Platform economy
[1] These platforms — such as Amazon, Airbnb, Uber, Microsoft and Google — serve as intermediaries between various groups of users, enabling interactions, transactions, collaboration, and innovation.
The increasing prominence of platforms has attracted attention from scholars, governments, and regulators, with many early assessments praising their potential to enhance productivity and create new markets.
Critics have highlighted issues such as technological unemployment, the displacement of traditional jobs with precarious forms of labor, and declining tax revenues.
As a result, there has been a shift towards more regulatory scrutiny of platforms, particularly in the European Union, where new regulations have been proposed to ensure fair competition and worker protections.
Early examples include matchmaking services in China dating back to at least 1100 BC, where intermediaries connected potential marriage partners.
[11] The development and impact of platforms continue to evolve, with ongoing academic and business discussions exploring their long-term implications and the ways they reshape markets, industries, and societal practices.
Plantin, Lagoze, and Edwards argue that platforms now function as essential infrastructure, similar to the monopolies of the late 19th and early 20th centuries.
For example, Trebor Scholz has argued that labor exploitation is a systemic feature of crowdsourced platforms such as Amazon's Mechanical Turk.
[15] Critics such as Poell and Nieborg have argued that this process reshapes cultural practices and influences governance, markets, and data infrastructures.
However, more nuanced definitions, like those of Poell and Nieborg, emphasize the broader institutional dimensions of platformization, including data infrastructures, markets, and governance.
While some digital-native firms have quickly reached multibillion-dollar valuations and gained strong brand loyalty, many platform startups fail.
This often results in providing free services to one group of users to attract a larger audience, which then generates demand for the revenue-generating side, such as advertisers.
For instance, companies like BlackBerry Limited and Nokia lost market share to platform-oriented firms like Apple and Google's Android in the early 2010s, as they failed to adapt to the growing importance of ecosystems over products.
Boyd Myers reported estimates ranging from $50,000 to $250,000 for developing an MVP like Twitter, while more complex platforms, such as Uber, could cost between $1 and $1.5 million.
While platforms in Africa often utilize SMS, the uptake of smartphones has increased, with mobile internet adoption outpacing global averages.
[52] The platform-based gig economy has not grown as fast in South America as in other regions, partially due to a large informal labor market.
However, some scholars have noted that Latin America's tradition of worker-organized activism may provide valuable lessons for workers in other regions facing economic challenges posed by platforms.
[56] Early reviews were largely positive, suggesting that platforms could enhance services, increase productivity, reduce inefficiencies, and create new markets.
The International Monetary Fund (IMF) and World Bank also noted the potential for platform technology to drive growth in less developed countries.
Advocates highlight the accessibility, flexibility, and low entry barriers of these employment opportunities, while critics emphasize their precarious nature.
Many gig economy workers earn below-average pay, exacerbating income inequality[61][60] Platforms have disrupted industries such as taxis and hotels, displacing traditional service providers while formalizing previously informal sectors.
For instance, ride-sharing apps and short-term rental platforms centralize value capture while replacing conventional service providers.
Although platforms claim to foster entrepreneurship and better resource utilization, critics highlight their role in creating wealth disparities and limiting economic opportunity.
[65] Increased regulation followed in regions like Europe and China, with major platforms facing allegations of anti-competitive practices and calls for stronger oversight.
[49][66] Though platform companies experienced increased scrutiny, many remained popular among consumers, as demonstrated by strong financial results in early 2018.
[68] In their early stages, digital platforms benefited from light regulation, often aided by policies designed to support emerging internet companies.
[69] Critics argue that current laws are insufficient for regulating platform-based businesses, pointing to concerns such as safety standards, tax compliance, labor rights, and competition.
In contrast, China tightly regulates its platform companies, such as Tencent and Baidu, while also shielding them from foreign competition in the domestic market.
[71][36] In March 2018, the European Union introduced guidelines for the removal of illegal content from social media platforms, warning that stricter regulations would follow if companies did not improve self-regulation.
On 18 January 2022, the National Development and Reform Commission and seven other departments published guidelines proposing future regulations for the platform economy.
