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Platform capitalism

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Platform capitalism is an economic and business model in which digital platforms play a central role in facilitating interactions, transactions, and services between different user groups. This model of capitalism has emerged and expanded with the rise of the Internet and digital technologies, transforming various sectors of the economy from retail and transportation to media and labor markets. Four main facets of platform capitalism are: crowdsourcing, sharing economy, gig economy and platform economy.[1] Key characteristics of platform capitalism include:

  • Network effect: The value of the platform increases exponentially as more users join, attracting even more users in a self-reinforcing cycle. This creates a dynamic where leading platforms can dominate markets, benefiting from economies of scale and scope;
  • Data driven marketing: Platforms collect vast amounts of user data, which is used to personalize experiences, target advertising, develop new products and services and refine algorithms. This data-centric approach enhances efficiency and user engagement;
  • 'Asset-Light' business model: Platform companies often own few physical assets, relying instead on the resources of their users and partners;
  • Disintermediation: Platforms are disrupting traditional industries (taxi industry, hospitality industry, old media industries such as television, music, radio and film, brick and mortar retails, banking and financial services etc.) by cutting out intermediaries and directly connecting producers with consumers;
  • Algorithmic Governance: Platforms use algorithms to manage and regulate interactions, determine rankings, and set prices. These algorithms play a crucial role in shaping the platform's ecosystem and can influence market dynamics and user behavior significantly;
  • Global Reach and accessibility: Platforms enable businesses to scale rapidly and reach a global audience with relatively low barriers to entry, transforming how businesses operate and compete on a global scale.

Examples of platform capitalism include: e-commerce platforms (Amazon, Alibaba, eBay); social media platforms (Facebook, Twitter, Instagram); ride-sharing platforms (Uber, Lyft); hospitality platforms (Airbnb); video-sharing platforms (YouTube); high-tech platforms (Google, Microsoft, Apple, OpenAI); streaming platforms (Netflix, Spotify, Disney+); fintech platforms (PayPal); food delivery platforms (Just Eat, DoorDash); freelance platforms (Upwork, Fiverr); online learning platforms (Coursera, Udemy, Khan Academy, edX) and Health information platforms (WebMD).

In this business model both hardware and software are used as a foundation (platform) for other actors to conduct their own business.[2][3]

Platform capitalism has been both praised for its innovation, user empowerment and market efficiency[4] and criticized for its potential for exploitation, market concentration, algorithmic bias and privacy concerns[5][6] by various authors. The trends identified in platform capitalism have similarities with those described under the heading of surveillance capitalism.[7] Technology companies build platforms that entire industries rely on, and those industries can easily collapse due to the decisions of those technology companies.[8]

The possible effect of platform capitalism on open science has been discussed.[9]

Platform capitalism has been contrasted with platform cooperativism. Companies that try to focus on fairness and sharing, instead of just profit motive, are described as cooperatives, whereas more traditional and common companies that focus solely on profit, like Airbnb and Uber, are platform capitalists (or cooperativist platforms vs capitalist platforms). In turn, projects like Wikipedia, which rely on unpaid labor of volunteers, can be classified as commons-based peer-production initiatives.[10]: 31, 36 

See also[edit]

References[edit]

  1. ^ Liang, Yin; Aroles, Jeremy; Brandl, Bernd (2022). "Charting platform capitalism: Definitions, concepts and ideologies". New Technology, Work and Employment. 37 (2): 308–327. doi:10.1111/ntwe.12234.
  2. ^ N. Srnicek, Platform Capitalism. Wiley, 2016.
  3. ^ L. Weatherby, "Delete Your Account: On the Theory of Platform Capitalism," Los Angeles Review of Books, 2018.
  4. ^ A. McAfee and E. Brynjolfsson, Machine, platform, crowd: harnessing our digital future. W. W. Norton and Company, 2017.
  5. ^ J. Lanier, Ten arguments for deleting your social media accounts right now. Henry Holt and Co., 2018.
  6. ^ Srnicek, Nick (2017). "The challenges of platform capitalism: Understanding the logic of a new business model". Juncture. 23 (4): 254–257. doi:10.1111/newe.12023.
  7. ^ S. Zuboff, The age of surveillance capitalism: the fight for a human future at the new frontier of power. PublicAffairs, 2019.
  8. ^ Herrman, John (28 April 2023). "The news went viral: The media bet its future on Facebook". Intelligencer. New York City: Vox Media. Retrieved 25 April 2024.
  9. ^ P. Mirowski, "The future(s) of open science," Soc. Stud. Sci., vol. 48, no. 2, pp. 171–203, Apr. 2018.
  10. ^ Dariusz Jemielniak; Aleksandra Przegalinska (18 February 2020). Collaborative Society. MIT Press. ISBN 978-0-262-35645-9.


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