The Digital Commonwealth from Private Enclosure to Collective Benefit
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IPPR Commission on Economic Justice The Digital Commonwealth From private enclosure to collective benefit Discussion Paper Mathew Lawrence and Laurie Laybourn-Langton The IPPR Commission on Economic Justice Dominic Barton Catherine McGuinness Global Managing Partner, McKinsey and Company Chairman, Policy and Resources Committee, City Sara Bryson of London Corporation Community Organiser, Tyne & Wear Citizens, Mariana Mazzucato Citizens UK Professor in the Economics of Innovation and Matthew Clifford MBE Public Value, University College London Co-founder and CEO, Entrepreneur First Dame Helena Morrissey DBE Charlie Cornish Head of Personal Investing, Legal & General Group Chief Executive, Manchester Airports Group Investment Management; Founder of the 30% plc Club Claire Dove OBE, DL Frances O'Grady Chief Executive, Blackburne House Group; former General Secretary, Trades Union Congress Chair of Social Enterprise UK Stephen Peel Lord John Eatwell Founder and Chairman, SMP Policy Innovation President, Queens’ College, University of Mary Senior Cambridge; Scotland Official, University and College Union Professor Emeritus, Judge Business School Hetan Shah Grace Gould Executive Director, Royal Statistical Society Entrepreneur in Residence, LocalGlobe Mustafa Suleyman Sandra Kerr OBE Co-founder and Head of Applied Artificial Race Equality Director, Business in the Community Intelligence, DeepMind Lord Bob Kerslake Sally Tallant Chair of Peabody, Former Head of the Civil Service Director, Liverpool Biennial Festival of Tom Kibasi Contemporary Art Director, Institute for Public Policy Research Neera Tanden (IPPR) and Chair of the Commission President, Center for American Progress John Mills The Most Revd and Rt Hon Justin Welby Founder and Chairman, JML Archbishop of Canterbury Get in touch For information or to contact the IPPR Commission on Economic Justice, please email: [email protected] www.ippr.org/cej This report was first published in September 2018 © IPPR 2018 The IPPR Commission on Economic Justice The IPPR Commission on Economic Justice is a landmark initiative to rethink economic policy for post-Brexit Britain. Launched in November 2016, the Commission brings together leading figures from across society – from business and trade unions, civil society organisations and academia – to examine the challenges facing the UK economy and make practical recommendations for reform. The Commission is undertaking a wide-ranging programme of research and policy consultation on issues including industrial strategy, macroeconomic policy, taxation, work and labour markets, wealth and ownership, sub-national economic policy and technological change. Through a major programme of communications, events and stakeholder engagement it aims to contribute to both public debate and public policy on the economy. Non-partisan, it has been welcomed by both government and opposition parties. The Commission’s Interim Report, Time for Change: A New Vision for the British Economy, was published in September 2017. Its Final Report will be published in autumn 2018. www.ippr.org/cej ABOUT THE AUTHORS Mathew Lawrence is a senior research fellow at IPPR. Laurie Laybourn-Langton is a senior research fellow at IPPR. NOTE The Commission publishes discussion papers to contribute to debate on issues of major importance. These discussion papers should not be taken to represent the collective views of the Commission or the views of individual commissioners, or the organisations with which they are affiliated. They reflect only the views of their named authors. The Commission welcomes responses and reactions to them. ACKNOWLEDGEMENTS The authors would like to thank Eric King, Nick Srnicek, Dave Beer, Michael Jacobs, Catherine Colebrook, Peter Wells, Wendy Liu, Francesca Bria, Diane Coyle and Will Stronge. THANKS IPPR is extremely grateful to the Friends Provident Charitable Foundation, City of London Corporation, GMB and TSSA, and a number of individual donors, for their support of the Commission. Their support should not be taken as agreement with the content of this or other Commission publications. Download This document is available to download as a free PDF and in other formats at: http://www.ippr.org/research/publications/the-digital-commonwealth Citation If you are using this document in your own writing, our preferred citation is: Lawrence M and Laybourn-Langton L (2018) The Digital Commonwealth: From private enclosure to collective benefit, IPPR. http://www.ippr.org/research/publications/the-digital-commonwealth Permission to share This document is published under a creative commons licence: Attribution-NonCommercial-NoDerivs 2.0 UK http://creativecommons.org/licenses/by-nc-nd/2.0/uk/ For commercial use, please contact [email protected] Contents Summary ..........................................................................................................................2 Introduction ....................................................................................................................5 1. Platforms are diverse in form but share common features ...........................7 2. Data extraction and analysis are central to the platform business model ... 10 Data and the development of platform firms ..................................................10 Why data is so valuable: improvement, revenue, AI ......................................10 The new giants ......................................................................................................... 12 The platform business model: expansion and enclosure ............................ 13 3. The universal platforms have boundless ambition ....................................... 17 Platforms provide many positive benefits to consumers and businesses .....17 The negative impacts of platforms are growing ............................................18 The universal ambition of platforms and its potential impact ..................20 4. Data and digital infrastructure should be organised as collective goods ....21 From enclosure to commonwealth ..................................................................... 21 Building a digital commonwealth .......................................................................22 Reform of competition law to foster innovation ............................................24 Regulation of the platform giants as utilities ..................................................25 Creation of a Digital Britain public service to better curate the nation’s data ........................................................................................................ 27 Introduction of Local Digital Commonwealth Strategies ..............................30 Conclusion .....................................................................................................................32 References ....................................................................................................................33 IPPR | The Digital Commonwealth From private enclosure to collective benefit 1 Summary Digital technology is delivering a huge range of benefits to businesses, citizens and wider society. Platforms – online applications that intermediate between the provider of a service and its users – have unlocked many of these benefits by sorting and connecting an enormous range of services and products, both online and off. At the forefront of the platform economy are Facebook, Alphabet, Amazon and Apple – they have accumulated the most data, developed the most advanced analytical capabilities and gained greatest ownership of the foundational infrastructure, from mapping to cloud computing, that underpins all digital technology. As such, we refer to them as the ‘universal platforms’ and their ambitions are the focus of this report. Increasingly, the operations of the universal platforms are driving negative social and economic outcomes. Critically, these outcomes are not aberrations but a result of the universal platform business model: the extraction and analysis of data for profit. Data is the source of their economic and, increasingly, social power. Maximizing the potential of digital technology requires managing data and digital infrastructure as a collective good. This conclusion is based on four propositions. 1. Platforms are diverse in form but share common features. The major platforms dominate the digital economy. • Platforms are multi-sided online arrangements between suppliers and users, with the platform acting as an intermediator. Types of platform include those that use data insights to promote products and those that provide the digital infrastructure, including cloud computing, on which other platforms operate. • Platforms all benefit from a number of factors inherent in digital markets, including low marginal costs, powerful network effects, and an emphasis on growth in users and other measures over profitability. • These effects tend dominant platforms towards monopoly. In the UK: Facebook has 74 per cent of the social network market share; Amazon is responsible for 90 per cent of all e-book sales and an estimated 80 per cent of online physical book sales, and Google has an estimated 88 per cent share of the desktop search engine market and 95 per cent of searches on mobile. • The ‘universal platforms’ have the most data and ownership of digital infrastructure. Facebook, Alphabet, Amazon and Apple have accumulated the most data, developed the most advanced analysis capabilities, and gained greatest ownership of the foundational infrastructure, from mapping