The widespread application of digital technology has led to profound changes in society, thus raising questions of market order and supervision in the digital age. In the digital age, market structures and business models have undergone significant changes. The unprecedented density, depth and breadth of market transactions, the complexity of transaction forms and content, and the rapid changes in trading rules and trading relationships have dramatically challenged the conventional market order. . This, in turn, created a strong demand for a new order.
The rise of large platforms has brought significant changes to the structure and order of the market. Jiang Xiaojuan and Huang Yingxuan of Tsinghua University mentioned in their article Market Order, Market Oversight and Platform Governance in the Digital Age that at the end of 2020, there were 197 digital platform companies worth over $1 billion in China, an increase of 133 from 2015. From 2015 to 2020, the digital platform business value with over $1 billion grew from $770.2 billion to $3,504.3 billion, with a compound annual growth rate of 35.4%.
These platforms not only pose challenges to the status quo of the market order, due to their technical capabilities, they have also become the relevant creators and maintainers of orders in their ecosystems of production and consumption. Jiang and Huang believe that the technical order has become another important driving force to maintain the efficient operation of the market after the spontaneous order, the administrative order and the legal order. At the same time, the “large and unmanageable” problem caused by large-scale digital platforms relying on the advantages of digital technology has become a major problem plaguing regulators in various countries and societies.
Due to their importance before the advent of the digital age, some large companies were presented as “too big to fail”, where the government had to slightly penalize or even bail out some of them if they had a problem. In the digital age, however, it is much more difficult to oversee these large companies, or “too big to handle” as Jiang calls it. The root cause is the advent of a technical order, which greatly expands the main body and transactions on large platforms. The structure of these platforms is multi-layered and very complex, and the business model faces frequent innovation, which makes them difficult to manage.
While the market economy, practiced in many countries, is able to keep its global operations efficient, different countries however have a significant degree of commonality when it comes to the “failure” of regulating digital platforms. Jiang believes that the fundamental reason is that the significant changes in technology, industrial organization and business model in the digital age have exerted large and strong constraints on the effective functioning of the spontaneous order and the institutional order. , posing enormous challenges to the functioning of the market.
The regulation of large platforms is a problem that is not uncommon across the world. Although the European Union and the United States have long had the concepts, policies and laws as tools, they have not been able to effectively curb the market power of these large digital platforms. In recent years, the United States and the European Union have faced growing doubts about the capitalistic power of these platforms being too enormous. Coupled with the monopolization of the market by technology companies, the authorities have constantly put in place regulatory policies. Nevertheless, the market value of many huge platforms has increased significantly, indicating that they are particularly difficult to regulate.
Jiang and Huang believe the reason these platforms are “too big to handle” is because the technology and business models are complicated, while the scale is dramatically large. At the same time, the administrative and legal supervision of the platform has not been properly carried out, so much so that it is unable to detect and control problems effectively. Therefore, monitoring platforms in the digital age is mainly about solving the major problem of “too big to handle”.
For the supervision of platform companies in the era of the digital economy, the regulatory policy suggestions put forward by Jiang and Huang include:
Above all, the government will need to strengthen the supervision of these platforms to ensure that they comply with rules and regulations. Indeed, it is difficult for external regulators to actively supervise every transaction on the platforms. Therefore, an effective institutional arrangement of the compliance management system must be put in place within the companies, for the government to effectively oversee the construction and operation of these systems. Second, there is the need to frame platforms by category. Each platform has commonalities, but they also have their specific characteristics. Search engine platforms, e-commerce platforms, social platforms, mobile payment platforms, etc. have their characteristics and must have individualized regulatory requirements. Third, the focus should also be on public rules and strengthening the supervision of algorithms. While serving the platform’s business model and autonomy, data and algorithms can lead to violation of privacy, social equity, shape inappropriate values, etc., and even interfere in political elections in through the massive data they possess. Since only software developers know how these algorithms work, even when abuse occurs, they can go unnoticed by society for a long time. Fourth, fair competition between platforms must be maintained and a balance of interests between multiple parties must be perpetuated. Fifth, administrative supervision must be prompt and timely.
Jiang and Huang believe that the market order in the digital age has changed, making it crucial to understand change holistically. In the new order structure, it is also crucial to understand the optimal combination of different market orders and supervisions, as well as to maintain the orderly operation of the market, balance the interests of different subjects and maximize social benefits. global.
Chan Kung, founder of ANBOUND, believes that such views are indeed necessary to prepare upstream for market regulation in the digital age. However, looking ahead, the worst is probably yet to come, not to mention the regulatory aspects. From the perspective of artificial intelligence (AI) development, Chan Kung pointed out that the potential for technological development has reached a stage beyond imagination. In the future, AI will be able to conduct autonomous programming, and it can do many things that are not possible for humans. The problem is, what should humans do once AIs have reached such a level? The answer for Chan Kung is to regulate the technology.
Therefore, in the future, all of human society will oversee technology comprehensively, rather than only having official bodies to do so. Be aware that in a time of rapid technological development, the future is not about “what can be done” but rather “what shouldn’t be done”. If we rely solely on official supervision, we would make the mistake of letting the problem spiral out of control. Be aware that in a time of rapid technological development, the future is not about “what can be done” but rather “what shouldn’t be done”.
The human community or countries must insist on maintaining a “legal balance” between scientific and technological growth and the effectiveness of this development. In the age of advanced technology, this legal balance is an essential foundation. For China’s forward-looking science and technology officials, China needs to establish such a concept.
Conclusion of the final analysis:
The emergence of online platform giants in the digital age poses new problems of market order and supervision. Therefore, human society must regulate the development of technology, while the state and government departments must establish a “legal balance” between the development of science and technology and its effectiveness. This will be a fundamental premise to which the future technological civilization will have to conform.