Bruegel policy brief on the issue of interoperability of social networking cores

Executive summary

The European Union’s Digital Markets Act (DMA) includes interoperability requirements for messaging services but not for personal social networking platforms. These gatekeeper platforms have seen little increase in competition under the DMA. Interoperability requirements – meaning different services should be able to communicate with one another – should be expanded to cover social networks, enabling entry by overcoming the single-homing tendencies of strong network effects.

Interoperability could be vertical and horizontal. Vertical interoperability would require incumbent platforms to maintain network infrastructure while allowing third-party curators to create their own networks ‘on top’ of the platform. Horizontal interoperability would enable social networks that run their own infrastructure to connect to existing networks through standardised application programming interfaces (APIs). Both designs entail some shared requirements, including APIs that enable basic content sharing, systems for verifying the identities of users communicating across networks and ways of ensuring safety and security. Government systems for licensing entrants and credentialing users would provide baseline support for interoperability.

While vertical interoperability lowers barriers to entry by using the dominant firm’s platform as the basis for interoperability, it gives that firm greater leeway to discriminate against rivals running on the platform. It also creates long-term questions about the price of access to the network, since its costs are borne by the gatekeeper. Horizontal interoperability requires each firm to maintain its own platform independently, but comes with the increased risk that the gatekeeper will discriminate against external traffic.

Increasing interoperability – either through horizontal or vertical methods – would encourage competition on content algorithms, customisation, locality and monetisation. By expanding the scope of interoperability requirements, the DMA could significantly reduce the market power of gatekeepers, provide users with more choice and create opportunities for new social networks – and models for social networking – to emerge. As messaging and social networking platforms continue to converge, extending interoperability standards will best support the continued development of competition in these sectors.

Read the policy brief