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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, typically consumers and producers. 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.[1][2] Four main facets of platform capitalism are: crowdsourcing, sharing economy, gig economy and platform economy.[3][4] Key characteristics of platform capitalism include:
- Network effects: 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 and monetization: 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 models: many platforms don't own the physical assets necessary to provide the services they offer, instead, they rely on the resources of their users and partners;
- Disruption of traditional industries: 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;
- Regulatory challenges: the rapid growth and novel business models of platforms often outpace existing regulation. Thus, this leads to debates over issues like worker classification, data privacy, and market power;
- Global Reach and scalability: platforms enable businesses to scale rapidly and reach a global audience with relatively low marginal costs.
Examples of platform capitalism include: e-commerce platforms (Amazon, Alibaba, eBay), social media platforms (Facebook, Twitter, Instagram, X), ride-hailing platforms (Uber, Lyft), short-term rental platforms (Airbnb), online travel booking platforms (Expedia, Booking.com, Kayak), video-sharing platforms (YouTube, TikTok), search engine platforms (Google Search, Microsoft Bing), web mapping platforms (Google Maps, Apple Maps, Petal Maps), app marketplaces platforms (Google Play, App Store) streaming platforms (Netflix, Disney+, Apple TV+, Amazon Prime Video), music streaming platforms (Spotify, Apple Music, Deezer), fintech platforms (PayPal), food delivery platforms (Just Eat, DoorDash, Deliveroo), crowdfunding platforms (GoFundMe, Patreon), freelancing platforms (Upwork, Fiverr), online learning platforms (Coursera, Udemy, Khan Academy, edX), voice and video calling platforms (Skype, Zoom), e-book hosting platforms (Kindle, Apple Books), career and job search platforms (Indeed, Monster.com, Glassdoor), manual work platforms (Helpling, Taskrabbit, MyHammer), video games marketplace platforms (Steam, Epic Games Store), dating platforms (Tinder, Bumble, OkCupid), pornographic platforms (Pornhub, XVideos, xHamster), subscription-based content platforms (OnlyFans), telemedicine platforms (WebMD, Teladoc Health), and generative artificial intelligence platforms (GPT-4o, Claude 3.5, Gemini, Llama, Copilot, Grok).
In this business model both hardware and software are used as a foundation (platform) for other actors to conduct their own business.[5][6]
Platform capitalism has been both praised for its innovation, user empowerment and market efficiency[7] and criticized for its potential for exploitation, market concentration, algorithmic bias and privacy concerns[8][9] by various authors. The trends identified in platform capitalism have similarities with those described under the heading of surveillance capitalism.[10] Technology companies build platforms that entire industries rely on, and those industries can easily collapse due to the decisions of those technology companies.[11]
The possible effect of platform capitalism on open science has been discussed.[12]
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.[13]: 31, 36
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