Robin Mansell

Platforms of power

Article (Accepted version)

(Unrefereed)

Original citation:
Mansell, Robin (2015) Platforms of power. Intermedia, 43 (1). pp. 20-24. ISSN 0309-118X

© 2015 The International Institute of Communications

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 Platform Power

Professor Robin Mansell

Department of Media and Communications
London School of Economics and Political Science
Email: r.e.mansell@lse.ac.uk
31 January 2015

Media policy always has been concerned with the exercise of media power. Regulatory
frameworks are designed to ensure that, whatever power the media may have, it is
exercised in a way that aligns with citizen and consumer interests. When the exercise of
media power seems likely to reduce media plurality, is there a need for regulatory
intervention? If yes, what evidence-base is needed? In an age when digital
intermediaries are sitting at the very core a complex media ecology, how can policy
makers ensure that media pluralism is maximised, albeit in line with other competing
policy goals?

The media ecology includes fixed and wireless access providers, search engines, video
streaming services, webhosts, and blog platforms, social media providers, and payment
systems. The top 10 websites in the UK in 2014 included Google with 88% of the search
market (94% for mobile search), YouTube, Facebook, eBay, BBC, Yahoo!, Twitter, and
Amazon, among others. In addition to search, they support content aggregation and their
recommender systems rely on the processing user-generated data. These companies
operate as market makers or orchestrators - as intermediaries - in the digital media
value chain. They sometimes function explicitly as gatekeepers to digital content and
information, blocking and filtering in line with their terms of service agreements or with
state policy and regulation regarding data protection, copyright enforcement and
surveillance. In other instances, their activities are anything but transparent.

These companies are increasingly at the centre of everything we do and learn online. Of
course the media ecology also includes incumbent newspaper and television/radio
broadcaster organizations. In the UK, the regulator, Ofcom’s 2014 Digital Day study
shows that total media and communication consumption has grown from over 8 hours
of activity in 2010 to more than 11 hours in 2014.1 Depending on the age cohort and
other socio-economic variables, increasing numbers of citizens are using the digital
intermediaries’ services to access a growing proportion of their total media
consumption.

The presence of these intermediaries in the everyday lives of citizens and consumers is
raising major policy issues. Because they are increasingly prominent in the media
ecology, digital intermediary responsibility and accountability are important
considerations for policy makers especially when they are mandated to hold these
companies to account if they are behaving badly. For instance, the European Parliament
passed a non-binding measure in 2014 calling for the break-up of Google as a means of
diluting its market power. Even if the Parliament does not have the power to enforce
this measure, this indicates that intermediary practices can be inconsistent with policy
goals.

The digital intermediary challenge for policy makers

There are many reasons that policy makers are finding it challenging to find effective
means of addressing competitiveness issues and media plurality concerns. A major
reason is the growing complexity of media production and consumption as activity shifts
towards the internet. These companies are organised as platform organizations -
companies that ‘squeeze themselves between traditional news companies and their two
customer segments, the audience and the advertisers’.2 They benefit from substantial
economies of scale and scope of operation. This enables them to exploit enormous
information assets including databases and algorithms. A platform is basically ‘a
reconfigurable base of compatible components on which firms and users build
applications’.3 Platform intermediaries use profiling to segment customers – some
offering free content, others, paid-for content, and still others, exposure to online
advertising. A citizen’s search activities may result in referrals to content ‘properties’
through a variety of intermediary sharing arrangements that support targeted
marketing and cross-selling. The platform owner’s interest is in aggregating content and
shaping traffic flows ultimately to achieve profits and to command high visibility in the
media marketplace ecology. Platform organisations are not new to industry, but when
they are present in media and information markets, they raise many issues around how
public policy should deal with them.

Intermediaries innovate continuously to find ways of locking in or capturing those who

visit their platforms using combinations of algorithms and human intervention. In the
1990s ‘portal’ firms like Yahoo! looked for ways to control what users could do at their

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sites and this lead to policy debates about the implications for privacy, freedom of
expression, and access to diverse content. 4 The world has moved on and we now have
open platforms, but the means of control over content gateways have not disappeared –
they have become more ubiquitous and less transparent than before.

Today’s intermediaries often compete less on price than on the way people evaluate the
quality of their services and they are in a position to exercise their market power when
they achieve dominance in the market. The question is whether they use this power in a
way that threatens citizen’s rights to privacy, freedom of expression, and access to
diverse content. If their editorial or gatekeeping efforts diminish the quality or variety of
content accessed by citizens, result in discriminatory treatment, or lead to unwanted
surveillance, there is a prime facie case for policy oversight. Most of the media ecology
intermediaries are commercial companies. They often claim they are neutral ‘conduits’
for traffic and hosts for content creators, but they are more than this. They have the
power to influence what ideas citizens are able to find easily and whether the notion of a
public sphere for democratic dialogue can be sustained into the future as the media
ecology increases in complexity.

The Market Dynamics of MultiSided Platforms

In Europe and in the United States analysts are considering what these developments
means for policy and regulation. Economists who study this class of business
intermediary call them ‘multi-sided platforms’. These bring together two or more types
of economic agents to facilitating interactions, theoretically making all agents better off
by coordinating them through their affiliation agreements (see Fig. 1).

Figure 1: Multisided platforms vs Product Platforms and Resellers

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Source: Hagiu5

Search engine intermediaries, for instance, generate value for three groups: websites by
indexing them and making them available through search queries, people who make
queries, and advertisers who want to reach people. In this multisided configuration it is
quite likely that a platform owner will choose to price at a level that is ‘higher than is
socially desirable’ in some part of its platform business. This means there will be market
failures in which social welfare is not maximized within the meaning ascribed to this by
economists. Evans and Schmalensee say that ‘perfect markets’ are not plausible in these
kinds of industries. These two leading economists who analyse these platforms, argue
that ‘exclusive reliance on mechanical measures such as market share or price-cost
margins in determining market power is not advisable’ in these situations. 6

Policy makers ignore the complexity of these platforms at their peril. It is essential to
have a means of understanding how actors on all sides of a platform are affected by
intermediary strategies because indirect network effects really matter. Since
economists’ results provide little certainty about whether policy intervention is called
for in any given case, there can be a strong inclination to do nothing until the evidence of
harm is incontrovertibly clear. Some argue that companies like Google, YouTube and
Facebook may be near monopolists, but their status is only temporary. The current
leaders may have superior technology and be the most innovative, but Schumpterian
creative destruction is likely to topple them eventually; therefore, their strategies and
practices cannot be deemed to be anticompetitive. 7 Regulatory intervention in hybrid
heterogeneous networks with contractual alliances with the large platform companies
might inhibit innovation. McKnight says the reality is one where:

‘enterprises deliver digital services orchestrated in hybrid clouds on virtual

machines, using software-defined networks and network function virtualization
to enable firms to create, and tear down heterogeneous, policy-compliant
servers and networks in an instant as users wish, whilst implementing Over the
Virtual Top [services]’. 8

Other economists say that companies like Google are not multisided players at all and
that the ‘relevant’ market that should be of concern to policy makers is not search, but
instead, the whole of the market for personal information in which Google is not
evidently dominant. 9

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The media ecology is said to be involved in a complex process of ‘platformization’.10 This
awkward neologism aptly characterizes the media market with its tangled vertical and
horizontal arrangements. Hybrid platforms are emerging with multiple intermediaries
in their value chains. For some of these content control is not an issue, while, for others,
it is. A platform provider might decide to privilege content produced by its affiliates in
one business segment, but not in another, with a view to maximizing its overall profit
margin.

Reactive or Proactive Policy Makers?

Policy makers could wait for economists and other analysts of these industry dynamics
to agree among themselves, but they would have a long wait. And, it is not only the
economists’ view of market dynamics and outcomes that is at stake. For instance, there
is relatively little understanding of the subtle ways in which news production and access
to content are influenced in the digital platform marketplace. Digital intermediaries
promise an abundance of content for citizens and consumers. Policy makers sometimes
seem entranced by the technical capacities of intermediaries to create, process and store
vast quantities of digital content. It may be suggested that regulatory intervention is
needed only if there is unambiguous evidence that intermediaries are involved in
practices inconsistent with public values such as media pluralism. After all,
technological innovation has abolished content scarcity and abundant media is
beneficial for all. In a complex ecology it is tall order to underpin claims of market
distortion or threats to the public interest with a robust evidence base. But multisided
platform operators package up some content and sell it, and these lines of business are
used to recover the costs, or to ‘subsidize’ other lines of business, often content. All
subsidies are not harmful of course, but when they are because they result in reduced
content diversity, this is when regulatory oversight is needed.

What do the regulator and the public need to know to support a claim that intermediary
bias and various other practices need to be curtailed? Even if it is judged that the
exercise of market power is only a theoretical possibility, foresight requires continuing
attention so that policy makers are not perpetually in reactive mode. Multisided
platforms enable direct interactions between two or more participant groups. They are
successful because they reduce searching costs and/or transaction costs for those who
visit their platform services. This puts them in a privileged position. There is a need for
vigilance to know how they are deploying this privilege. A key issue is the quality and

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diversity of content that is produced since, for these platform organizations, there is
always a trade-off between fostering quantity and quality. However quality is judged it
is a consideration in view of the goal of protecting the right of citizens to be informed in
a democracy. It is not possible to map the way companies engaged in platform
competition are behaving in the old ways by treating them as if they are not platform
organizations. Legislation and regulation that is geared to measuring media power in
the old ways simply misses the way the industry is developing. Intermediaries involved
in platformization are deploying strategies in ways that seek to monopolize segments of
their markets. There are risks to citizens that need to be curtailed but policy makers will
have no purchase on the consequences of intermediaries’ strategies if they look in the
wrong places for symptoms of bad behaviour. When intermediaries close off or steer
their customers through subscription access to news outlets, for instance, then no
matter how trustworthy they are, or how much they promise to protect their customers’
privacy, they are managing the content that their consumers are most likely to see.
Platform providers can screen out desirable content without the citizen’s knowledge
just as they can screen out undesirable content. It should not simply be commercial
operators that decide what is and is not desirable.

Before the appearance of multisided platforms it was comparatively easy, though not
uncontroversial, to assess which media content producers and distributors had
incentives to operate in ways that might limit the plurality of the media environment –
whether this involved the press or broadcasters. The market concentration of these
providers could be measured. There was a broad consensus on where to draw
boundaries around media markets and about what should be measured by a regulator.
The structural features of platformized markets are continuously changing in ways that
are not captured in the assumptions in economists’ theoretical models. Policy makers
must therefore turn to new empirical evidence to determine whether a given market is
dominated by the very large players in ways that are reducing the diversity of content
available to citizens.11 This is not only about how the digital spaces citizens encounter
are structured in the marketplace; it is also about how the activities of these platform
organisations shape meaning through their capacity to engage in the ‘construction of
audiences’.12 A key challenge is to work out how to monitor processes that go beyond
market dynamics and economic incentives. As a result there is a need for a shift in
thinking ‘from outcomes to processes, to understand how media organizations and
media users are immersed in algorithmically informed online tools’. 13 Proceeding as if
there isn’t a ‘new emperor with new clothes’ means that policy decisions about media

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plurality are being removed from the hands of policy makers.

Negotiating an Evidence-base
It is not clear that policy makers are ready to catch up with the fast pace of change,14
although media plurality issues are receiving policy attention. The European
Commission’s High Level Group on Media Freedom and Pluralism has been very clear
about what is at stake: ‘In the context of the current economic and financial crisis and
the steps the European Union has taken to address it, the need for democratic legitimacy
at the EU level has become an even greater priority’. 15 Its report emphasizes the need
for adequate monitoring encompassing the whole of the media ecology. It states that
digital intermediaries such as search engines, news aggregators, and social networks
should be included in that monitoring. Detailed work has been carried out to design
media pluralism measures that focus on media supply, distribution and use. 16 So far,
unfortunately, there is no consensus on how these should be implemented and with
what force. There is a wide spectrum of views about what would constitute a ‘high’ risk
of diminishing media pluralism, whether political, cultural or geographical.

In the case of a narrower range of media such as news and current affairs where the link
between plurality and democracy is self-evident for many policy makers in Europe,
there are debates about what constitutes ‘sufficient’ plurality. In the UK, Ofcom has been
developing a methodology that focuses both on content diversity and on the medium
used to access content, asking citizen audiences to report on their media consumption.
But it is unclear how often monitoring should take place and what thresholds should
trigger regulatory intervention. These developments have been criticized for not
addressing growth dynamics and changes in supplier strategies, for excluding parts of
the media ecology, for lack of clarity about how to establish diversity standards for
different types of content, and for the ambiguity around what constitutes ‘sufficient
plurality’. 17 In the end, all these issues require sensitive political judgements.

Prospects for Effective Regulatory Oversight

There is some way to go to before a consensus on these issues can be reached in the UK
and throughout Europe. Collins and Cave are cautious, noting that as steps are taken to
develop ‘more practicable data-driven ways of assisting judgement’, this will lead to ‘a
mismatch between the degree of elaboration of the concepts underlying plurality and
the available data, or to unrealistic expectations about what measurement can do in its
initial stages’.18 The European Data Protection Supervisor puts the case for action more

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forcefully, observing that ‘powerful or dominant undertakings are able to exploit
“economies of aggregation” and create barriers to entry through their control of huge
personal datasets alongside proprietary software which organises the data’.19 It is of
course true that intermediaries’ practices are restrained by citizen resistance to the
more visible actions that they regard as being inconsistent, for instance, with privacy
protection. Facebook may alter its privacy settings in response. The European Court of
Justice has mandated that citizens must have a right to have the traces they leave online
deleted, so Google has set up an Advisory Council to address the right to be forgotten.
These are sporadic instances of change and they do not tackle the persistent issue of
judging the plurality of the media. The capacity of platform providers to screen out
desirable content without the citizen’s knowledge is as significant as their capacity to
screen out undesirable content. Should platform providers be the sole authorities in
these matters? Citizens cannot choose to view what they are not aware of or to protest
about the absence of content which they cannot discover. The regulatory challenge is
not only about whether platform operators exercise direct editorial control over news
content, for example. It is also about whether they are shaping citizen’s online
experience in ways that are consistent with optimizing their revenues - a time-honoured
strategy, but also inconsistent with fostering a diverse content environment that
promotes the goal of media plurality.

Regulatory attention needs to shift to the platform arrangements so that intermediaries

do not establish practices without public oversight. It is tall order to create an evidence
base to underpin regulatory intervention. In the specific context of news and public
affairs content, Google and other large intermediaries are not (yet) in the business of
producing news. This may change and regulators need to be able to monitor the
emerging control configurations. Instead of focusing on vertical market segments such
as transmission/access, content, search/aggregation, the focus must move to the new
points of control. For instance, if a dominant platform operator is screening out some
news sources, this might trigger regulatory intervention. Large intermediaries have
access to libraries of digital content, databases capturing platform user preferences and
habits, and they can finance the copyright license payments to control content. These by
no means are all new means of monopolisation, but some are and regulators still have a
preference for focusing on segmented markets. They need to focus on the webs of
vertical and horizontal, often virtual, linkages. The new emperors have new digital tools
for exercising their media power, and like their predecessors, these can be used to
diminish media plurality.

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A European Regulators Group for Audiovisual Media Services (ERGA) has been set up
and it is time to ask tough questions about media plurality and what should be done on a
continuous basis to encourage and sustain it. Approaches to monitoring both the supply
and demand side of emerging platformized media markets need to be agreed and
implemented. The evidence needs to be examined by regulatory authorities regularly.
The need for normative judgements is not going to disappear. If the media platform
organisations have the capacity to serve as, for instance, political ‘king-makers’, this
requires a response before, rather than after, the event.20

Conclusion – Towards Regulatory Innovation

It is time for regulators to be just as innovative as the digital platform industry. Freedom
of expression, access to diverse content, and protecting the vulnerable, including
children, may be secured to some extent by industry self-regulatory codes. But there will
be times when intermediary gatekeeping has a negative impact on broad public interest
goals and when this will not be voluntarily addressed by the intermediary companies.
Proceeding with silo measures of market power and excluding intermediary platform
operators from public interest regulation is no longer a viable way forward. As Just
comments, ‘democratic, social and cultural ends are pursued predominantly by content-
and user-specific objectives, economic goals mostly by objectives related to the
promotion of competition and market-power control’. 21 Achieving both these goals
requires a balance, but the intermediaries are not neutral gatekeepers and will not
become so as a result of market dynamics. Normative consideration of the need for a
plural media ecology and a vibrant public sphere, consistent with democratic practice,
must not be sidelined in favour of the economic calculus and audience use indicators
that never quite make it to a threshold that prompts regulatory intervention.

References

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2 Latzer, M., et al. (2014) The Economics of Algorithmic Selection on the Internet. Working Paper,
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Systems in Europe and US. Steumpunt-Media ICRI Monitoring D1D2,
http://tinyurl.com/omu42nd and Valcke, P., et al. (2010) The European Media Pluralism
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Regulation in Media Markets, Journal of Media Law, 2(1), 85-113.
17 Craufurd Smith, R. D. and Tambini, D. 2012. Measuring Media Plurality in the United Kingdom:
Policy Choices and Regulatory Challenge. EUI Working Papers RSCAS 2012/36,
http://tinyurl.com/p7dwk8d.
18 Collins, R. and Cave, M. (2013) ‘Measuring Media Pluralism and the Overlapping Instruments
Needed to Achieve It’ Telecommunications Policy, 37(4/5): 311-20, p. 314.
19 Hustinx, P. (2014) Privacy and Competitiveness in the Age of Big Data: Preliminary Opinion of
the European Data Protection Supervisor, European Data Protection Supervisor,
http://tinyurl.com/on8gopu.
20 Tambini, D. (2015) The Plurality Dialogue: What Have We Learned, and Where Next?, Media
Policy Project, 16 Jan, http://tinyurl.com/lof34qp.
21 Just, N. (2009) Measuring Media Concentration and Diversity: New Approaches and
Instruments in Europe and the United States, Media Culture & Society, 39(1), 97-117.

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