Courts Are Quietly Taking Over the Internet
The next generation of online platforms is being shaped less by engineers and entrepreneurs and more by regulators and courts—and they’re very bad at it.
Who do you think decides what you see and how you interact on your favorite online service? Most would point to Silicon Valley engineers and product managers tinkering behind the scenes. However, an underappreciated reality is emerging: judges and regulators are increasingly the ones who decide how online platforms operate. The blueprint for tomorrow's internet is being drawn up in courtrooms and government offices. This should concern us all.
Today's leading tech platforms were initially shaped by market forces. Governments did not tell Google to display blue links, Apple to invent the App Store, or Amazon to introduce the "Buy Box." But legal battles and regulations are now redefining how platforms are built and run. This includes deciding how firms can monetize their services, how they display content to users, and which features can be rolled into a single service.
Litigation brought by Epic Games may force Apple to allow in-app links to outside payment systems, and effectively reduce its App Store fees to $0. This is not the consumer win many believe it to be, as it would undo the closed—but safe and easy to use—business model that made Apple's iOS into the leading ecosystem it is today.
Apple isn't alone. If upheld on appeal, a U.S. District Court ruling would prevent Google from paying to be the default search engine on iPhones and browsers. The most direct consequence of this would be to make smartphones more costly, because these deals subsidize handset prices. The viability of the Android operating system and the Chrome browser could also be at stake as a result of the suit.
Analogous cases are also being brought against Meta and Amazon. Meta might have to sell its Instagram and WhatsApp services, despite the benefits users derive from their integration (not least in terms of better and less intrusive ads). Amazon may be forced to further open its logistics network, while dismantling its Prime service, both of which contribute to a reliable, cheap, and seamless experience for shoppers.
These cases are not just a U.S. phenomenon. Under the recently adopted Digital Markets Act, the European Commission has forced Google to stop displaying a clickable version of Google Maps in its search results. The commission has sought to break open Apple's ecosystem with sweeping interoperability mandates and a requirement to accommodate rival stores. And it is steering Meta away from the targeted-advertising business model that allowed it to thrive, in favor of subscriptions and contextual ads.
Things have not gone as the commission might have hoped. At the time of writing, its regulatory push has mostly served to degrade existing services while delaying the launch of new or updated ones (particularly those that use artificial intelligence) in Europe. On top of this, the large fines levied on U.S. firms have become an increasingly contentious issue in the unfolding trans-Atlantic trade war.
Driving many of these legal and regulatory interventions is a common belief that more "open" and less tightly controlled platforms are inherently better for competition and consumers. The idea is that today's tech giants succeeded by locking in users and locking out competitors. Interventions that pry those platforms open will, the theory goes, unleash competition and innovation.
Unfortunately, these assumptions are at odds with reality. Time and again, consumers and businesses have gravitated toward platforms that are relatively closed and tightly controlled by their owners, even as authorities insist that more open and loosely governed platforms would be better.
Apple's relatively closed iOS set the standard for user experience and security on smartphones. In the world of desktop computing, open-source Linux has remained a fringe competitor to Microsoft Windows. Decentralized social networks have thus far been a flop. Amazon—known for its tightly managed platform—outpaced eBay, which was comparatively more permissive and took a smaller cut of sales. Even in the highly competitive generative AI industry, OpenAI's ChatGPT seems to be outpacing more open rivals like Meta's Llama. All of this suggests more openness is not good in and of itself.
Platforms should be designed by engineers, entrepreneurs, and market feedback. They evolve through a trial-and-error process in the marketplace. This evolutionary process isn't perfect, but it has, over time, tended to result in services that reflect a balance of features people actually want.
Judges and bureaucrats are ill-suited to fine-tune the nuanced features of digital services. A courtroom battle can determine whether a certain contract or policy is anticompetitive, but it's a poor forum to decide how an app store's security-review process should work, or the extent of interoperability among services.
Regulation is also slow and politically influenced. Regulatory "fixes" tend to lock in a certain architecture and stifle the natural experimentation that might have yielded a better approach. Decisions may also be dictated by protectionism and other political considerations, rather than the best interests of consumers.
None of this is to argue that tech platforms should get a free pass from law enforcement. But there's a difference between policing harms and trying to play architect. The latter constitutes a dangerous overreach. Policymakers should instead ensure the next big ideas can emerge naturally, rather than being engineered by judicial decree.
