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Two-Faced Governance in Platform Ecosystems
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... Thus, more research is needed to better understand the nature of digital platforms from a regulatory perspective, including the importance of platform types and governance design. Platform governance design determines how platforms orchestrate their ecosystem while at the same time shielding it from the regulator's grasp (Gorwa, 2019), thus sometimes departing from their declared mode of ecosystem governance (Harraca & Gawer, 2023). It is therefore surprising that a systematic analysis of platform types and governance design, specifically focusing on digital competition from a regulatory perspective, is still lacking in IS research (Heimburg & Wiesche, 2023a;Mukhopadhyay & Bouwman, 2019). ...
... They define technical, organizational, and financial rules and incentives, such as transaction fees or the extent to which actors can interact (Schreieck et al., 2016). 2) Besides their role as ecosystem orchestrators, some platform owners also behave as actors (e.g., Amazon Marketplace) (Harraca & Gawer, 2023). This dual role enables anti-competitive behavior, since undue preferences based on information asymmetries disadvantage actors that compete with the platform owners (Khan, 2019). ...
... However, an information asymmetry exists between the platform owners and the regulator, who does not have full access to the platform's internal activities and dynamic governance decisions, making it challenging to identify and address problems. Platform owners further complicate this problem by concealing anticompetitive behavior from the regulator via "two-faced governance" strategies, as highlighted by (Harraca & Gawer, 2023). In order to ensure that remedies can be successfully implemented, the burden of proof for compliance must shift from the regulator to the platform owner. ...
The rise of hybrid-conglomerate platforms like Google, Apple, Microsoft, Amazon, and Meta (GAMAM) has led to significant market power concentration and negative competition implications, right down to calls for their potential breakups. To expand dominance, these platforms leverage extensive ecosystems with strategic control over resources and customer relationships, often at the expense of others. We conduct a qualitative meta-analysis of 87 empirical platform-governance problem cases from a regulatory perspective. Using a decomposition approach, we develop a taxonomy of competition problems induced by platform governance and identify four governance standard types (i.e., growth, consolidation, extension, and protect and capture), representing platform lifecycle phases from a regulatory perspective. Each standard type describes the platform owner’s governance strategy, consequent competition problems, and potential remedies. Our findings show how lack of regulation of digital platforms’ governance design has contributed to their growing market power and that effective regulatory intervention requires making platform governance more open and neutral. Moreover, we emphasize the need for platform governance regulation that shifts the burden of proof for regulatory compliance from regulators to platform owners.
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