As Internet-based distributors move up and down the stack to become vertically integrated platforms with a preferred suite of affiliated content, there is a growing concern among policymakers that innovation among independent content creators and websites may be threatened. More fundamentally, the Internet is not one thing—it is many things, and our current regulatory regimes are struggling to address that complexity. These new platforms give rise to potential conflicts of interest, in which it might pay for a vertically-integrated platform owner to sacrifice some profits (if any) in its distribution division in order to support an affiliated (or favored, third-party) application.
This essay focuses on identifying and fixing this potential regulatory gap when crafting a “net neutrality” policy—a set of rules or standards designed to spur innovation at the “edge” of the Internet by preventing Internet service providers (ISPs) from engaging in discriminatory conduct. But the essay could just as easily be directed at the powerful online platforms wielded by Amazon, Facebook, or Google. The applicability of this remedy to other parts of the Internet is natural, not because market power is paramount there (though it certainly exists), but because there is a large enough threat to innovation in adjacent markets to online shopping, social media, and search, respectively.
[Singer is Principal, Economists Inc., and Senior Fellow, George Washington Institute of Public Policy. The author has served as a consultant to both ISPs and independent cable networks in regulatory matters.]
