The Infrastructure Dilemma: What Happens When Platforms And Network Industries Collide?

In recent years online platforms such as Amazon, Google, and Facebook, have become significant players in a number of markets, from retail to entertainment. Now, often aided by a favorable regulatory environment, platforms are encroaching on network industries, such as communications, transportation and energy. However, in addition to offering consumers considerable benefits, the platforms may be undermining the financial model which ensures that the network infrastructure they use, and that benefits society generally, receives adequate investment in the future. In their research paper Platformed! Network Industries and the New Digital Paradigm academics Juan J. Montero and Matthias Finger, consider some of the issues raised by the involvement of online platforms in networked industries.

In brief

  • The involvement of online platforms in network industries benefits consumers by fulfilling unmet needs, often efficiently, at low cost.
  • The platforms do this partly by exploiting access to existing network infrastructures that are often vital for national economic growth and wellbeing.
  • However, if online platforms are allowed to sideline traditional network operators, it may mean that vital investment in building and maintaining the infrastructures on which these markets are founded becomes unsustainable in the long-term.
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