The platform is the canonical form of Internet business: a two-sided marketplace that facilitates connections between end users and business customers. Uber connects drivers with riders; Amazon and eBay connect sellers with buyers; TikTok and YouTube connect artists with audiences; social media connects people with something to say to people who want to hear it.
Yet weak competition laws have allowed companies to consolidate, capturing their markets. Meanwhile, consolidated sectors find it easy to sing with one voice, blocking the adoption of unfavorable regulation (there is still no national privacy law in the US) or its implementation (the EU’s General Data Protection Regulation shows that Ireland is even more -valuable as a lawless asylum regulation than it once was as ordinary tax haven).
Undisciplined by competition or regulation, platforms are free to slide into “enchitification,” where a company extracts value from both sides of a two-sided market, relying on lock-in to keep consumers and business customers from switching to a rival. The year 2023 was when platforms went bad: Twitch, Reddit, Twitter, Facebook, Instagram, Google Search, and Discord all became the enshitification of terminals, shifting value from users to shareholders, leaving behind messy half-dead things that were unpleasant, but not -rejected.
The secret to this persistence is high “switching costs”—the economists’ term for the things you have to give up to leave a job. You hate Facebook, but you love connecting with your communities, friends, and customers. They’re holding you hostage on Facebook’s behalf – and you’re holding them hostage too. Facebook is literally betting on these high switching costs: The US Federal Trade Commission’s antitrust case against Facebook revealed internal memos in which a product manager specifically bet on designing features that “make switching costs very high for users” in order to make it “very difficult” for a consumer to switch” to a competing service.
Regulators are increasingly aware of the fact that Big Tech deliberately designs its products to impose high costs on consumers who have the audacity to favor their competitors. If a company fails to offer a formal means for users to take their data with them or continue to communicate with the contacts they leave behind when they switch platforms, those users don’t have much recourse. The once-common practice of reverse-engineering a rival platform to make an unofficial, interoperable bridge — say, a tool that scrubs your Facebook, Twitter, LinkedIn and other shared inbox messages into a new privacy-friendly service — has effectively been banned by anti-circumvention laws, patents, copyrights, and exotic contract theories like “tortious interference.”
Despite these exit barriers that keep users tied to bad platforms, most of Big Tech’s regulatory response has been aimed at improving them rather than making it easier to leave. We continue to create rules requiring Big Tech to control misinformation, harassment and a host of other evils, but with the passage of the EU’s Digital Markets Act (DMA) we are finally focusing on making Big Tech less important for its users and thus less sticky.
The DMA allows the commission to make rules for each service to facilitate “interoperability” — connectivity — with new services. It’s not just data portability or downloading a blob containing all the messages you’ve sent and the photos you’ve uploaded. This is the ability to leave a service, set it up elsewhere, and resume conversations and transactions you left behind. For example, under the DMA, it should be possible to leave Facebook and tune into a community-run Mastodon server and continue to participate in group discussions and exchange individual messages with the people who aren’t ready to leave (yet).
In the UK, the long-awaited Digital Markets, Competition and Consumer Bill finally gives enforcement powers to the Competition and Markets Authority’s Digital Markets Unit, which has dozens of HMG’s smart engineers and policy officers, all looking to turn their detailed market research in politics. If passed, the bill would give them wide latitude to fashion means for any dominant service, including interoperability mandates requiring walled gardens to install portals for new market entrants, making it easier for users to leave without isolating themselves from important social relationships .
In the US, multiple interoperability bills with broad bipartisan support have made it out of committee, only to be denied a vote after intense lobbying by the tech sector. But if the UK and EU force interoperability on tech firms, it won’t matter if the beleaguered US legislature can’t manage to add its own – consumers around the world will reap the benefits of interoperability and burn switching costs.
These remedies will become available online in 2024. I believe we will see one or more of the big tech platforms face a legal requirement to make it easier for their users to leave: “Mr. Zuckerberg, tear down that (garden) wall.”
