Digital platforms are transforming the economy, with their value lying in their ability to connect users and facilitate exchanges. They are becoming dominant players in various industries, from transport to hospitality. Their success is based on network effects, where the value of the platform increases with each new user. This leads to a winner-takes-all scenario, where one or two platforms dominate the market.
Despite their success, there are concerns about the power and influence of these platforms. Some argue they have too much control over the data they collect, which they can use to their advantage. Others worry about their impact on competition, as they can easily outcompete traditional businesses.
Regulation is seen as a potential solution to these issues, but it is a complex task. Regulators need to balance the need for competition with the benefits of network effects. They also need to consider the global nature of these platforms, which operate across borders and jurisdictions.
There is a growing recognition of the need for a new approach to regulating platforms. This includes considering their role in society and the economy, and the potential for them to contribute to public goods and services. It also involves understanding the dynamics of platform markets and the strategies platforms use to gain and maintain their dominance.
Innovation is also key. New technologies like blockchain could disrupt the platform model, by creating decentralised platforms that give users more control over their data. This could lead to a more equitable distribution of the benefits of platforms, and a shift in power from the platform owners to the users.
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