In the current discussions about competition policy and big tech, a more technologically focused approach to boosting competition has been the promotion of “data portability” and “interoperability.” However, many are unclear about what these terms mean and how they relate to competition in the technology sector. This piece will answer those questions and others to help inform the current debates around antitrust and competition.
Although these terms are sometimes used interchangeably, data portability generally refers to a users’ ability to easily download or transfer their personal data from a digital platform in an organized and machine-readable format, while interoperability generally refers to the ability of computational systems to regularly interact and exchange information with one another through a standardized and well-documented interface in real-time. A user downloading all their photos from a cloud storage platform onto their personal computer or another digital platform would be an example of portability. A user authorizing a social media platform to regularly update their profile with new photos from another platform in real-time is an example of interoperability.
Advocates for greater data portability and interoperability argue these tools will boost competition by lowering switching costs for customers and reducing barriers to entry for non-incumbent firms. For instance, the ability to move photos from one service to another can make it easier for customers to switch to a new startup platform and give the startup access to data they can use to create a better product. This can further pressure incumbent firms to reduce prices or improve their quality to keep existing customers. However, critics contend data is not a major barrier to switching services for users and that mandating data portability and interoperability will increase compliance costs with little benefit and could unintentionally hurt competition. Further, critics and advocates argue over the extent of the implementation challenges, which will be the topic of the next section.
Data portability and interoperability face several hurdles to implementation. In addition to the costs , there are other challenges, such as designing the right technical standards, and addressing privacy and security concerns.
The process of defining and maintaining common standards for portable and interoperable data can be challenging. Each platform will likely have different priorities for how the standards are designed, depending on their business model and those of their competitors. Further, how exactly certain kinds of data should be represented through the application programming interface (API) or portable format might be difficult to define between services that do not use the same ‘language’ – for example, how might a ‘retweet’ on Twitter be represented on Facebook? Will Instagram’s ‘stories’, images and videos meant to disappear after 24 hours, be shared with competitors who can display them in perpetuity? The coordination challenges, technical feasibility, and scope of the various standards are important issues to consider and address.
Data portability and interoperability also raise privacy and security concerns. Interoperable APIs, by design, grant easy access to secure data systems using methods to verify whether any requests for data are legitimate. However, an API may be fooled into giving away sensitive information by a convincing but fraudulent request or send information to a bad actor misrepresenting their services using a completely legitimate and authenticated request. Digital platforms will have to regularly update their portability and interoperability tools to address such privacy and security challenges, and regulators may have to augment their technical expertise to evaluate these systems, any modifications, and their competitive effects.
Various proposals for portable and interoperable standards have been proposed by industry, academia, and government with differences often centering around whether they are voluntary or based on government mandates. For instance, the Data Transfer Project is a voluntary, industry led effort for transferring data between partner platforms. The effort was launched in 2018 and continues to be developed. The Access Act of 2021 and the American Choice and Innovation Online Act are bills recently approved by the House Committee on the Judiciary that pertain to portability and interoperability standards for designated ‘covered platforms’. The Access Act of 2021 requires these firms to create and maintain tools to enable data portability and interoperability, and the American Choice and Innovation Online Act restricts them from disallowing third-party services from interoperating with the platform if those platforms’ in-house services can do so.
Data portability and interoperability have garnered bipartisan interest from policymakers in Congress and the executive branch. Discussions around these policies will continue as experts debate various proposals’ benefits and drawbacks in the context of the greater competition policy debates. A thoughtful and bipartisan approach to these issues can help policymakers better understand their competitive effects, technical challenges, and trade-offs.