Regulating Digital Platforms: Interoperability and Data Portability

Contact: James Langenfeld, Chris Ring

February 5, 2021

This article was originally published in The new US antitrust administration, 12 January 2021, Concurrences N° 1-2021, Art. N° 98407, www.concurrences.com.

Both Democrats and Republicans have targeted the large tech companies such as Facebook, Google, Amazon, and Apple in proposed legislation and court cases. We anticipate the Biden administration will continue or expand existing antitrust actions targeting policies of the major digital platforms. These actions, in part, focused on the platforms’ allegedly anticompetitive barriers to “interoperability” and “data portability.”

Data portability is when users can download a snapshot of their data in a form that can be uploaded to another supplier. Interoperability permits multiple suppliers to exchange information directly with each other as frequently as needed. One important effect of a platform limiting interoperability and portability can be increasing the cost of a user to switch from one platform to another. These costs can limit a customer’s ability to substitute between competitors, potentially creating monopolistic competition where firms have market power over a given set of customers and the ability to set prices higher than would occur without such switching costs.

In our full article, we discuss in detail the key aspects and economics of interoperability and portability of data and the impact on switching costs. We conclude by discussing whether correcting any potential abuses will be pursued exclusively through antitrust actions or also through legislation that creates explicit regulations of digital platforms.

Read the full article.