasingly important and will only grow in importance in the future. Stronger measures from governments and global institutions need to address these concerns accordingly, where a focus needs to lay on effectively tackling current problems as we can see with the regulatory quality of the GDPR for example.
References:
Burgess, M. (2022). How GDPR Is Failing. Wired. https://www.wired.com/story/gdpr-2022/
Epstein, M. (2017). The Google-Facebook Duopoly Threatens Diversity of Thought. Wall Str Journal. https://www.wsj.com/articles/the-google-facebook-duopoly-threatens-diversity-of-thought-1513642519.
Heine, I. (2021). 3 Years Later: An Analysis of GDPR Enforcement. CSIS. https://www.csis.org/blogs/strategic-technologies-blog/3-years-later-analysis-gdpr-enforcement
Matz, S., Cerf, M. & Rolnik, G. (2018). Solutions to the Threats of Digital Monopolies. Promarket. https://www.promarket.org/2018/04/10/solutions-threats-digital-monopolies/
McIntosh, D. (2019). We Need to Talk About Data: How Digital Monopolies Arise and Why They Have Power and Influence. Journal of Technology Law & Policy 23(2): 185-213 https://scholarship.law.ufl.edu/jtlp/vol23/iss2/2
Saqr M. (2022). Is GDPR failing? a tale of the many challenges in interpretations, applications, and enforcement. International journal of health sciences, 16(5), 1–2. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9441646/
Fascinating topic! During the readings of this course, we explored how these advantages can build up and have led to some big companies being able to dominate entire industries. It makes sense since the fixed costs are high but the variable costs are close to zero. Thus, building up a company with big investments is the struggle here, leading to high entry barriers. However, when a company can get to that point it can gain more advantages and grow even further.
From this perspective, it also makes a lot of sense that governments throughout the world started investigations and that the EU created several laws targeting these multinationals. However, the world always develops faster than the government can create laws so we will see what the future brings.