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If Data Portability is the Solution, What’s the Problem?

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WASHINGTON – Large technology platforms are accused by academics, government agencies, and members of Congress of blocking competition. Advocates say that data portability and/or interoperability mandates would make it easier for consumers to switch platforms, and, therefore, ease entry and lead to more competition and innovation. Even Facebook CEO Mark Zuckerberg proposed portability in a recent Washington Post op-ed.

But not everyone is convinced such regulations will produce the promised benefits or help consumers. Technology Policy Institute Senior Fellow and President Emeritus Thomas Lenard warns in a new TPI publication, “If Data Portability is the Solution, What’s the Problem?“, that such rules may actually harm consumers and competition.

Lenard explains that consumers can use many new services easily already without transferring their data and, moreover, that the regulations and standards flowing from these rules would “almost inevitably favor large incumbents.”

“The rationale for mandating data portability or interoperability is that users can’t move between platforms without taking their data with them. But switching costs are not a barrier to using a new online retailer or search engine,” Lenard writes. In addition, he reminds legislators that an inability to transfer historic data has not prevented consumers from using multiple platforms simultaneously or the emergence of new types of social media.

And existing law includes a failsafe. “To the extent platforms present a market power problem, antitrust is a better answer than data portability and interoperability mandates,” Lenard writes. “Properly applied, antitrust can help assure that new rounds of ‘competition for the market’ will be on the merits.”

Lenard says antitrust would be based on finding that a firm has market power, has engaged in anticompetitive acts, and consumers have been harmed. There are no such findings thus far.

 

Contact: David Fish, 571-389-4446, dfish@techpolicyinstitute.org

The Technology Policy Institute

The Technology Policy Institute is a non-profit research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at http://www.techpolicyinstitute.org/.