CPH Tech Policy Brief #10

Private actor governance and platform power

Key public policy domains – free speech, privacy, cyber security – are governed by the decisions of digital platform companies.

That said, we only have a rough idea of when firms engage in such actions and to what effect. In this brief, we argue that one critical driver of private actor governance in the digital domain is corporate power. In short, firms can use technological standards and defaults to target public policy objectives, while simultaneously concentrating their economic position in the market.

To explain how this works, we link work on private actor governance with the economic literature on two-sided markets. In short, we argue that the particular nature of platform economies offers digital firm a unique way to grow their influence as they attempt to address public policy goals. To demonstrate the argument, we explore Apple’s decision to implement its App Tracking Transparency feature, which requires users to opt into third-party tracking via cookies.