Work

When Serving the Public Interest Generates Private Gains: Private Actor Governance and Two-Sided Digital Markets

Year: 2024

Type: article

Abstract: From speech to privacy, broad public interests are increasingly governed online by policy decisions taken by private companies. We examine when and how firms make such decisions. In contrast to the shadow of hierarchy and functionalist explanations of private authority, we build an analytical framework based on business power and the economics literature concerned with two-sided markets. We argue that companies operating as digital platforms may use private actor governance to consolidate their influence. More precisely, public-interest regulation on one side of the market (e.g., protecting the privacy of end-users) may increase the dependence of firms on the other side of the market (e.g., increasing the price paid for information by advertisers). We probe our argument by looking at the privacy policy implemented by Apple in 2021. Our findings demonstrate the growing role played by digital companies in global regulatory debates and call attention to how market structures can simultaneously incentivize public-interest regulation and become a source of business power.

Source: Perspectives on Politics

DOI: 10.1017/s1537592724001099

Authors: Guillaume Beaumier, Abraham Newman

Institution: Université Laval

Language: English

Topic: Digital Platforms and Economics

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $3,450