Current Affairs

Internet as a level playing field: How to curtail anti competitive behaviours on internet platforms?

The term “online platform” has been used to describe a range of services available on the Internet including marketplaces, search engines, social media, creative content outlets, app stores, communications services, payment systems, services comprising the so-called “collaborative” or “gig” economy, and much more. Example: Amazon, flipkart etc.

How did the Platforms on the internet begin?

  • Platforms are technology layers that leverage the internet to bring together producers, resellers and consumers.
  • Platforms reduce transaction costs by cutting out intermediaries.
  • Amazon started by selling books but became a profitable giant by creating the e-commerce platform called Amazon Marketplace.
  • The most valuable companies today are platforms for search, social interaction, advertising, insurance, travel, real estate, etc.

Issues with the platforms

  1. The promise of the internet was disintermediation, but the process has hit a speed breaker with major platforms taking on the role of mediation. 
  2. There may be multiple platforms in the game to start with, but due to network effects and the non-portability/lock-in, only a few monopolies space.
  3. Big platforms have tried to create a sort of  cartel in which to trap the customers while fencing off the rest of the internet.
  4. The platforms amass data about users which is used to influence user behaviour, which is not limited to guiding the buying decisions.

UPI model as a solution:

  • Unified Payment Interface (UPI) is a set of protocols that standardises the language of money transfer.
  • It is an interface: a simple and structured protocol for instructions and a clearinghouse that relays well-formed requests to concerned parties for execution.
  • Once the language is there, a user may choose any app to link their bank account to a UPI ID and make a pay or collect request involving any other bank account.
  • UPI handled 1.3 billion transactions in June 2020, overtaking the aggregate number of transactions of all legacy “platforms”.
  • UPI succeeded because it treated all players, big or small, equally.
  • This allowed third-party innovators to drive adoption by creating solutions that addressed the need of the people.

Lessons from UPI for APIs: 

  • Application Programming Interfaces (or API) are protocols that define the meaning of data exchanged between two computers.
  • Universally accepted API definitions could allow a cabbie to be discovered by any cab aggregator app the rider may choose.
  • In healthcare, it could facilitate finding a doctor, booking an ambulance, taking out insurance, filing a claim, sharing a medical report or purchasing medicines from a pharmacy.

Advantages of open protocols

  • Open protocols create ecosystems that are non-rivalrous and non-excludable by design.
  • Even the smallest of application developers or start-ups can offer low-cost, locally relevant solutions using the protocol.
  • We can address the needs of the diverse business community and achieve much greater penetration for e-commerce than the 10 percent of today.
  • Open systems have the potential to transform education, food delivery, by enabling entrepreneurs to compete on their quality and reputation alone.
  • Portability from one application to another, privacy and data empowerment will be some of the issues taken care of.
  • We can reduce our dependence on foreign platforms