A few thoughts on (1) the @acccgovau bargaining code to encourage G/F compensation for news and (2) its potential for “Decentralized Regulation” for dominant DPs generally, written with @Caffar3Cristina. A thread summarizing the post for the TLDR crowd. 1/ voxeu.org/article/accc-s…
(Part 0/Context:) The premise is that regulation for dominant digital platforms is coming (e.g. the UK and EC are advancing legislative proposals). What should these address? How should they be designed? 2/
Re: what to address, most of the focus of international antitrust enforcement re: DPs has been on exclusion (e.g. the EC’s Google cases), but there is a burgeoning interest on exploitation and expropriation of value. 3/
This is particularly relevant in the production of news, where the Internet has fostered both the disappearance of classified ads and the presence of intermediaries (esp. Google and Facebook) between consumers and their news. 4/
So how to address? The @StiglerCenter Media report (which is v good) recommends public funding for news organizations, plurality reviews for all M&As involving news orgs, and regulatory reforms re: information flows, algorithms, and liability exemptions. 5/
(Part 1:) All good advice, but none yet taken up. What is newly out there is Australia in the lead (as ever) with the ACCC’s draft “Mandatory Bargaining Code”. This requires G & F to negotiate with news businesses over compensation for news content. 6/
A couple key details are (1) information-gathering powers, (2) collective bargaining, (3) non-discrimination (preventing the substitution of intl for Australian news), and (4) minimum standards for non-price aspects (e.g. significant algorithm changes, data collected). 7/
Perhaps the most interesting element: bargaining is backed up by “baseball-style” (“final offer”) arbitration (FOA). So G/F have to bargain with news orgs, and if they can’t reach a deal, they each present a final offer to an arbitrator who can only pick one or the other. 8/
We conclude that this setup has promise. We lay out some simple principles from the economics of bargaining and map the ACCC Code into these. We also highlight some of the good properties of the FOA backstop and areas that might be clarified. 9/
Make no mistake: *this is regulation*. But instead of empowering an old-fashioned regulator to (try to) get the necessary info and “come up with a number”, it empowers the platforms/news orgs to get the info and figure it out themselves (with FOA backing it up). Nice! 10/
(Part 2:) What we think is even more interesting is the potential of this mandatory-bargaining-with-FOA-backstop approach in other settings. Regulation is coming for digital platforms, and the scope of the task is far larger than in traditional industries. 11/
Regulatory economics has faded as a discipline and digital platforms serve thousands of markets with millions of counterparties. Could any regulatory agency hope to “get things right” from either an efficiency or equity perspective? 12/
If regulation, why not give affected parties information-gathering powers to try to resolve asymmetries and let them cut a deal (as above, backstopped with binding FOA). We call this idea “Decentralized Regulation” (hat tip Patrick Rey). 13/
One thing is clear: change is coming to the relationships between large digital platforms and third parties that are subject to their rules. We feel that “Decentralized Regulation” inspired by the ACCC’s “Mandatory Bargaining Code” can be one of a set of possible solutions. 13/
Coda I: Not everyone agrees with our rosy assessment of the ACCC’s proposed Code (@benthompson, @benedictevans). Happy to debate the substance (as has already begun). 14/
Coda II (disclosures): We have not received any compensation for this nor have we advised any parties in the Australian matter. Potentially relevant former/current consulting clients are given in the “Author’s note” at the end of our post (none related to the topics here). End/
