In digital markets, the essential functions of property turn against each other. Common law property divides the world into mine, yours, and others' by excluding non-owners. This exclusion strategy generally serves three essential functions in economic ordering: it internalizes externalities by channeling positive and negative effects on third parties back to the owner; it creates modularity by dividing the world into manageable chunks; and it promotes liberty by enabling private control over resources. Usually, these functions work in harmony. Not so in the digital platform economy.
Digital networks create enormous value through communication, transactions, and knowledge production—value that grows exponentially as more people participate. Through property-like entitlements, law enables platforms like Amazon, Google, and Facebook to exclude others from these networks and thereby capture their exponential returns. Law encloses digital networks just as it once enclosed common meadows. Control over such scaling resources disproportionately benefits incumbents while legal enclosures make those advantages durable. Paradoxically, property's internalization function—designed to improve economic ordering—captures value so effectively that it fuels industrial concentration. Rather than creating modularity, this concentration amplifies systemic complexity and fragility. Instead of promoting liberty, it centralizes control and breeds oligarchy.
This Article’s analysis reveals that platform dominance primarily stems from property design, rather than technological inevitability. More fundamentally, the Article challenges the classical prescription that property should maximize internalization of externalities where boundary enforcement is cost-effective. When platforms internalize network effects under that logic, the result is industrial concentration with deep structural harms to modularity and liberty. Realizing all of property’s essential functions in the digital economy thus requires curtailing property-like entitlements, expanding digital commons, and recalibrating the remaining protections.
Nikolas Guggenberger is Assistant Professor of Law at the University of Houston Law Center. He also holds an appointment at the Cullen College of Engineering’s Electrical and Computer Engineering Department. Guggenberger’s work focuses on antitrust, law & technology, privacy, and regulation. He has frequently advised government entities and served as expert witness on technology policy, financial markets regulation, and media law.
Sponsoring Organization(s)
Information Society Project