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Policy Proposals

Enhancing competition with data and identity portability

June 13, 2018

The Problem

The network effects that contribute to the success of popular platforms can also constitute a barrier to entry for potential competitors. Users who move between platforms, even if they can take their personal data, could lose the benefits of communications within their social network. This constitutes a switching cost as well as a barrier to entry for new firms. In turn, these costs increase the market power of incumbents, potentially resulting in higher prices for advertisers and as well as lower-quality services delivered to users.

The Proposal

The author proposes that policymakers establish a user’s right to identity portability, which will address the network effects that arise from users’ desire to receive and transmit information to other users. In practice, this means that if a user leaves a particular platform, they can opt to have messages (e.g., posts, photos, likes, comments, etc.) from contacts on the original network sent to them on a new network, and vice versa. Identity portability would enhance innovation by mitigating many of the network effects that insulate online platforms from competition.