Plum prepared a report on platform neutrality, openness and interoperability – and the potential policy issues related to these areas – for a California-based Fortune 500 Company.
The terms open, neutral and interoperable appear frequently in discussions of the technology/ICT sectors, yet terms are not uniformly defined. The first challenge therefore lies in defining these terms:
- Neutrality generally refers to the principle of non-discrimination – competing services, or alternatively different data packets, should be treated equally;
- Interoperability typically refers to the ability to transfer and render useful data and other information across systems, applications and devices;
- In an ICT context, the terms ‘open’ and ‘closed’ can refer to open and closed platforms. In a closed platform (also called a walled garden) the user’s access to applications and content is restricted (potentially leading to vendor lock-in)
The report argues that the appropriate level of integration and openness is dynamic and contestible. For example, there are likely to be greater advantages from tighter device-operating system integration on mobile devices than for PCs. Similarly, curated app stores offer a degree of protection for consumers from malware. Customers have a choice between app stores with more or less strict degrees of curation (systems that are more or less ‘open’). Users will gravitate towards those platforms that better fit their preferences and requirements.
In a similar vein, strict interoperability requirements may undermine market innovation. For example, a requirement that apps work across all mobile operating systems would impose prohibitive costs on small-scale app developers who do not develop for minority platforms. Poorly designed interoperability requirements could lead to or enforce the dominance of one standard, to the detriment of innovation. It is also worth noting that the market is often incentivised to provide a level of interoperability.
Finally, digital markets are often dynamic and competitive; even established players must constantly innovate to remain successful. Different device, operating systems and app ecosystems compete with one another, and openness and interoperability may develop in different ways at different levels of the ecosystem. Competition not only operates between more or less integrated vertical ecosystems, but is also testing whether consumers value integration at each level of any currently integrated ecosystem.
This suggests that caution is advisable when imposing requirements on the market which may have unintended consequences in terms of foregone future innovation.