Interoperability in the Age of Algorithmic Discovery

Miguel Risco ()
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Miguel Risco: IGIER, Bocconi University, Milan, Italy

No 26-05, Working Papers from NET Institute

Abstract: Interoperability has been proposed to make social media contestable. But platforms are no longer purely network-based: personalization algorithms select much of what users see beyond their network, and an interoperability mandate opens the network but not the discovery layer. We study two platforms, each allocating resources between its network and discovery layers. A reciprocal mandate can raise the leading platform's size even if it is more productive in both, because its comparative advantage in discovery makes the challenger the network specialist, whose specialty the mandate opens. This effect can reverse once investment adjusts. Opening only the leader's network lowers its size, so any increase in concentration under a reciprocal mandate comes from opening the challenger's network. Concentration, challenger profit and user surplus can diverge. Whether recommendation technology, now largely driven by artificial intelligence, becomes a commodity or a moat determines whether the mandate reaches the source of the leader's advantage.

Keywords: interoperability; social media; discovery; recommender systems; platform competition (search for similar items in EconPapers)
JEL-codes: L13 L41 L51 L86 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2026-09
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