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Reimagining the Platform Economy

Today's digital economy has grown up around a business model of data and wealth extraction, confounding traditional antitrust paradigms and undermining the public and social value that otherwise could be derived from technological innovation. The state can redress these problems, but only if it reclaims its proper role.

LONDON – As Donald Trump’s presidency careened to its ignominious end, with a mob of his supporters storming of the US Capitol, Facebook and Twitter banned the US president for inciting the violence. With that act, the scope of the political power wielded by Big Tech became impossible to ignore.

Whether these platforms have too much political power is a debate that is just beginning. Their outsize economic power, though, is unquestionable. The combined market capitalization of the five largest US tech platforms – Alphabet (Google), Amazon, Apple, Facebook, and Microsoft – rose by $2.7 trillion in 2020. Following the addition of Tesla to the S&P 500, the Big Six tech firms now represent nearly one-quarter of the index’s valuation. And with the spread of COVID-19, the leading digital platforms have become de facto essential service providers, enabling a mass transition to remote and isolated living.

And yet the political pressure on Big Tech has continued to rise. There is a growing consensus that platforms have been abusing their power, driving profits by exploiting consumer privacy, crushing the competition, and buying up potential rivals. In Germany, a provisional ruling by the Federal Court of Justice against Facebook has set a precedent for disabling data-extractive business models more generally. In the United Kingdom, an expert panel is completing an inquiry into whether giants like Google should be broken up, and how regulatory institutions and capabilities can be strengthened to rein in Big Tech. And in Australia, the government is following through on a number of regulatory proposals designed to redefine its approach to the industry.