The turning tide of the platform revolution – Current trends and future developments

From vehicles to vacations, retail to restaurants, networking to news – we live in the age of platforms. Uber and Lyft transformed the taxi business by enabling regular drivers to connect with potential passengers and offer their services online. AirBnB transformed the hotel business by enabling local residents to welcome strangers on vacation into their homes. Facebook and Twitter users have transformed the traditional media business by acting as both consumers as well as on-the-ground producers and real-time commentators of news. None of these companies provide their own physical infrastructure to provide these services, or even provide these services themselves.

Platforms are popular for good reason: by turning traditional pipeline exchanges between producers and consumers into multi-way dynamic exchanges, value can be generated and consumed by market participants on all sides.^<1> Products can better be tailored to individual needs. Service providers, in turn, can participate in the market flexibly, without the need for special training, or having to subject themselves to working hours dictated from above.

Platforms often portray themselves as neutral intermediaries: they enable us to connect without forcing us into a hierarchy. They present themselves as technical rather than political.^<2> They are private rather than public: we can choose to accept their terms or not.^<3> At the same time, the platform revolution^<4> also harbors significant risks: for our right to privacy and informational self-determination on one hand, and to our labor protections and social welfare on the other hand.

At an individual level, both sellers and consumers of goods on digital platforms are subject to extensive surveillance and control. Uber drivers and riders alike are subjected to ratings, which, if not at a near-perfect level, prevent them from offering and making use of services on the platform in the future.^<5> The same applies to AirBnB. Social networks such as Facebook collect granular data about their users in order to tailor posts to individual preferences: a model which might work well at an economic level (“if you like this, then you also like”) but becomes problematic at a social level (“if you believe this, then you’ll also believe”). This further narrows the space for meaningful dialogue across the socioeconomic and political divides.

At a socioeconomic level, the devaluation of professional training – as is the case for taxis with ride-sharing services such as Uber or Lyft, or the hospitality industry through the rise of AirBnB – also leads to a devaluation of professions themselves, threatening livelihoods and sparking protests worldwide.^<6> Amateur drivers, along with other workers in the on-demand economy, do not enjoy the same benefits as regular full-time employees. This is particularly true in the case of traditional service industries that have waged long and protracted battles for unionization in the past. AirBnB, while promoting tourism, also contributes to property speculations and rising rents, as local residents can no longer afford to live in their own neighborhoods. Finally, by subjecting traditional news outlets to the need of having to generate the most clicks in order to remain relevant, social media also force them into writing the most attention-grabbing headlines, further sensationalizing an often already polarized political reality.

But the tide of the platform revolution seems to be turning, as public and political pressure to reign in some of the most egregious consequences is mounting. Uber – the app itself or select sub services thereof – has been banned in several locations across Europe and abroad.^<7> Ride-sharing services are also increasingly facing regulatory scrutiny in the United States as jurisdictions such as New York and California passed bills limiting the number of drivers, imposing minimum wages and demanding that contract workers, which include ride-hailing drivers, be classified as regular employees.^<8> AirBnB is confronted with large-scale protests in popular tourist destinations like Barcelona, where the platform has contributed to transforming even traditionally residential neighborhoods into transitory spaces, best characterized by the sound of hand luggage suitcases clattering down cobblestone streets.^<9> Other cities such as Amsterdam, Berlin and London are experimenting with different ways to balance a thriving sharing economy with protecting the integrity of urban spaces that an explosion of short-term rentals risks undermining. Facebook continues to struggle with the aftermath of Cambridge Analytica that triggered investigations and regulatory actions by the Information Commissioner’s Office (ICO) in the UK,^<10> the Standing Committee on Access to Information, Privacy and Ethics in Canada,^<11> and the Italian Data Protection Authority,^<12> among others.

Meanwhile Silicon Valley, an industry that has long prided itself as a source of good (“transportation as reliable as running water, everywhere for everyone,” “making the world more open and connected”), is facing an internal reckoning based on the discrepancy between declared ideals and actual business practices.^<13> Uber changed its leadership in response to mounting scandals, ranging from sexism and sexual harassment in the workplace,^<14> to violating user privacy by enabling employees to track rides for the purpose of personal entertainment.^<15> AirBnB released a so-called policy tool chest for improving cooperation with the cities in which it operates, including on issues such as tax collection and promoting more sustainable tourism.^<16> Mark Zuckerberg has redefined the company mission to focus more on privacy-protective services and offerings, such as encryption, deletion and secure data storage.^<17> An open question remains as to the extent to which these changes are compatible with the original business models, ranging from an open disregard for rules and regulations (“move fast and break things”) to the detailed segmentation and monetization of users’ personal data.^<18> While some early pioneers of the platform model such as Apple actively advertise their emphasis on user privacy today,^<19> not everyone, on neither the demand nor supply side, will be able to afford the premium price tag associated with offering luxury products, assuming tangible products are sold to begin with.

Increasingly, platforms are not only under political (and psychological) but also economic pressure. When Uber went public in May this year, its stock price dwindled.^<20> WeWork, a platform that specializes in shared working spaces, withdrew from its initial public offering after it failed to convince bankers to buy its shares.^<21> The appetite for investing in companies that aggressively push into markets, with little regard for toxic internal cultures and a potentially devastating social footprint, while at the same time accumulating reckless costs combined with an unclear path toward long-term profitability, seems to be waning. Does this mean the platform revolution failed?

Perhaps not. It depends on what we consider to be a successful revolution. If we think of the revolutionary waves that swept across Europe in 1848, some may consider these a failure as liberal and republican forces ultimately failed to topple the monarchies against which their uprisings were targeted. But while these political movements may not have succeeded in overthrowing the prevailing system of government in the short term, they did pave the way for fundamental structural sociopolitical changes in the long term.^<22> Similarly the most important near-term impact of the platform revolution might not be to displace traditional industries, but to force them to fundamentally rethink their operating model in light of the real benefits of flexibility and efficiency that platform models do provide. Among others, BMW and Daimler – otherwise competitors in the market for luxury cars – have teamed up to shape the future of mobility, including a joint venture on car-sharing and a network of charging points for more eco-friendly electric vehicles.^<23> Marriott International, one of the most dominant players in the hospitality industry, now also includes home sharing in its portfolio in an attempt to offer well-endowed travelers a more boutique experience.^<24> Most importantly, traditional market players are not only ahead at the level of infrastructure but also social welfare; the hope being that traditional industries will take the positive learnings of the platform model to heart while avoiding its worst impacts on employment security and social welfare.^<25>

We can again look to the revolutions of 1848 for inspiration: on a positive note, in order to take the wind out of the sails of the socialist forces gaining traction around him, Bismarck implemented a series of social reforms, including in the areas of health, accident and disability insurance as well as workplace safety that constituted the basis for the German welfare state today. On a more cautious note, widespread unemployment and rising inequality across Europe were incorporated into an increasingly nationalized narrative, contributing to the formation of nation states in the late nineteenth century, but perhaps also previewing the excesses of nationalism in the mid-twentieth century. As the preeminent historian Christopher Clark aptly put it, “in their swarming multitudinousness, in the unpredictable interaction of so many forces, the upheavals of the mid-19th century resembled the chaotic upheavals of our own day, in which clearly defined end-points are hard to come by.”^<26>

On a final note, the platform revolution is far from over, as the infrastructure itself is now being transformed into a service with the cloud. The extent to which in-house solutions from traditional telecommunications providers such as Deutsche Telekom will be able to compete with the likes of Amazon AWS, Microsoft Azure and Alibaba remains to be seen. One competitive advantage the former still has over the latter is in the area of security and privacy – an advantage not be underestimated, particularly in the long run. After all, if there is one lesson to be learned from the history of platforms (and revolutions), it is that trust is the one currency neither our companies, our economies, nor our societies can afford to lose.

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Endnotes

^<1> Van Alstyne, Marshall W., Geoffrey G. Parker, and Sangeet Paul Choudary, “Pipelines, Platforms, and the New Rules of Strategy”, Harvard Business Review, April 2016. ^<2> For a critical take on this convenient self-portrayal, see Tarleton Gillespie, “The politics of ‘platforms,’” new media & society 12(3): 347-364. ^<3> For an analysis of the extent to which it actually remains possible not to participate in such platforms, see Evgeny Morozov, “Every Little Byte Counts”, New York Times, May 16, 2014. ^<4> Parker, Geoffrey G., Marshall W. Van Alstyne, and Sangeet Paul Choudary, Platform Revolution: How Networked Markets Are Transforming the Economy – and How to Make Them Work for You, New York, NY: W.W. Norton Company, 2016. ^<5> Rosenblat, Alex and Luke Stark, “Algorithmic Labor and Information Asymmetries: A Case Study of Uber’s Drivers,” International Journal of Communication 10, 2016: 3766. ^<6> Smith, Noah, “Uber Strikes Could Be the Start of Something Bigger”, Business Insider, May 7, 2019. ^<7> Asenjo, Alba and Ruqayya Moynihan, “Driver protests, bans and fighting with the competition: how Uber and other ride-hailing apps are holding up around the world”, Business Insider, May 10, 2019. ^<8> Conger, Kate and Noam Scheiber, “California Bill Makes App-Based Companies Treat Workers as Employees”, New York Times, September 11, 2019. ^<9> Mead, Rebecca, “The AirBnB Invasion of Barcelona”, New Yorker, April 29, 2019. ^<10> Information Commissioner’s Office, “Investigation into the use of data analytics in political campaigns: A report to Parliament”, November 6, 2018. ^<11> Zimmer, Bob, “Democracy under Threat: Risks and Solutions in the Era of Disinformation and Data Monopoly: Report of the Standing Committee on Access to Information, Privacy and Ethics”, House of Commons, December 2018. ^<12> Garante per la protezione dei dati personali, “Cambridge Analytica: il Garante privacy multa Facebook per 1 milione di euro”, June 28, 2019. ^<13> Marantz, Andrew, “Silicon Valley’s Crisis of Conscience”, New Yorker, August 19, 2019. ^<14> Isaac, Mike, “Uber Founder Travis Kalanick Resigns as C.E.O.”, New York Times, June 21, 2017. ^<15> Hill, Kashmir, “‘God View’: Uber Allegedly Stalked Users For Party-Goers’ Viewing Pleasure (Updated)”, Forbes, October 3, 2014. ^<16> AirBnB, “Home sharing policy approaches that are working around the world”, May 17, 2017. ^<17> Zuckerberg, Mark, “A Privacy-Focused Vision for Social Networking”, Facebook, March 6, 2019. ^<18> Thompson, Nicholas, “Mark Zuckerberg on Facebook’s Future and What Scares Him Most”, Wired, June 3, 2019. ^<19> Apple, “Apple products are designed to protect your privacy”, last accessed on September 30, 2019. ^<20> Isaac, Mike, “Uber’s Stock Disappoints, Capping a Rocky Path to Its I.P.O”, New York Times, May 10, 2019. ^<21> Eavis, Peter and Michael J. de la Merced, “WeWork I.P.O. Is Withdrawn as Investors Grow Wary”, New York Times, September 30, 2019. ^<22> Clark, Christopher, “Why should we think about the Revolutions of 1848 now?”, London Review of Books, March 7, 2019. ^<23> Ewing, Jack, “BMW and Daimler, Once Rivals, Join Forces to Fend Off Silicon Valley”, New York Times, March 28, 2018. ^<24> Glusac, Elaine, “A New Marriott Division Goes Head-to-Head With Airbnb” New York Times, April 29, 2019. ^<25> Irwin, Neil, “Maybe We’re Not All Going to Be Gig Economy Workers After All”, New York Times, September 15, 2019. ^<26> Clark, Christopher, “Why should we think about the Revolutions of 1848 now?”, London Review of Books, March 7, 2019.

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This article originally appeared in The Digital Debates

• Media and Internet
• Cyber and Technology
• India
• USA and Canada
• CyFy 2019
• Digital Debates
• Digital platforms
• gig economy
• Privacy
• Silicon Valley
• surveillance

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