On January 24, Wang Yong, professor at the School of Social Sciences, Tsinghua University and deputy director of the Institute of Economics, Tsinghua University, gave the Lecture 4 of Frontiers of Digital Economy Lecture Series, with the theme of co-governance and collaborative regulation of the platform economy.
First of all, Prof. Wang vividly explained the concept of platform economy with rich cases, and introduced the relationship between the platform economy and the digital economy and the development process of the platform economy. He noted that there are narrow and broad definitions of the platform economy. The platform economy in a narrow sense refers to economic activities based solely on digital platforms. Policy documents and the platform economy frequently discussed are of the narrow sense. In a broad sense, it refers to economic activities based on physical or digital platforms, which have actually existed in large numbers offline, such as home stores, credit card organizations, and stock exchanges. Regarding the relationship between the platform economy and the digital economy, the platform economy is the organizational form of the digital economy and the most important organizational modality in which data elements plays a role in the digital economy. With the development of the digital economy, the platform economy has also undergone different development stages such as operating system platform, search engine platform, e-commerce platform, social entertainment platform, cloud computing platform. In this process, the organizational role of the platform becomes growingly profound.
Prof. Wang analyzed the characteristics of the platform economy from the perspective of its operation, and elaborated the positive and negative effects of the platform economy based on these characteristics. He argued that from an operational point of view, the platform economy has three core features, namely “cross-network effect”, “data-driven and algorithm-driven computation” and “attention and dataflow competition”, which are closely linked to the contributions and negative effects of the platform. In terms of contributions, the platform economy exerts an important and active role in “providing a new momentum driving economic growth”, “helping expand consumption to boost domestic demand” and “promoting the rapid development of related service industries”. In terms of negative effects, the operation mechanism of platform economy can rock economic operation order. For example, it can take the advantages of data and algorithms to infringe on the legitimate rights and interests of platform users and disrupt the order of platform market operation; it can create a winner-take-all scenario through cross-network effects that breeds the abuse of market dominance, platform monopoly and unfair competition, thus disrupting the fair competition order in the industry. Furthermore, it can also use dataflow as capital to expand business through attention and dataflow distribution; even worse, the distribution of dataflow is set to support specific circles of people instead of giving priority to innovation, thus forming cliques and stratification in the Internet industry, leading to unregulated expansion of capital, and hindering the healthy development of innovation and digital economy.
In view of the above problems, the existing literature generally emphasizes the need to relax regulation and enhance oversight. However, Prof. Wang argued that we should change our thinking and explore how to enable platform enterprises to better participate in the construction and maintenance of the digital economic order based on the operating characteristics of the platform economy. He analyzed that platform enterprises are willing to participate in the construction of digital rules and order, because a good order will increase great revenue: The better the order of the platform, the lower the transaction costs for the users on the platform to trade and interact with each other, the more users on the platform and the more frequent the trading activities. As a result, the platform revenue will increase. Objectively, based on the characteristics of platform enterprises, especially data-driven and algorithm-driven computation, platform enterprises can develop flexible market-driven measures such as price structure, reputation mechanism, payment means, logistics and distribution, after-sales service, to build digital rules and order, and can also implement process regulation to become effective private regulators.
Prof. Wang analyzed in detail how government departments and platform enterprises can conduct collaborative regulation after introducing the above co-governance thinking. He pointed out that in terms of collaborative regulation, first of all, it is necessary to determine the regulation model that should be dominated by platform enterprises and supported by government departments. Such a model turns platform enterprises into Caesars playing a greater role in taking market-driven measures to maintain the relevant economic order inside and outside the platform; and government departments into God taking administrative measures to ensure fairness and make final and reasonable decisions. Secondly, in terms of specific collaborative regulation, it is necessary to further subdivide order responsibilities and classify platforms, so that the definition and association of different order maintenance responsibilities on different platforms can be realized, and platform enterprises can carry out collaborative regulation with the government according to the definition of responsibilities. Third, it is necessary to carry out collaborative regulation based on the chain of regulatory processes. In terms of determining the qualifications of platform users in the pre-entry process, government departments are responsible for determining qualification standards, and platform enterprises for reviewing and verifying; in the process of business activities, platform enterprises should use technical means to conduct monitoring and regulation, and government departments can take random inspections for supervision; in the post-event penalty phase, platform enterprises should provide relevant data to government departments to determine the level of final penalty. In addition, platform enterprises can also impose corporate punishments such as banning accounts, downgrading rights to search, and confiscation of mortgage funds. Fourth, in addition to the collaborative regulation of government departments and platform enterprises, more channels should be opened for social entities to participate in the maintenance of platform order, including industry associations, news media, and capital markets.
As the moderator of this lecture, Assistant Professor Xie Danxia commented that Prof. Wang explained the profound in simple terms and put forward innovative insights on platform governance, and that he has always maintained an attitude of particularly scientific analysis, which is the principle that should be adhered to in the study of the digital economy and platform economy.
This Lecture Series is supported by Sina Finance, NetEase Finance, Chinese Headlines, CITIC Press and KeAi’s Journal of Digital Economy.
