Digital Gatekeeper

Nicolo Zingales

Digital gatekeepers are the equivalent of the guardians of critical infrastructure (e.g., highway, railway, utilities, and telecommunications) in the digital world. Thus, the focal element of this definition is the critical nature of the services they provide, in enabling both the enjoyment of services that are considered essential for digital citizenship and the provision of such services by third parties.

There are, however, competing views of the essential elements of this term. For instance, one of the first users of the term in the legal domain relies on the four criteria identified by an economist (Reiner Kraakman) who focuses on requirements that regulators should meet before designing an entity of gatekeeper, specifically “(1) serious misconduct that practicable penalties cannot deter; (2) missing or inadequate private gatekeeping incentives; (3) gatekeepers who can and will prevent misconduct reliably, regardless of the preferences and market alternatives of wrongdoers; and (4) gatekeepers whom legal rules can induce to detect misconduct at a reasonable cost.

Another pioneer in the area, Emily Laidlaw, defines gatekeeper power as a function of the impact on participation in a democratic culture, which in turn depends on: (1) when the information has democratic significance; and (2) when the communication occurs in an environment more closely akin to a public sphere. As a result of this, she identifies two different categories: (1) Internet gatekeepers, which are those gatekeepers that control the flow of information; and (2) Internet information gatekeepers, which as a result of this control, impact participation and deliberation in democratic culture.

More recent scholarship seems to accentuate, rather than reconcile these divergences. For instance, Thomas Kadri (2021) uses ‘digital gatekeepers’ in a less metaphorical sense, referring to the property owners that may permit and restrict access to their websites much like landowners may do with private land in the real world. In this sense, he discusses how cyber-trespass law empowers them with legal rights of inclusion and exclusion over information on websites.

By contrast, Rory Van Loo calls platforms the ‘New Gatekeepers’ to describe how administrative agencies increasingly conscript them to “perform the duties of public regulator” and police other businesses. Similarly, Daniel Citron defines a special role of ‘digital gatekeepers’ on preventing online hate, referring to entities that “have substantial freedom to decide whether and when to tackle” harms like cyber-harassment by deciding what content appears on their websites.

Adopting a more media-focused approach Eli Pariser has invoked the gatekeeper language to describe how platforms exercise editorial control over the news and information we consume, replacing the ‘old gatekeepers’ that ran traditional broadcast and print media. Helberger et al. (2015) reinforce this understanding, focusing on the control of critical resources, rather than on access to and supply of information, as a measure of their ability to affect user choices and diversity of exposure.

More recently, we have seen a resurgence of the concept of gatekeeper especially within the realm of competition law, as a threshold that triggers more stringent scrutiny for intervention. Recent reports on proposed changes to the existing framework of competition law for the digital age use similar terms, such as:

1. bottleneck power, where consumers primarily single-home and rely upon a single service provider, which makes obtaining access to those consumers for the relevant activity by other service providers prohibitively costly (Cremer et al., 2019)
2. intermediation power, linked to having “unavoidable trading partner” status (Competiton Law 4.0 report, 2019)
3. strategic market status or competitive gateway, i.e., in a position to exercise market power over a gateway or bottleneck in a digital market, where they control others’ market access. 

The Furman Report focuses on three main variables: i) the power to control access to certain goods and services and charge high access fees; (ii) the power to manipulate rankings or the prominence of a given good/service; and (iii) the power to control reputations. It also stresses how the concept of “Significant Market Power” that exists in telecom markets can provide some references on how to think about strategic market status in digital markets. Finally, the CMA in its Digital Markets Report complemmented that for platforms funded by digital advertising some of the criteria should include measures of shares of supply in consumer-facing markets, reach across consumers, the share of digital advertising revenues, control over the rules or standards which apply in the market and the ability to obtain and control unique datasets.

The work of these reports has fed into recent proposals, and particularly in the case of the Cremer et al. report, it has led to a formalization of the term gatekeeper in the proposed Digital Markets Act. The Act establishes in its Article 3 that a provider of “core platform services” (a term which refers to platforms operating in specific markets, such as online intermediation services, online search services, online social networking services, video-sharing platform services, number-independent communication services, operating systems, cloud computing services, and advertising services) shall be designated as gatekeeper if: (a) it has a significant impact on the internal market; (b) it operates a core platform service which serves as an important gateway for business users to reach end-users; and (c) it enjoys an entrenched and durable position in its operations or it is foreseeable that it will enjoy such a position in the near future.

Furthermore, the same article establishes a presumption that a provider of core platform services satisfies the above criteria in the following way:

(a) the requirement of (a) where the undertaking to which it belongs achieves an annual EEA turnover equal to or above EUR 6.5 billion in the last three financial years, or where the average market capitalisation or the equivalent fair market value of the undertaking to which it belongs amounted to at least EUR 65 billion in the last financial year, and it provides a core platform service in at least three Member-States; (b) the requirement of (b) where it provides a core platform service that has more than 45 million monthly active end users established or located in the Union and more than 10 000 yearly active business users established in the Union in the last financial year; and (c) the requirement in paragraph 1 point (c) where the thresholds in point (b) were met in each of the last three financial years. Finally, Article 3 (6) establishes that in designating an entity as gatekeeper, the Commission shall take into account the following elements:

(a) the size, including turnover and market capitalisation, operations, and position of the provider of core platform services;

(b) the number of business users depending on the core platform service to reach end-users and the number of end-users;

(c) entry barriers derived from network effects and data-driven advantages, in particular in relation to the provider’s access to and collection of personal and non-personal data or analytics capabilities;

(d) scale and scope effects the provider benefits from, including with regard to data;

(e) business user or end-user lock-in;

(f) other structural market characteristics.

References

Citron, Danielle. (2014). Hate Crimes in Cyberspace. Harvard University Press.

Commission Competition Law 4.0. (2020). A New Competition Framework for the Digital Economy. BMWi.

Competition and Markets Authority. (2020). Online platforms and digital advertising market study. UK Government. Available at: https://www.gov.uk/cma-cases/online-platforms-and-digital-advertising-market-study.

Crémer, J. de Montjoye, YA. Schweitzer, H. (2019). Competition Policy for the digital era. European Commission Directorate-General for Competition. Available at: https://ec.europa.eu/competition/publications/reports/kd0419345enn.pdf.

Furman, J., Coyle, D., Fletcher, A., Marsden, P., McAuley, D., Unlocking digital competition. Report of the Digital Competition Expert Panel (March 2019), available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785547/unlocking_digital_competition_furman_review_web.pdf.

Helberger, N., Kleinen-von Königslöw, K., Van Der Noll, R. (2015). Regulating the new information intermediaries as gatekeepers of information diversity.

Kadri, Thomas E. (2021). Digital Gatekeepers. Texas Law Review. 99.

Kraakman, R. H. (1986). Gatekeepers: The anatomy of a third-party enforcement strategy. Journal of Law, Economics, & Organization, 2(1), 53-104.

Laidlaw, E. B. (2010). A framework for identifying Internet information gatekeepers. International Review of Law, Computers & Technology, 24(3), 263-276. 

Stigler Center News. (2019). Stigler Committee on Digital Platforms: Final Report. Chicago Booth. Available at: https://www.chicagobooth.edu/research/stigler/news-and-media/committee-on-digital-platforms-final-report.  Van Loo, R. (2020). The New Gatekeepers: Private Firms as Public Enforcers. Va. L. Rev., 106, 467.