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The rise of Platform Cartels in a post-Covid world

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Platform Cartels: A rising concern

There’s a lot of talk about how the economy will ‘snap back’.

External conditions may ‘snap back’ but the systems we create during this time will not.

This issue highlights a very important shift that will not easily ‘snap back’ in a post-Covid world:

The rise of platform cartels

Specifically, this issue explores the following:

  1. Why platform cartels are different, why we haven’t seen them pre-Covid, and why Covid-19 is spurring their rise
  2. How contact tracing is driving the creation of platform cartels which will survive into a post-Covid world
  3. How Facebook, Twitter, and Google are setting up ecosystem governance cartels

There’s a lot of good stuff here.

And if you’d like to discuss the ideas in this post further, please join the discussion on LinkedIn at this link.

Let’s get started…

The rise of Platform Cartels

A crisis requires large-scale collaboration towards solving complex problems. A crisis also legitimizes practices that may shift power further away from individuals and societies towards a few large institutions.

We’re seeing the rise of platform cartels because of Covid-19.

In particular, global contact tracing efforts and large-scale efforts to manage misinformation are driving the creation of platform cartels. We explore all these examples below.

We’ve seen many examples of cartels in the traditional world of pipelines. Traditional cartels coordinate and collude on a range of aspects, most often price and output, but also standards and patent usage.

In the platform economy, cartels coordinate on two specific aspects: data usage and ecosystem governance.

In this manner, they impact not just traditional production metrics like quotas and prices, but effectively exert new forms of influence over ecosystem-wide activity, including influencing the decisions and actions of third parties not involved in the cartel, as the examples below show.

Coordination in platform cartels is achieved through data sharing and technology standards. This essentially enables automation of all coordination allowing platform cartels to be much more responsive and adaptive to external forces than traditional cartels, which relied on agreement by committee and contract.

Finally, platform cartels further exacerbate antitrust concerns. If individual platforms gain near-monopolistic positions through network effects, cartelization further centralizes power with the top players.

 

Platform cartels towards coordinated ecosystem governance

We’ve seen the rise of fake news and misinformation for some time but the stakes are higher than ever before during Covid-19.

Over the past 6 weeks, platforms like Facebook, Twitter, Medium, and YouTube have taken to content moderation in a big way.

Amazon has quietly removed dozens of books containing conspiracy theories or medical misinformation. Medium is aggressively taking down viral posts under a new policy on COVID-19 content, despite the site’s mission to be a platform for “whatever you have to say.” Reddit has added warning messages on two subreddits for boosting misinformation. Pinterest is limiting all search results about the coronavirus to those from “internationally-recognized health organizations.” Internet companies, in short, are trying to impose guardrails.

In some excellent research, Evelyn Douek brings up the idea of content cartels – where platforms coordinate efforts on content moderation. However, the problem extends beyond mere coordination around content – as I will illustrate shortly – and hence I’ll use the broader term platform cartels to dig into this further.

But first, let’s reference some of Douek’s work to ground ourselves in the idea

If information operations work across different platforms, so too should the efforts to combat them. Researchers express dismay when pages and groups blocked on Facebook continue to operate accounts on Twitter, YouTube, and Instagram.

There are several reasons why platform cartels coordinating moderation efforts are important

  • First, inappropriate behavior and false news attacks can easily move to another platform if moderated by a platform. A mechanism to track activity across platforms is required.
  • Second, smaller platform firms are less capable of responding to this challenge than the bigger ones. Through coordination, the bigger platforms can help smaller niche platforms with fewer resources combat this effectively. Tools developed by larger platforms can be opened and democratized for smaller platforms to leverage.

What is different about… COVID-19 is the context: The problem is huge and the stakes are very high.

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    False positives: The unintended dark side of platform cartels

    This does sound like the right response, but we’re often left choosing between the devil and the deep blue sea of no moderation vs. over-moderation.

    The challenge with over-moderation is non-trivial. False positives – incorrect classification of true content as false – are present in all such systems. FacebookTwitter, and YouTube have all published disclaimers about the inherent flaws in their moderation and the possibility of false positives.

    This gets worse with platform cartels.

    Inter-platform coordination around moderation has happened in the past.

    This collaboration began with a technology that allows child pornography to be assigned a digital fingerprint and placed in centralized databases that the platforms draw on to suppress the material. A similar mechanism has been deployed against terrorist speech—a more controversial practice, since the label terrorist often involves inescapably political judgments. Sharing and coordination across platforms are also moving forward on content related to electoral interference and are being discussed for the manipulated videos known as deepfakes.

    By centralizing more of the judge-jury-executioner role over content, platform cartels create a single point of failure.

    If platforms coordinate their moderation – as they likely will – a false positive being barred on one platform could soon find itself being completely barred from the majority of the known internet.

    The likelihood of false positive increases when moderating subjective content, where truth is not easily verifiable.

    This is further complicated by the fact that most platforms are opaque and not accountable to any third party for their moderation policies. From Douek:

    Content moderation more generally is going through a crisis of legitimacy. There is growing awareness about the arbitrary and unaccountable way that tech companies develop and enforce their rules of what is allowed on their platforms. Content cartels exacerbate this—when platforms act in concert, the actual source of any decision is harder to identify and hold to account.

    Cartels may also extend their moderation powers to legitimize censorship over time.

    Content cartels also further embed and legitimize standards without proper public contestation. Companies and governments can use technical-sounding terms like “hashing” to describe coordinated censorship of material falling under the ill-defined standard of “terrorist propaganda.”

    Platform cartels in contact tracing

    As I mentioned further up, this issue runs deeper than coordination around content monitoring.

    We’re seeing one of the largest platform cartel efforts currently underway in contact tracing, with the Google Apple Contact Tracing (GACT) platform:

    Google and Apple are announcing a joint effort to enable the use of Bluetooth technology to help governments and health agencies reduce the spread of the virus, with user privacy and security central to the design.

    Apple and Google will be launching a comprehensive solution that includes application programming interfaces (APIs) and operating system-level technology to assist in enabling contact tracing.

    Given the urgent need, the plan is to implement this solution in two steps while maintaining strong protections around user privacy.

    First, in May, both companies will release APIs that enable interoperability between Android and iOS devices using apps from public health authorities. These official apps will be available for users to download via their respective app stores.

    Second, in the coming months, Apple and Google will work to enable a broader Bluetooth-based contact tracing platform by building this functionality into the underlying platforms.

    This is a more robust solution than an API and would allow more individuals to participate, if they choose to opt in, as well as enable interaction with a broader ecosystem of apps and government health authorities.

    The most significant aspect of this press release is the fact that this tracing doesn’t work as an app, it works at the operating system layer.

    Many governments have launched apps, which work contingent on people downloading or activating them. Changes made at the OS level and updated over the air could be set up with much less explicit user consent.

    Here’s a good primer on how the GACT works:

    Phones detect proximity of other phones by broadcasting random looking proximity identifiers over Bluetooth while listening for such random looking identifiers of phones nearby. A phone stores all proximity identifiers it receives in a local database, together with an estimate of the distance between the two phones (based on the signal strength). Identifiers received more than 14 days ago are deleted.

    Users can only notify or be notified if a Covid-19 tracing app is installed on the device. This app uses the API provided by the GACT platform that offers (controlled) access to the set of daily keys used by a phone, and the database of proximity identifiers it collected from other nearby phones over the last 14 days.

    Google and Apple themselves only standardize the API and the scanning phase described above. They (apparently) do not provide a service that coordinates the notification of contacts.

    Whenever a user tests positive, the daily keys his or her devices used the last 14 days can be retrieved by the app through the GACT API, presumably only after an authorized request from the health authorities. How this exactly works, and in particular how a health authority gets authorized to sign such request or generate a valid confirmation code is not clear (yet).

    Moving contact tracing down the stack fundamentally changes the amount of control users have: you can uninstall a (contact tracing) app, you cannot uninstall the entire OS (although on Android you can in theory disable and even delete Google Play Services).

    But the bigger picture is this: it creates a platform for contact tracing that works all across the globe for most modern smart phones across both OS platforms. Unless appropriate safeguards are in place, this would create a global mass-surveillance system that would reliably track who has been in contact with whom, at what time and for how long.

    With this move, Apple and Google make themselves indispensable, ensuring that this potentially global surveillance technology is forced upon us. And as a consequence all microdata underlying any contact tracing system is stored on the phones they control.

    The problem with such a large scale global effort at the OS layer is that it comes with multiple points of future attack:

    1. There is very little definition around who can request retrieval of contact tracing data. E.g. a health authority could use this to determine all phones that were in proximity of an infected person, but could the police also eventually use it to round up suspects based on proximity to scene of crime? By creating a single point of access, it allows for extension into use cases that could serve to create a surveillance state.
    2. The architecture is decentralized today but could easily move to a more centralized architecture in the future. We have seen this shift with platforms in the past and there’s no evidence to show that this may not happen with a platform cartel.
    3. By implementing this at the OS layer, the initiative shifts the responsibility of governance to the API access layer. Despite the best API management policies and security practices, the system is vulnerable to malicious attacks. A malicious attack could qualify a particular user as infected to pull data related to all users who have been in close proximity of the user.

     

    If you’d like to learn more about our work here, check out our Advisory page or request our Advisory kit to get more details on our analysis and approach.

     

    Interesting times…

    As we see with the examples above, the extraordinary circumstances of Covid19 are driving the rise of platform cartels. We could dismiss this as something that’s going to go away with the virus. But if history teaches us anything, it is that these systems survive crisis to reshape the world beyond.

    External conditions may ‘snap back’ but the systems we create will not:

    What is different about… COVID-19 is the context: The problem is huge and the stakes are very high. But when the crisis is gone, there is no unregulated “normal” to return to. We live—and for several years, we have been living—in a world of serious and growing harms… Governments will not stop worrying about these harms. And private platforms will continue to expand their definition of offensive content, and will use algorithms to regulate it ever more closely. The general trend toward more (speech) control will not abate.

     

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    State of the Platform Revolution

    The State of the Platform Revolution report covers the key themes in the platform economy in the aftermath of the Covid-19 pandemic.

    This annual report, based on Sangeet’s international best-selling book Platform Revolution, highlights the key themes shaping the future of value creation and power structures in the platform economy.

    Themes covered in this report have been presented at multiple Fortune 500 board meetings, C-level conclaves, international summits, and policy roundtables.

     

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