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Wang Hao: Interconnectivity A Possible Path for Anti-Monopoly

Sep 20-2021   



A spokesman of the Ministry of Industry and Information Technology (MIIT) recently pointed out that interconnectivity is an inevitable choice for facilitating the high-quality development of the internet industry. Such a campaign with a focus on ensuring interconnectivity will be a milestone event in the development history of digital platforms, writes Wang Hao, Associate Professor of the NSD and Deputy Editor-in-Chief of Economics Quarterly, in a media commentary.

 

Unlike the telecoms or banking industry, for which the main concerns of the government tend to be over-competition or systemic risks, the digital platform industry has seen the “barbaric growth” of certain platforms and their affiliates and caused the government to agonize over the inadequate competition, says Prof. Wang.

 

With interconnectivity in place, companies will still have to compete fiercely; however, their focal point will no longer be about attempts to monopolize the market but improvement of service. In other words, a healthier type of competition – one most needed by the market economy – will take place. That will benefit consumers tremendously in the form of more convenience and lower prices.

 

One major issue the MIIT is currently addressing is the blockage of weblinks, a common practice of digital platforms to prevent competition and protect interests. Prof. Wang recommends the creation of a compensatory mechanism to accommodate the different situations of various platforms.

 

He also advises taking one step further than banning the blockage of weblinks: platforms in the competition should be required to allow interconnectivity of their core businesses, much like what has been achieved in the telecoms industry. For example, social media platforms should permit users to contact and exchange with each other across platforms, so should platforms of car hailing and bike sharing.

 

Full interconnectivity between digital platforms might be a daunting task due to the big differences between platforms and the complexity of their businesses, yet it should be technically feasible to link their basic businesses, argues Prof. Wang.

 

Such “bridge-building” will bring welfare to consumers and society at large. More importantly, interconnectivity can offer a possible solution to fighting against the monopoly of certain platforms. Compared with such anti-monopoly measures as breaking the platforms up or limiting their expansion, interconnectivity will engender healthy competition without damaging network effects and causing efficiency loss for the society.

 

Wang Hao: Interconnectivity A Possible Path for Anti-Monopoly

Sep 20-2021   



A spokesman of the Ministry of Industry and Information Technology (MIIT) recently pointed out that interconnectivity is an inevitable choice for facilitating the high-quality development of the internet industry. Such a campaign with a focus on ensuring interconnectivity will be a milestone event in the development history of digital platforms, writes Wang Hao, Associate Professor of the NSD and Deputy Editor-in-Chief of Economics Quarterly, in a media commentary.

 

Unlike the telecoms or banking industry, for which the main concerns of the government tend to be over-competition or systemic risks, the digital platform industry has seen the “barbaric growth” of certain platforms and their affiliates and caused the government to agonize over the inadequate competition, says Prof. Wang.

 

With interconnectivity in place, companies will still have to compete fiercely; however, their focal point will no longer be about attempts to monopolize the market but improvement of service. In other words, a healthier type of competition – one most needed by the market economy – will take place. That will benefit consumers tremendously in the form of more convenience and lower prices.

 

One major issue the MIIT is currently addressing is the blockage of weblinks, a common practice of digital platforms to prevent competition and protect interests. Prof. Wang recommends the creation of a compensatory mechanism to accommodate the different situations of various platforms.

 

He also advises taking one step further than banning the blockage of weblinks: platforms in the competition should be required to allow interconnectivity of their core businesses, much like what has been achieved in the telecoms industry. For example, social media platforms should permit users to contact and exchange with each other across platforms, so should platforms of car hailing and bike sharing.

 

Full interconnectivity between digital platforms might be a daunting task due to the big differences between platforms and the complexity of their businesses, yet it should be technically feasible to link their basic businesses, argues Prof. Wang.

 

Such “bridge-building” will bring welfare to consumers and society at large. More importantly, interconnectivity can offer a possible solution to fighting against the monopoly of certain platforms. Compared with such anti-monopoly measures as breaking the platforms up or limiting their expansion, interconnectivity will engender healthy competition without damaging network effects and causing efficiency loss for the society.