We speak endlessly of the value of “data” in the digital economy, and the platforms’ alleged “extraction” of value from it. But this emphasis on data, data, data can be misleading. Platforms compete for users, for larger “audiences,” not for “data.” I say “audiences” for lack of a better word. The notion of an audience is derived from pre-digital mass media, which had very limited forms of interactivity. “Enclosed user group” would be a better label than “audience” for what platforms are after.
What we called data enclosure in an earlier paper is really a process of enclosing a population of unique identities. The value of the data generated by their interactions is indeed part of the value the platforms are competing for, but the real driver of comparative value for a platform is the number of people who rely on the digital identities the platform controls. Notice how badly Apple, Chrome/the Google ecosystem, Facebook and Firefox want you to sign in to their applications, using the digital identifier they have issued to you. Notice how relentlessly Google offers to help you sign into other services using your Google account ID. Notice how Microsoft goes to great lengths to tie its digital identity, usually an email address, to its OS. Notice how all platforms have consolidated those identities across services over time. The unique ID becomes a person’s gateway into the whole world of online commerce and communication. Everything passes through the “account” invoked by the ID. Control of this digital identity gives the supplier more than a way to collate all the user-generated data and make use of it – it gives them privileged access to users’ eyeballs, fingertips, partners, payment systems.
But it is only advertising-supported social media who rely mainly on monetizing user-generated data for their revenues. Apple’s ecosystem, in contrast, combines ads with hardware and software-based services, including an app store charging commissions. Google, which runs the other major OS and mobile app store, used to be all ad-based but has found it necessary to start making branded handsets based on its own OS, like Apple. Amazon’s attempt to get into the device market by means of book readers and Alexa has basically failed. But it compensates for this weakness with its forays into the cyber-physical, such as e-commerce, package delivery, and groceries, integrating the world of apps with the world of shopping. Yes, they all get “data,” and the data is valuable, but it is not the only source of value, other revenue sources are involved. Apps like Facebook and Spotify are not so integrated, but may not need to be because their exclusive user base has enough critical mass to ensure that none of the ecosystems will cut them off. (Although the political attack on TikTok shows how much geopolitics is starting to warp the market for these services.)
If it’s our digital identities they are after, is this all about lock-in and monopoly? Degrees of exclusivity, yes. Monopoly, No. The digital ecosystem makes it relatively easy for users to “multi-home” their online digital identities. Exclusivity is limited by our willingness to duplicate apps and accounts. We can be a Facebook or Instagram user as well as a Tiktok user, and access either from an Apple or Android device. We can access or subscribe to any online app in any country (if the government lets us). We can search for and find any information resources regardless of where they are located geographically. Each of us probably has over 100 digital identities.
The key to competition in this industry is negotiated compatibility. How much of your software and services are going to be interoperable across platforms and how much of it will be exclusive, a point of competitive differentiation? Even as they claim to support competition, regulators and policy makers tend to overestimate the social value of interoperabiity, and underestimate the social value of competition over exclusivities. They do not understand the way competition hinges on exclusivity. It is seen as an abuse of market power but in fact it is the most important dimension of competition. Eliminate exclusivity – make all platforms seamlessly interoperable and combining the same user sets – and you eliminate all competitive differentiation and most of the incentives for competition and innovation.
Interoperability is vitally important, but major parts of the digital ecosystem, such as HTTP (the Web) and the Internet protocols are already fully interoperable and non-proprietary. Users of the 3 major commercial OSs no longer have any problem exchanging files or engaging in networked connections. No one really gives a shit if your bubble is green or blue. Because the Web and the Internet protocols allow all these competing software ecosystems to interoperate, users can move relatively freely among them. We have plenty of compatibility.
Of course everyone should fight hard against any threats to the interoperability of the Internet standards and the Web, if and when they arise. IGP’s work on fragmentation of the digital political economy has consistently targeted threats to global interconnection and neutrality. But we also need to recognize the value of differentiated ecosystems. And this in turn leads to multiple digital identities. A lot of the competition in the digital economy hinges on tying things to an account or identity.
