Three options for platform economy

I have been reading the new book by Douglas Rushkoff, which got me thinking about alternative views as to where platform thinking might lead us. The discussion revolves largely around where the next disruption will be or which will be the winning platforms. But perhaps there are other options to think about. Here I list three: Platform monopoly, platform cooperatives and moving beyond platforms.

Platform monopolies and digital dystopias

Many of the current successful platforms may be disrupting the business of the incumbents, but not really the rules of economy. Companies such as Airbnb and Uber are using platform tehcnology as tools of the digital, networked era to carry on the principles of economic system based on continuing growth. The goal is not to distribute wealth or provide opportunities for people (although they are of course doing that as well), but to capture the market and gather as much value as possible to the company valuation. Value is accumulated to the owner of the platform – the shareholders. These platform are operating in a winner-takes-all dynamic and aim to become a monopoly. That, however, is not enough – they need to keep on growing indefinitely to justify their high valuations. But while the dominant discourse is on identifying the winning paltforms and making strategies to become one, there is a countertrend emerging, enabled by the low capital cost and easy replicability of digital technology.

Platform cooperatives for distributing value

If the problem of platform thinking is that the value tends to accumulate to the owner of the platform, then there needs to be mechanism for redistributing that value back to those who created it. Worker or user owned platform cooperatives are one solution that is currently being experimented with. The value accumulated by the platform is  shared amongst its owners, who were the ones doing the work in the first place. Cooperatives are of course not a new idea, but one that is well suited to a networked world. As the cooperatives are not (necessarily) trying to maximise profit or generate endless growth, they do not have to play the winner-takes-all game. They just have to find the right level in which they can be sustainable financially, socially and environmentally.

Beyond platforms: protocols

A platform cooperative or a platform company model is not one that takes full advantage of the potential to have a truly distributed network. They still have a central platform operator at their core, providing coordination, quality assurance and, most essentially, trust. However, it is possible to go beyond platforms to protocols – to commonly agreed ways of operating. Thus anyone who agrees to the rules can become a part of the network. The question of trust can be solved either with technology such as blockchain, or by taking a lesson from managing of commons. The network is self-organizing and open, keeping it in a state of “bounded instability” to use the terms of complex adaptive systems theory. The benefit of such a model is robustness and adaptivity to changing operational environment.

Platform economy is still a rather ambiguous term, but the thinking and technologies behind it have the potential to transform the way we do business from the current unsustainable growth-based economy to a more sustainable, fair and dynamically stable system. Therefore it is important to continue the discussion on what do we want from platform economy.

For more information on platform economy, check Platform Value Now, project funded by the Strategic Research Council of the Academy of Finland.