Taking It With You: Platform Barriers to Entry and the Limits of Data Portability

Abstract

Policymakers are faced with the vexing problem of how to increase competition in a tech sector dominated by a few giants. One answer proposed and adopted by regulators in the US and abroad is to require large platforms to allow consumers to move their data from one platform to another. Facebook, Google, Apple, and other major tech companies have enthusiastically supported this form of regulation, known as data portability, through their own technical and political initiatives. Today, data portability has taken hold as one of the go-to solutions to address the tech industry’s competition concerns.

This Article argues that despite the regulatory and industry alliance around data portability, today’s public and private data portability efforts are unlikely to meaningfully improve competition because they focus solely on mitigating switching costs, ignoring other barriers to entry that may preclude new platforms from entering the market. The technical implementations of data portability encouraged by existing regulation — namely one-off exports and API interoperability — address switching costs but not the barriers of network effects, unique data access, and economies of scale. This Article proposes a new approach to better alleviate these other barriers called functional group portability, which would allow groups of users to coordinate to transfer data they share to a new platform, all at once. Although not a panacea, functional group portability would provide a meaningful alternative to existing approaches and avoid the privacy/competitive utility trade off of one-off exports along with the hard-to-regulate power dynamics of API interoperability.

Keywords: portability, data portability, competition, technology, barriers to entry

JEL Classification: K21