National Priorities

European negotiators have agreed on the Digital Markets Act, a law aimed at regulating dominant platforms in Europe. A key focus appears to be interoperability, particularly among messaging platforms. While it is intended to increase competition, mandatory interoperability may degrade privacy and create conflicts with global technology platforms’ policies.

This article was first published in The Mint. You can read the original at this link.

On 24 March 2022, European negotiators announced that they had come to an agreement on the final terms of the Digital Markets Act. This new legislation, a key component of Europe’s new digital strategy, is designed to regulate “gatekeepers”, or platforms with a significant presence in Europe in terms of their revenues and European user base. These legislative measures make it clear that European regulators have got Big Tech companies firmly in their sights and want to break, at least to some extent, their control over the markets in which they operate.

While the final text of the draft has not yet been made available to the public, a number of commentators seem to have access to near-final versions of the draft agreement and have initiated discussions on social media about what it will mean for the tech ecosystem. From what has leaked so far, it appears that a key area of regulatory focus is going to be interoperability.

It is not hard to work out why.

Dominant Platforms

The winner-takes-all nature of the platform economy means that in almost all instances, there will only ever be one dominant platform in a given vertical. What’s more, since dominant platforms can easily be used to enter adjacent fields, there is a real fear that dominance in one vertical will create an ever-widening kill zone for innovation around that domain, with investors steering clear of anything remotely close to a dominant platform’s scope of interest.

Given their first-mover advantage on the internet, US companies occupy most of these positions of dominance. This has made it almost impossible for domestic alternatives in the EU to acquire enough market-share to inspire hopes of survival. As a result, there is a real fear that US companies will digitally dominate Europe. By enforcing mandatory interoperability through the Digital Markets Act, European regulators are attempting to loosen the stranglehold of dominant platforms over their customer base in order to at least give smaller companies in adjacent fields a chance to survive.

The Interoperability Solution

An example of mandatory interoperability that has prompted animated discussions in the tech world relates to messaging platforms, which will now be required to interconnect with smaller messaging apps that request as much. Commentators have been quick to point out the sorts of problems this would give rise to.

If end-to-end encrypted services like WhatsApp and Signal have to mandatorily inter-operate with other messaging services (including those not encrypted in the same way), it is almost certain that they will not be able to provide the same level of privacy as they did before.

For many users, given their personal circumstances and the sensitivity of their discussions, these privacy guarantees are an absolute necessity. Not only will they not be able to continue to use these services once interoperability is made mandatory, it may be impossible for anyone to offer secure communications at a global scale. In addition, features specifically designed to work without affecting the basic privacy guarantee of these systems—spam detection, identification of prohibited speech, etc.—will not be able to function, since they cannot be implemented if messages are shared with other services.

As with all policy choices, there are trade-offs implicit in the decision to enforce mandatory interoperability obligations. While its absence results in customer lock-in, affecting consumer choice and the overall competitiveness of the market, insisting on it makes it hard for messaging services to guarantee privacy of communication.

Sometime in the future, it might be possible for us to ensure such privacy across multiple interoperable applications. However, requiring interoperability before these secure protocols have been built could result in the immediate degradation of a key feature of modern digital communication.

Different Trade-offs

India, as I have pointed out previously in this column, has engaged with a different set of trade-offs in connection with secure messaging services on the internet. By requiring messaging companies to trace the original sender of a message, India has prioritied law enforcement and national security concerns over the individual’s right to privacy in communication.

Some would argue that even the US, despite its strong constitutional guarantees and liberal sentiments, might have headed the same way on privacy had Big Tech not dug its heels in.

All countries make choices like these to promote their goals. Whether or not they intend it as such, policy trade-offs are a reflection of national priorities. In a pre-internet world, these choices only affected individuals within the sovereign territory of a given country, falling away the moment they exited its borders. Today, global technology platforms connect people regardless of which country they are physically situated in. When choices required by one country run contrary to those imposed by another, it becomes impossible for any platform to implement all these conflicting policy priorities in a globally consistent manner.

All countries of the world need to come together to establish common policy principles that they can all agree to implement and then impose on global technology platforms. Until we do this, decisions about what should or should not be done in navigating these complex trade-offs will remain in the hands of the biggest global tech companies. Which will, in turn, represent the personal political viewpoints of their managements.