Figure 1 from that section can be used as a graphical tool to assist in this work, especially when doing the analysis by means of a group exercise. By drawing arrows between the various boxes and by adding descriptive text to the relationships, the complete picture of the platform becomes visible. The platform type can be determined either beforehand, based on common knowledge of the platform, or further along the process and once the various characteristics have been determined. Determining the platform type will help in getting a general feeling for the complexity to be expected in the analysis.
Note that for the considerations on public interests and instruments later on, the platform characteristics are used rather than the platform type. As a next step, the relation s between the platform characteristics and public interests are to be determined these relations and their possible impact have already been described in the first section. This is done by going through the list of public interests already presented one by one, assessing the possible impact of every relevant platform characteristic from the previous step on each of the public interests at stake. A relevant question here is to assess whether the platform is capable of having an impact on the public interests, and if it is in the interest of the platform to do so.
Figure 1 can be used as a graphical aid to create an overview of all platform impacts on public interests. Based on the overview of possible impacts that has been constructed, policymakers need to assess whether an intervention is called for at all. For each public interest impacted by the platform, policymakers will need to determine if the impact requires and justifies an intervention.
If, as a result of the above exercise, a need to intervene has been identified, the potential policy instruments are to be determined. Here, the list of instruments presented in the first section can be used to help in selecting potential instruments. After the potential interventions are selected, the broader impact they might have on the digital platform itself and on other public interests has to be analyzed.
This analysis starts from determining the impact the selected potential interventions have on the platform characteristics. When they give rise to a change in the platform characteristics, so does the impact the platform has on the public interests. Note that this return route is an impact analysis, and will contain assumptions and estimations necessary to arrive at the estimated impact. Especially for the potential platform response, a good prediction may be difficult to achieve. Still, an eventual policy decision will, as with any decision, be based on incomplete information, given it is impossible to predict the future.
As a first step in analyzing the impact of a selected potential intervention, the impact it has on the platform characteristics must be assessed.
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This is done by going through the list of platform characteristics already presented. As a visual aid, Figure 1 can be used, creating an overview for each potential intervention that is being analyzed. Depending on the interventions that are analyzed, it may be necessary to consider the impact on characteristics of other platforms as well, as these can also be affected by the interventions.
Next, the platform response or responses, in the case of multiple platforms to the intervention needs to be estimated. Most likely, the digital platform will respond to interventions in a certain way, thereby potentially changing the effect the selected instrument would have on other characteristics.
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Just like before, the business model is a key characteristic, because any impact on this will severely impact the various other characteristics as well. Also in this step, stakeholders can be involved. Stakeholders will be able to present their view on the impact an intervention may have, and any suggestions or objections stakeholders may have can be collected while consulting them.
Again, be aware of the interests of the various stakeholders consulted, as they will provide input based on them.
Next is the analysis of the impact of the changing platform characteristics on the public interests, which is very similar to the analysis on the forward route in the framework, described in the previous section. Only where changes are expected in the platform characteristics, do these need to be analyzed anew.
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From this exercise, it can be seen if the intervention actually achieves what it was intended to achieve, namely to impact a certain public interest in a certain manner. Moreover, from this exercise it will also become clear if there is an impact on other public interests, be that directly or indirectly. It should be stressed that the return route is as important as the forward route. It closes the loop: is the policy question adequately addressed? Is the situation that was the motivation for doing the analysis sufficiently dealt with? Has the analysis discovered relevant new policy questions, perhaps even of greater importance than the original question that started the analysis?
Once the above steps have all been carried out, a complete view has been created of the digital platform and its impact on public interests, and of the impact of potential interventions. Based on this overall view, decisions can be made to actually carry out certain interventions or not. In theory, the framework as presented in this article could be used in an iterative way. As potential interventions change the platform characteristics, and the impact thereof on the public interests, new interventions could be thought of to counteract these new effects.
Even though such an iterative use is certainly possible, it is not recommended as it makes using the framework overly complex and less certain.
The analysis leans on estimations of effects, and doing this in an iterative fashion will lead to introducing more uncertainty about the outcomes of the framework analysis, as estimation errors will multiply in each iteration circle. In the previous section, the framework was introduced with an emphasis on the forward direction: from platform characteristics to public interests and then on to instruments. In this section, we illustrate this path using the Facebook case study as an example. Since the goal of this study is to develop a generic framework and not to provide policy advice for a specific platform case, we do not consider the use of existing or new instruments for the Facebook case.
If the framework is applied to a case with the goal to analyze specific issues or questions, a further level of detail would need to be added. It is important to keep in mind that the framework is not a straightforward decision tree, as will become clear from the example. With around 1. Facebook has integrated a number of related applications, such as video, messaging, and photos in its main social networking app Facebook, At the time of writing, the WhatsApp messenger and the Oculus devices are offered separately from Facebook's main social networking applications.
Facebook's primary revenue model is advertising: it offers targeted advertising based on the information it has available on its social network user. The evaluation of Facebook's platform characteristics and their relation to public interests is shown in Figure 8. In the coarse typology of platforms, Facebook best matches the Social Network category. The next step is the evaluation of the platform characteristics, as follows: Facebook's dominant revenue model is advertising.
Advertising accounts for over 98 percent of Facebook revenues. The direct network effects of the Facebook platform are strong, as the value of Facebook for its users strongly depends on the number of other users and friends. The direct network effects have an impact on competition and innovation. First, the direct network effects introduce a substantial entry barrier for potential competing social networks.
At the same time, the direct network effect brings the value and scale to the Facebook innovations. From the consumer interest perspective, the direct network effect created by a large group of Facebook friends makes it hard to switch from Facebook to another social network. This means that the actual use that users make of a social network is more important than whether or not they have an account.
The indirect network effects of the Facebook platform are strong as well, as the value of Facebook for advertisers strongly depends on the number of users. The strong indirect network effect makes it difficult for potential competitors to create a targeted advertising offer that matches Facebook's.
At the same time, the presence of these indirect network effects show that advertisers and companies benefit from Facebook's success in attracting a large group of users. Facebook's economies of scale are moderate. Its global brand and scale enables Facebook to attract mobile operators in many developing countries to the internet.
The use of the Facebook platform by other platforms is moderately strong and has an impact on both competition and innovation. Facebook plays an important role in the distribution of many casual games. For the games providers, the Facebook platform is important because of the indirect network effect.
Other major applications e. Furthermore, many websites use Facebook's Like button and comment fields. These examples show that many companies use and benefit from the Facebook platform. They, therefore, depend to some degree on Facebook, but they have a choice in other platforms and distribution channels. The Facebook platform shows a moderate degree of horizontal integration.
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The additional products that Facebook offers such as Messenger, Video, and Photos stay close to the main social networking product. Facebook shows substantial vertical integration in several areas. It operates an extensive data center infrastructure that supports its service. Facebook has moved into devices earlier Facebook Home Android overlay, acquisition of Oculus. Facebook's offering currently has limited geographical dependencies , as it provides essentially the same service to its global customer base. The data and content is used for both internal and external purposes and is also subject to curation and editorial control by Facebook.
Facebook uses the partly personal data and content provided by its users internally, for example, in the news feed of the Facebook service. Facebook's attraction for its users, and also much of its competitive strength, is in its innovative use of data provided by the users themselves in ways that they find useful.
This internal use of data occurs in parallel to its external use in targeted advertising. Based on underlying data that stays within Facebook's domain, advertisers can choose their audience by location, age, interests, and more. Facebook exercises editorial control according to its own community standards. Because of its large user base, Facebook is an important platform for sharing of news and opinions, which links Facebook's editorial control to freedom of expression. To illustrate the return path in the analytical framework, we consider a fictitious social network application driven by a direct payment subscription revenue model.
The social networking platform exhibits strong direct network effects. We assume that the data that users provide to the social network is used only within the platform.