China News Agency, Beijing, September 13th, Question: Why has anti-monopoly in the platform economy become a global challenge?

　　——Interview with Wang Hao, professor of economics at the National School of Development, Peking University

　　China News Agency reporter Wang Enbo

　　With the introduction of a series of relevant laws and regulations, 2021 is regarded as the "first year" of China's Internet platform economic anti-monopoly, which has attracted widespread attention.

In fact, it is not only China. In order to promote the orderly competition and standardized development of the platform economy, the United States and Europe have introduced targeted measures in recent years.

Platform economic governance, especially antitrust, has become a global challenge.

　　Why is the platform economy easy to breed monopoly?

What are the similarities and differences between Chinese and foreign platform economic governance ideas and practices?

What signals do the latest trends in China's platform economic regulation reflect?

The book "Platform Economy - Innovation, Governance and Prosperity" co-authored by Wang Hao, a professor of economics at the National School of Development of Peking University, was recently published.

China News Agency "Dongxi Wen" conducted an exclusive interview with Wang Hao on the above-mentioned issues.

"Platform Economy - Innovation, Governance and Prosperity" Photo courtesy of respondents

The following is a summary of the interview transcript:

China News Agency reporter: Why is the platform economy prone to monopoly?

Is this situation unique to China?

Wang Hao:

The reason why the platform economy is easy to breed monopoly is that it has the characteristics of network externality.

That is to say, any user joining a platform will make the platform more valuable.

So when a platform gets bigger and bigger, its efficiency in providing related services will become higher and higher.

In this way, there is an irreconcilable contradiction between platform efficiency and market competition: if a platform is to improve its efficiency, it must become larger, but if the scale is too large, it will reduce competition and lead to monopoly.

　　This phenomenon is not unique to China, it exists all over the world.

To a certain extent, it is not a new concept. Similar phenomena have also occurred in communications and other industries in the traditional economy, but this feature has become more prominent in the past 20 years.

China News Service: In recent years, in order to promote the orderly competition and standardized development of the Internet platform economy, the United States, Europe and China have formulated a series of policies. What are the differences and commonalities among the three?

Wang Hao:

The common features of the three supervision ideas are to regulate platform behavior, encourage competition, and properly protect consumer information security.

For example, China has been lacking in protecting consumer information security before, so in recent years, a series of relevant laws and regulations have been formulated to check and fill in the gaps.

At the same time, China is also launching anti-monopoly investigations into the unfair competition practices of some Internet companies.

This has something in common with the platform economy supervision ideas in the United States and Europe.

　　But there are some differences between the parties.

Taking the comparison between the United States and Europe as an example, from the perspective of cultural background, Europe attaches great importance to the protection of personal privacy, which hinders the development of the digital economy to a certain extent, while the United States makes some compromises between privacy protection and the development of the digital economy.

　　The economic conditions of the US and Europe are also different.

The United States occupies a dominant position in the global platform economy, and its interests are global; Europe is more concerned with how to protect its own interests as much as possible when the Internet is dominated by American companies, so its regulatory starting points are different.

In the practice of supervision, the United States often expresses its opposition to some European practices, and hopes that the government will not intervene. However, Europe tends to implement stricter supervision and establish a more complete system. There is a certain contradiction between the two.

Citizens of San Francisco pass near Twitter's headquarters.

Photo by Liu Guanguan

China News Service reporter: In the past few years, there have been some irregular "barbaric growth" phenomena in China's platform economy. Are there similar situations in the United States and Europe?

Wang Hao:

Taking the United States as an example, "barbaric growth" is mainly reflected in the fact that big platforms have too much political influence.

For example, as a platform company, Twitter’s ability to make money is not particularly strong from an economic point of view, but its political influence is very large, and it can even block the account of the incumbent president of the United States.

Platform owners such as Facebook also have certain political ambitions, and their political influence is growing.

　　This is also one of the important reasons why the United States now pays more attention to the antitrust of the platform economy.

There are several recent trends worthy of attention. First, some senior regulatory officials in the United States have re-emphasized the concept of "big is evil", and their regulatory measures may be more targeted at large technology companies to a certain extent.

In addition, the United States has also introduced some laws to regulate the behavior of big platforms, especially for some exclusion clauses. In fact, it also hopes to limit the political influence of big platforms by increasing competition.

Facebook headquarters in Menlo Park, California.

Photo by Liu Guanguan

China News Service: What lessons does the governance of the United States and Europe have for China?

Wang Hao:

The platform economic governance in the United States and Europe particularly emphasizes the supervision of daily behaviors and restricts exclusive behaviors, which is worth learning from.

One of the core issues of antitrust is exclusivity. The behavior of the two parties to the transaction to exclude the third party in various implicit or explicit ways is particularly valued in the US legislation.

Europe emphasizes the "gatekeeper" system in daily supervision. If a large technology company meets certain standards, it will be designated as a "gatekeeper" and must fulfill the relevant obligations to promote market competition.

Strengthen the daily supervision of the platform economy through such measures, intervene in a timely manner when encountering problems, and not let the problems ferment. This is the inspiration given to us by the United States and Europe.

　　However, the disadvantage is that it is difficult to effectively solve the basic contradiction between platform efficiency and market competition mentioned above, and it can only reduce the severity of the problem to a certain extent. This can be explored from two aspects.

　　One is to strengthen connectivity.

From the perspective of China's practice, one of the most prominent areas of network externalities in the platform economy is communication, which is most likely to appear "dominated by one family".

But we can't simply split the head platform, because "big" itself is its value.

To solve this problem, we need to rely on interconnection. Information exchange between different communication platforms can avoid affecting network effects and promote competition.

This is not new, the mobile communications industry is a precedent.

　　The second is to strengthen data sharing.

The real operating elements of the platform economy are data and traffic. Now China has raised data to a high level and regards it as a new factor of production.

If the factors of production cannot be circulated, circulated and shared through the market, it will be difficult to truly improve the efficiency of the market.

Therefore, China's Internet governance still needs to actively explore the data flow and sharing.

Jiangxi Nanchang City Brain Operation Command Center.

Photo by Liu Zhankun

China News Service: In the past two years, from "strengthening anti-monopoly and preventing the disorderly expansion of capital" to "promoting the healthy development of the platform economy", the focus of China's relevant policies has also been adjusted simultaneously with the improvement of the platform economy.

How do you view this transition?

Wang Hao:

While continuing the expression of "anti-monopoly and preventing the disorderly expansion of capital", the central government also emphasizes promoting its "standardized, healthy and sustainable development".

I think this reflects the clear attitude of the decision-makers towards the development direction of the platform economy, that is, as a very important new field, when a new phenomenon occurs in the platform economy, regulation often lags behind innovation. a while”, which also highlights the importance of normalized regulation.

In normalized supervision, the relationship between the regulator and the regulated should not be a one-way relationship, but requires two-way long-term interaction and communication to jointly promote the healthy development of the industry.

The cloud-native core network that meets the needs of communication services such as industry, energy, transportation, and medical care attracts visitors.

Photo by Zhang Yin

China News Service reporter: With the continuous advancement of relevant governance, can the huge value created by the platform economy be truly enjoyed by the whole society fairly in the future, rather than being occupied by a few platforms?

Wang Hao:

This issue needs to be viewed from different angles.

The platform economy does create great value. People use platform services and obtain convenience from them, and their value has been shared by the whole society to a certain extent.

But from the perspective of economic value, the platform economy has indeed created some super-rich and high-paid classes, leading to the excessive and rapid concentration of wealth.

There are different views in the academic community on this issue.

　　One of those ideas is taxation.

The platform economy itself is highly exclusive. Once one company grows, it will be difficult for other companies to compete. Therefore, it is reasonable for super platforms to take on more social responsibilities.

In the event of a monopoly or semi-monopoly situation and cannot be effectively resolved, regulators can levy a "digital service tax" on super platforms to redistribute wealth.

This approach has reached a certain consensus in Europe and other places.

　　Another idea is to use connectivity to introduce competition without destroying network effects.

The biggest benefit of competition is to allow more benefits to be obtained by consumers and reduce monopoly profits, which to a large extent also contributes to the realization of wealth sharing and common prosperity.

(Finish)

Interviewee Profile:

　　Wang Hao, professor of economics at the National School of Development of Peking University, associate editor of "Economics (Quarterly)", his main research directions are industrial organization theory, corporate strategy, anti-monopoly and government regulation.