Platforms - growth and policy

Online platforms have grown rapidly as a means of matching market participants and facilitating transactions. Their growth and comparative success reflect the preferences of participants for multisided online platform markets in competition with alternative forms of market organisation and governance – online platforms have grown because they benefit users.

Platforms were enabled by connectivity, mobile devices and the low entry barriers to developing and distributing apps. They offer advantages over conventional business models and regulation in terms of discovery and matching in markets characterised by abundance and in providing effective market governance to participants – online platforms reduce information asymmetries.

To realise the full potential of online platforms, policymakers should first seek to do no harm. While platforms have created some harms alongside benefits, the challenge is to address these in an evidence- based, targeted and proportionate manner in order to preserve their substantial benefits while mitigating those harms.

Policymakers should also remove unnecessary regulatory barriers to the development of online platforms, taking account of the market governance that platforms themselves provide. Not only would this benefit users directly, it would also increase competition in the economy as a whole as online platforms provide a competitive challenge to existing businesses, including in areas that previously saw limited competition. 

Brian Williamson considers these issues in an article for InternMEDIA