Reasonable regulations needed to protect platform marketplace

The platform economy is often hailed as opening new opportunities for people to chart their own courses and to determine where and how they will earn a living. If you have a car, you can sell rides on Lyft and Uber. If you have a house, you can rent it or a back room on Airbnb. And if you have a brilliant idea for a new mobile app, you can make it available on Apple Store or Google Play.

All of these platforms have the look and feel of an open marketplace. But in reality, they're not. These are all the domains of their owners who set all the conditions and collect and analyze terabytes of data on sellers and buyers.

No one disputes that app platforms have triggered a creative revolution benefiting consumers as well as developers. Consumers can shop for new products, compare functions, and learn from the experiences of others. Those who create apps have a place to monetize their ideas, get important feedback from their customers, and see what the competition is offering.

What's not clear, however, is the extent to which these experiences are filtered by the platforms. And this is the crux of the problem: there are no clear and commonly agreed rules of the road so that all parties to each transaction can trust that no one is being disadvantaged.

States are considering measures that aim to protect all stakeholders and ultimately strengthen their faith in the platform economy. Several foreign governments are already ahead of the U.S. on this. At the federal level, details are being sorted out on bipartisan legislation named the Open App Market Act.

Whatever app marketplace bills are contemplated, the legislative outcome should achieve three key goals.

First, operations of market platforms must be transparent so that buyers, sellers, and regulators can see that the product performance is based on merit and product access is both equal and equitable. For example, no one should have a home-field advantage. Developers tied to the platform should not be treated better than independent entrepreneurs. New developers should have the same opportunities to get their apps on a platform as those who have been in business for much longer. Independent developers should not have to concede to fees and conditions beyond what proprietary developers experience. Consumers need to know they have true freedom to assess and choose what they purchase rather than get steered to the product that makes the most money for the platform.

Second, app platforms should be subject to the same competition they require from their vendors. Apple, for example, does not pick a weather app and exclude others from its store. A consumer has choices and can download many services, as I do. They aren't limited to just one of anything. But there is only one place where I can obtain an app for my iPhone. And while I appreciate the possibility that this exclusive arrangement might add extra layers of security for my phone, I also wonder whether this makes apps more expensive or limits my choices.

Third, a new regulatory framework must be sufficiently flexible and robust for platforms to continue to innovate and thrive. They should be able to invest in new products that eventually come to market. They should also be able to support future innovations through education and

training and through various means of financing. Blacks, Latinos, and Indigenous people, as women of all races, are under-represented as app developers. Their lived experiences can inform wildly creative apps that are now unimagined.

App platforms are the golden goose for consumers, developers, and platform companies. Americans of all political stripes are naturally suspicious of government, and the platforms seem to be working fine without government involvement. But once we understand that platforms are not free markets and are operated to benefit the bottom line of the companies that own them, it is easy to conclude that all stakeholders must have a say in their operations.

Our mechanism for accomplishing this is to enact reasonable laws and regulations that lead to verifiably fair and transparent markets operated for the public good by platform businesses.

• Peter A. Creticos is president and executive director of Institute for Work & the Economy in Chicago.