Can self-regulation save digital platforms?

Uncertainty and the welfare economics of medical care

Michael A Cusumano, Annabelle Gawer and David B Yoffie

Industrial and Corporate Change, 2021, vol. 30, issue 5, 1259-1285

Abstract: This article explores some of the critical challenges facing self-regulation and the regulatory environment for digital platforms. We examine several historical examples of firms and industries that attempted self-regulation before the Internet. All dealt with similar challenges involving multiple market actors and potentially harmful content or bias in search results: movies and video games, radio and television advertising, and computerized airline reservation systems. We follow this historical discussion with examples of digital platforms in the Internet era that have proven problematic in similar ways, with growing calls for government intervention through sectoral regulation and content controls. We end with some general guidelines for when and how specific types of platform businesses might self-regulate more effectively. Although our sample is small and exploratory, the research suggests that a combination of self-regulation and credible threats of government regulation may yield the best results. We also note that effective self-regulation need not happen exclusively at the level of the firm. When it is in their collective self-interest, as occurred before the Internet era, coalitions of firms within the same market and with similar business models may agree to abide by a jointly accepted set of rules or codes of conduct.

Date: 2021
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