What is digital interoperability?
Can interoperable platforms be secure?
Just as on closed digital services (‘walled gardens’), data security on interoperable platforms depends on the trustworthiness and technical skills of the service provider. After all, closed platforms like Facebook and Amazon have messed up data security as much as anyone. The public scrutiny that is possible on services that use open standards and interfaces helps to identify and fix security issues before they can be exploited.
How can interoperable platforms protect people’s privacy?
By allowing new market entrants to offer innovative digital products and services, interoperability can enable a vibrant digital services market that offers users more choice in terms of privacy. Currently, internet gatekeepers have little incentive to take account of users’ privacy because users often stay on their platforms for the sheer size of their existing user base.
As a result, the gatekeepers’ digital products and services are often based on maximising benefits for the operator, not for users. Some of the largest online platforms’ core business model is the pervasive collection and monetisation of user data for the purpose of selling it to advertisers. The lack of digital interoperability prevents the development of compatible, privacy-friendly alternatives that could enable users to move away from the platforms that dominate their digital lives today.
To further strengthen operational privacy protection, interoperability could be limited to firms and organisations that have contractually agreed to honour security and privacy requirements, and be independently certified to do so. However, such security and privacy requirements must not be used as a pretext by large platforms to refuse to interoperate, or to limit interoperability to a few large players that could form a cartel.
What is the impact of interoperability on innovation?
Interoperability of digital services can stimulate innovation by allowing new operators to enter markets such as social media and messaging services. This in turn creates an incentive for all operators to innovate and provide new features. Currently, large online platforms such as Facebook or Youtube can rely on the sheer size of their existing user base to keep their users (so-called network effects) without having to compete on the merits of their products and services.
While interoperability requires the establishment of common standards and basic sets of functionalities, it does not prevent companies from introducing innovative features on top of them, without having to ask for permission. In fact, the internet’s principle makes standards follow independent innovation. In many of today’s platform applications past innovation needs to be standardised to ensure access and competition.
Are there benefits of interoperability for consumers?
Interoperability of consumer-facing digital platforms like social media networks and messaging apps would enable consumers to communicate across digital silos. It removes the need for users to create a profile with a platform they otherwise dislike just because that platform has the largest user base. As a result, people can choose the digital services they like most based on their actual preferences, for example in terms of content moderation rules, privacy protection, or user interface innovation.
Mandatory interoperability for the largest digital platforms can also foster the creation of whole new digital markets where startups build digital services on top of incumbent platforms. That way, consumers can get access to better AI-driven content moderation algorithms that run on top of a user’s Twitter feed or Facebook timeline. In the same vein, new apps could replace YouTube’s recommender algorithm that is known to promote extremist video content even to people who weren’t looking for it.
Are there benefits of interoperability for small and medium-sized businesses?
Small and medium-sized enterprises (SMEs) can benefit from interoperability in various ways. As business users of the largest digital platforms, they share many of the benefits that interoperability provides to consumers: a real choice of innovative digital products and services that better suit their needs and that can be used across digital silos as well as increased independence from any of the large platforms.
SMEs that seek to directly compete with the largest platforms also benefit from interoperability because it would enable them to enter markets that would otherwise be closed off to them by digital gatekeepers. If those gatekeepers are obliged to interoperate with competitors, SMEs can unleash new innovation and directly offer it to the existing user bases of those gatekeepers.
Are there benefits of interoperability for public administrations?
Digital interoperability can benefit public administrations by providing them with a real choice of innovative platforms and services that better suit their own needs and their citizens’ needs. Interoperable digital services can also provide them with greater flexibility and lower costs by reducing switching costs and anti-competitive barriers created by a lock-in to specific service providers.
At the moment, digital gatekeepers have little incentive to take account of the needs of public administrations because of the sheer size of their existing user base, so that their products and services are often based on maximising benefits for the gatekeepers (for example, in terms of keeping customers locked in to a ‘walled garden’ of proprietary products and services).
Doesn’t forcing Facebook to be interoperable go against free market principles?
Free market principles would require markets to be open and contestable. However, at the moment many markets for digital products and services are dominated by gatekeeper companies that have achieved an unassailable market position by relying on the sheer size of their existing user base to keep their users (so-called network effects), without having to compete on the merits of their products and services.
In practice, new operators cannot break into these markets and any company showing signs of doing so risks being bought by the gatekeeper (see for example Facebook’s acquisition of WhatsApp and Instagram or Google’s acquisition of maps app Waze). Interoperability requirements can be a tool to restore free market principles, where markets are open and contestable, and where companies have to compete for market share on the merits of their products and services.
How could interoperability be required in Europe?
Interoperability could be required for so-called ‘digital gatekeepers’ as part of the EU’s Digital Markets Act (DMA). The interoperability obligation currently proposed in Article 6(1)(f) of the DMA proposal applies only to ancillary services and for business but not end users. For example, Apple’s mobile payment system Apple Pay makes use of a particularly secured piece of hardware built into iPhones, and the current DMA proposal would oblige it to give third-party mobile payment providers access to the same secure hardware.
This limited interoperability obligation would not, however, increase competition for gatekeepers’ core services. It would not allow upcoming digital services to challenge Google’s dominance in search and ads, or Facebook’s monopoly in social networking.
To achieve real core service contestability, the Digital Markets Act would need to oblige gatekeepers to make their core consumer services interoperable, too. Users of competing social networks would need to be able to interact with users on Facebook (and vice versa) and users of competing messaging apps would need to be able to communicate with people on Whatsapp (and vice versa). The DMA’s interoperability obligation therefore needs to be extended to gatekeepers’ core products and services for all users.
Core service interoperability could also be mandated as part of the EU’s proposed Digital Services Act (DSA) for so-called Very Large Online Platforms. That would change the scope of affected digital services by limiting it to online platforms but extending it to all large platforms, not only those designated as ‘gatekeepers’.
Would all online platforms have to be interoperable?
Not necessarily. Although the internet would probably be a better place for people if many more services were interoperable with each other based on open and transparent technical standards, the law does not need to oblige everybody. The goal of interoperability regulation should be to push the most dominant digital services providers to be interoperable in order to reduce network effects, prevent them from locking down the market, and promote competition on the merits. Smaller providers often already have an incentive to use open standards and interoperate with one another to improve usability and maximise their potential user base.