Regulating Platforms. Terry Flew
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rather than by virtue of being themselves wealthy. (Many populists, such as Donald Trump, are themselves very wealthy.) From this perspective, elites tend to be identified with figures such as judges, intellectuals, celebrities, politicians, and others whom the political right views as usurpers of the popular will, particularly if they champion globalization and what the political right considers ‘cosmopolitan’ perspectives. Racism can and frequently does play a part in this, but it intersects with a wider mistrust of political elites, anger about corruption, and the perception of being excluded from the institutions of liberal democracy and from the benefits of the global market economy – attitudes that would be shared by many left-wing populists (Flew, 2018a; Flew and Iosifidis, 2020; Mouffe, 2018).
Debates on populism and digital platforms have tended to revolve around whether the social media have been catalysts for populist movements and, if so, whether that is something to be concerned about. The creation of ‘networked publics’ that social media platforms have been associated with (boyd, 2010; Howard and Hussain, 2013; Papacharissi, 2015), and the correlation between this phenomenon and the ongoing shrinkage of traditional news media outlets and professional journalism, have triggered debates on a post-truth politics (Waisbord, 2018a), the proliferation of fake news (Flew, 2019), and the balkanization of rival political and ideological perspectives within the filter bubbles that arise from the algorithmic sorting of news (Napoli, 2019b). There is also debate on the ethics of accepting, on digital platforms, political advertising that unfairly maligns opponents through manipulated words and images. Another subject of discussion is whether platforms have become the ideal conduits for large-scale political propaganda campaigns (Raicu, 2019; Young and McGregor, 2020).
But there is also the problem that owners and managers of digital platforms themselves constitute an elite, and the politics of populism is increasingly inserted into debates around platform regulation. Populist challenges to digital platforms have been coming from the political right, centre, and left. Conservatives have complained that Silicon Valley is a bastion of West Coast liberalism and a ‘one-party state’, in the words of tech entrepreneur and one-time Trump supporter Peter Theil (Solon, 2018). In the US Congress in 2017, the California Senator Dianne Feinstein, a Democrat, warned tech companies ‘I don’t think you get it. … You created these platforms, and they are being misused. And you have to be the ones to do something about it – or we will’, while the North Carolina Senator Lindsey Graham, a Republican, observed: ‘continued self-regulation is not the right answer when it comes to dealing with the abuses we have seen on Facebook’ (both quoted in Flew et al., 2019, p. 34). On the global stage, President Emmanuel Macron of France called for greater regulation of digital platforms as a ‘third way’ between the Californian ideology and authoritarian statism (Macron, 2018).
The major populist challenge to digital platforms came from the political left, in the form of a renewal of the antitrust movement. Lina Khan pointed to the unfettered expansion of Amazon as the dominant player in electronic commerce: this dominance is achieved through a business model that pursues data-driven integration across business segments that competitors are unable to replicate, and the goal is for Amazon to acquire monopoly power in platform markets without triggering competition policy concerns, as it does not impose higher prices for consumers (Khan, 2018a). Tim Wu argued that major mergers and acquisitions such as Facebook’s takeover of Instagram and WhatsApp or Google’s acquisition of the online mapping company Waze, as well as the creation of ‘clone’ digital products, undermine potential competitors, making the case for the renewal of antitrust law in an age of digital platforms and multisided markets (Wu, 2018). This ‘neo-Brandeisian moment’ in public policy debates (Shapiro, 2018; Wu, 2018) found a strong political voice during Senator Elizabeth Warren’s campaign for the 2020 Democratic Party presidential nomination, as Warren made breaking up the big tech companies a core item on her agenda (Warren, 2019). The Biden administration, which came to power in the United States in 2021, has appointed Khan to the Federal Trade Commission and Wu to the National Economic Council, indicating that these arguments will have some influence within that administration.
Renewed Regulatory Activism
For much of the period in which digital platforms rose to dominance, public policy was being shaped by ideas that emphasized the limits of state agencies as effective regulators of corporate conduct. While reformers of the 1960s and 1970s pointed to market failure and the need for the kind of regulation that should restrain corporate self-interest and promote the public good, the policy pendulum in the 1980s, 1990s, and early part of the subsequent decade swung strongly towards deregulation, that is, towards setting limits to the power of governments over corporations and markets. Against the assumption that ‘the creation of regulatory agencies is … the concrete expression of democratic reform’ (Horwitz, 1989, p. 23), approaches such as public choice theory saw regulators as self-interested bureaucrats who seek to use the regulatory process in order to advance the interests of their own agencies (Christensen, 2011). A related concept was that of regulatory capture, whereby regulators came to identify their own interests with those of the industries they regulated, thus creating both policy barriers to new entrants and congnitive barriers to new approaches – that is, to the factors that would drive competition and structural change. A famous early example of capture theory was Ronald Coase’s critique of the FCC as coming to view the broadcasting industry through the perspective of the incumbent licensees, so that ‘regulation of the broadcasting industry by the Federal Communications Commission resembles a professional wrestling match. The grunts and groans resound throughout the land, but no permanent injury seems to result’ (Coase, 1966, p. 442).
Within policy and regulatory communities, the focus of regulation itself had moved away from traditional approaches and rationales. While market failure had traditionally been a driver of economic regulation, there was growing attention to regulatory failure and to the limitations of direct government regulation in increasingly complex environments. In particular, the view that regulators may lack expertise in the areas and fields that they were regulating, or that existing regulations may be inefficient, may fail to be cost-effective, or may have perverse behavioural consequences, gained greater currency (Baldwin et al., 2012; Freiberg, 2010).
One response was the growth in co-regulatory arrangements where industry bodies took primary responsibility for enforcing regulatory compliance; they were overseen by a government regulator subject to an approved industry code. Another response was what came to be known as responsive regulation. Pioneered by Ayres and Braithwaite (1992), responsive regulation proposed that regulatory strategies would in the first instance entail the use of incentives, education, and persuasion to achieve compliance; more coercive approaches would operate at the higher levels of the regulatory pyramid. The concept of responsive regulation also introduced tripartism, whereby public interest and advocacy groups would be directly engaged in the regulatory process, working with industry and regulatory agencies around agreed policy solutions (Drahos and Krygier, 2017).
The underlying assumptions behind responsive regulation was that by and large the corporate sector could be trusted by consumers and citizens to ‘do the right thing’, as it was in its collective interest to do so, and that a ‘light touch’ regulation was thus warranted; the problem was for the most part one of a few ‘bad apples’. In light of the global financial crisis (GFC) of 2007–8, this optimism about industry-driven regulation took a hammering. The GFC, which had a massive impact on all western economies throughout much of the 2010s, was attributed by many to a relaxing of financial regulations that had been going on in many countries for a number of years (Picciotto, 2011; Stiglitz, 2010). The problems with reducing the direct regulation of financial institutions and markets and relying more heavily on the industry’s self-regulation were reinforced through shared mental models (Denzau and North, 1994) of how financial markets work, so that by 2007 ‘the ideational structure had ... become [not] merely embedded but almost impervious to challenge’ (O’Brien and Gilligan, 2013, p. xxiv). Until the markets themselves failed to behave as the models predicted!
There is considerable evidence worldwide of a growth in regulators’ attention to the structure of markets in the digital economy and to the conduct of digital platform companies. This new regulatory activism first became apparent in the European