Platforms – making markets work

How platform market governance evolves to sustain a healthy market

In this paper for Apple, Brian Williamson considers how online platforms govern their community or multi-sided market place to promote trust and benefits for all users including business users, consumers and peer-to-peer participants. Platforms compete to offer governance aligned with users’ needs and are of necessity rule-makers who provide governance for participants. The growth of online markets in competition with alternative forms of market organisation, OECD consumer survey evidence and outcomes in platform markets point to alignment of incentives between platforms and participants. 

When contemplating the application of existing consumer protection and other regulation to platforms, consideration should therefore be given to the regulatory function that platforms themselves are undertaking, and the potential interaction between the two forms of governance. For example, ill-conceived regulation related to ‘fairness’ for business users could undermine the balancing act and ongoing evolution critical to the success of platforms. Doing so could result in consumer harm, in turn harming the interests of businesses participating in platform marketplaces and resulting in further consumer harm. 

Governments have a legitimate interest in outcomes in relation to online platform markets, but the best means of achieving good outcomes should be assessed mindful of the market governance role platforms play, the reasons they have proved successful and the limitations and potential unintended consequences of regulation