Among the most highly capitalised and internationally expanding digital platform firms, most come from the United States while a small number hail come from China (Cusumano et al., 2019; Kenney & Zysman, 2016). All have begun ambitious programmes of internationalisation, seeking to find their “next billion” users in the global South (Pisa & Polcari, 2019).

Yet new developments in the regulatory environment in Europe and other countries from the global North are likely to have profound impact on such platforms’ internalization strategies. Emanating from Europe, new regulations such as the Digital Services Act (DSA) and the Digital Markets Act (DMA) are likely to have effects (both intended and not intended) on competition and innovation, but also on development outcomes. For example, the DMA aims to curb power abuses by so-called “gatekeeper” platforms by controlling and limiting some of their activities. As with GDPR before, these new rules are likely to have implications reverberating globally. The changing regulatory environment for digital platforms is therefore an international phenomenon which has implications on the globalization of digital platforms as well as the impact of platforms for development.

Most of the extant research on digital platforms in strategy and IS had hitherto primarily focused on strategy issues mostly pertinent to the global North, broadly ignoring issues specific to the global South. Research has only begun to tackle the question of the specific impact of digital platforms in the global South (Guillén, 2021). For example, Bonina, Koskinen, Eaton, and Gawer (2021) have offered a framework delving into the specifics of how digital platforms can trigger positive effects for development as well as identifying the trade-offs involved.

But although a relatively new research topic, the internationalization of digital platforms already shows early signs of fueling a hotly polarised debate. While some extoll the virtues of big tech digital platforms entry in the global South as providers of much needed digital infrastructure and basic services by facilitating access for isolated or disenfranchised workers as well as to resource-poor micro-enterprises to networks of digital commerce and labor markets, others raise the spectre of a new form of colonialism, coined “digital colonialism” (Kwet, 2019).

The notion that a small number of digital platform firms has garnered in a stealthy way an outsized and potentially dangerous amount of power is neither new, nor is it specific to issues of imbalance of power between the global North and the global South. In fact, the fundamental structural asymmetry between a central platform and peripheral ecosystem members is inherent to the organizational form of platform-based ecosystems (Gawer, 2014; McIntyre et al., 2021). Furthermore, the central paradox of digital platforms and ecosystems in their current organizational form is that while distributed patterns of value creation characterize the circumstances that allowed them to emerge, the business models most successful platforms have adopted have led to a centralized modality of value capture (Gawer, 2022). These structural conditions have created environments where digital platforms firms have acted as the “new “governors” of increasingly vast ecosystems that span sectors, markets, and countries” (Gawer & Srnicek, 2021: 119), leading to salient instances of digital platform firms’ abuse of economic power over their ecosystem members, first observed in developed economies, in turn giving rise to widespread concerns on digital platforms firms’ abuse of power on other dimensions including privacy and labour relations (see the report for the European Parliament by Gawer & Srnicek, 2021). While these issues have been increasingly acknowledged in the global North and have even given rise in Europe to a new tide of regulation specifically intended to curb big tech platform abuses, the situation in the global South is different and calls for a rigorous yet more nuanced approach.

For example, on the positive side, big tech platform companies from the US and China have collaborated closely with local governments in the global South to provide much-needed digital infrastructure and basic services to local populations. However, the possibility of regulatory capture is even greater in countries that have lower income and geopolitical influence. In particular, the process of “digital colonization” (Özalp et al., 2022) of big tech platform entry in highly-regulated industries, first observed in the global North, is likely to become even more prevalent in the global South. To complicate matters, local regulators in the global South, having access to fewer resources than their global North counterparts, have been found in the past to have a tendency to “cut-and-paste” regulations emanating from the global North, which may have unintended and detrimental consequences. In sum, the recent changes in the global regulatory environment for digital platforms requires examination, as they create new constraints, new sources of uncertainty, and yet at the same time they also open new possible avenues for value creation.

This article offers an analysis of the strategic implications of the changing global regulatory environment on digital platforms’ impact for development. It offers recommendations for the strategic management of these regulatory changes from the perspective of global North platforms, but also from the perspective of local actors. It aims to offer an analysis that goes beyond improving benefits for internationalising platforms, but also to explicitly address positively development outcomes. It does so by offering, first (in Section 1), a review of the main regulatory changes affecting the global South including, but not limited to, those emanating from the global North,  focusing on regulation likely to directly affect competition and innovation. In Section 2, it then offers (in Subsection 2.1) an analysis of how the major regulatory developments are likely to affect the success of major platforms firms from the US and China, including effects of possible entry by local platforms. In Subsection 2.2, it then turns to the effects on local innovation ecosystems associated with the entry of global North platforms as well as the emergence of local innovation platforms. To conclude, it develops strategic recommendations (in Section 3) for effective collaboration between platforms from the global North and local actors together with international governance organizations in order to better exploit the potential of digital platforms for innovation and for development.