Digital platform (infrastructure)

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A digital platform is a software-based online infrastructure that facilitates user interactions and transactions.

Contents

Digital platforms can act as data aggregators to help users navigate large amounts of information, as is the case with search engines; as matchmakers to enable transactions between users, as is the case with digital marketplaces; or as collaborative tools to support the development of new content, as is the case with online communities. [1] Digital platforms can also combine several of these features, such as when a social media platform enables both searching for information and matchmaking between users. [2]

Digital platforms can be more or less decentralized in their data architecture and can be governed based on more or less distributed decision-making. [3] [4]

Operations

Based on governance principles that can evolve, platforms shape how their users orchestrate digital resources to create social connections and perform market transactions. Digital platforms typically rely on big data stored in the cloud to perform algorithmic computations that facilitate user interactions. [5] For instance, algorithms can be designed to analyze a user's historical preferences to provide targeted recommendations of new users with whom to connect or of new content likely to be of interest.

Platforms can be multisided, meaning that qualitatively different groups of users come to the platform to be matched with each other, such as buyers with sellers of goods, developers with users of applications, or consumers with advertisers. [1] Digital platforms can thus act as catalogs, as marketplaces, as mediators, and as service providers, depending on their focus and the groups of users that they manage to attract. Platform operations are such that platform organizations “connect-and-coordinate” more often than they “command-and-control”. [6]

Economic and social significance

Digital platforms orchestrate many aspects of our lives, from social interactions to consumption and mobility. [5] [7] That's why law and technology scholar Julie E. Cohen described the digital platform as "the core organizational form of the emerging informational economy" that can, in some circumstances, replace traditional markets. [8]

While measuring the size of the platform economy in absolute terms is notably difficult due to methodological disagreements, [9] there is consensus that revenues derived from digital platform transactions have been growing rapidly and steadily over the past twenty years, with the World Economic Forum estimating the growth to be 15-25% a year in emerging markets. [10] As of October 5, 2020, the five most valuable corporations publicly listed in the U.S. were all primarily digital platform owners and operators (Apple, Microsoft, Amazon, Facebook, Alphabet) and so were the top two in China (Alibaba, Tencent). [11] [12]

Digital platforms also increasingly mediate the global labor markets as part of the so-called gig economy.

Competition between digital platforms

Due to the existence of network effects, competition among digital platforms follows unique patterns studied from multiple perspectives in the fields of economics, management, innovation, and legal studies. [13] One of the most striking features of digital platform competition is the strategic use of negative prices to subsidize growth. Negative prices happen, for instance, when a credit card company gives consumers cashback rewards on top of a free credit card to entice merchants to join their payment network. [14] This represents a case of a platform subsidizing one side of the network (consumers) to attract users on the other side (merchants). More recently, another striking pattern has been the growing competition between centralized corporate platforms and decentralized blockchain platforms, [4] such as the competition, in the banking sector, between traditional financial institutions and new "decentralized finance" (DeFi) ventures, or in the file hosting sector, between the likes of Dropbox, BOX, Amazon Cloud, SpiderOak, and Google Drive, on the one hand, and decentralized peer-to-peer alternative InterPlanetary File System, on the other.

Impact on Politics

Digital Platforms have a significant influence on politics, through enabling rapid information sharing which has shaped public discourse and the spread of misinformation. [15] Social Media Platforms, in particular such as Facebook, Google and Twitter have become instrumental to political campaigns, allowing Politicians to spread their messages across these platforms. [16] These Platforms have used algorithms by analysing user behaviour and preferences to target messages toward influencing individuals. [17] This has been seen in Elections such as the 2016 EU referendum where 'Political Bots' on Digital Platforms targeted older age groups with concerns on immigration for the argument that the U.K. should leave the European Union. [18] The involvement of Digital Platforms on Political Campaigns has sparked lots of controversy; This has raised concerns on the impact that these Digital Platforms actually have in terms of influencing Politics. There has been discussions and laws put in place to regulate the power these Platforms have. Laws such as The Digital Services Act have been put in place to regulate and ensure Digital Programmes are abiding by content moderation, privacy, consent an data protection laws. [19]

Examples

Some of the most prominent digital platforms are owned, designed, and operated by for-profit corporations such as Google, Amazon, Facebook, Alibaba, Tencent, Baidu, and Yandex. [5] By contrast, non-corporate digital platforms, including the Linux operating system, Wikipedia and Ethereum, are community-managed; they do not have shareholders nor do they employ executives in charge of achieving predefined goals. [4]

Criticism

Despite their notable ability to create value for individuals and businesses, large corporate platforms have received backlash in recent years. [20] Some platforms have been suspected of anticompetitive behavior, [21] of promoting a form of surveillance capitalism, [22] of violating labor laws, [23] and more generally, of shaping the contours of a digital dystopia. [24] [5] The digital platforms operating in social media operate a business model that nudges content creators toward circulating disinformation. [25]

Related Research Articles

<span class="mw-page-title-main">Network effect</span> Increasing value with increasing participation

In economics, a network effect is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. Network effects are typically positive feedback systems, resulting in users deriving more and more value from a product as more users join the same network. The adoption of a product by an additional user can be broken into two effects: an increase in the value to all other users and also the enhancement of other non-users' motivation for using the product.

<span class="mw-page-title-main">Electronic colonialism</span>

Electronic colonialism sometimes abbreviated to eColonialism, was conceived by Herbert Schiller as documented in his 1976 text Communication and Cultural Domination. In this work, Schiller postulated the advent of a kind of technological colonialism, a system that subjugates Third World and impoverished nations to the will of world powers such as the United States, Japan, and Germany, given the necessary "importation of communication equipment and foreign-produced software". As scholarship on this phenomenon has evolved, it has come to describe a scenario in which it has become normal for people to be exploited through data and other forms of technology. It draws parallels to colonialism in the historical sense when territories and resources were appropriated by the wealthy and powerful for profit.

<span class="mw-page-title-main">Web 2.0</span> World Wide Web sites that use technology beyond the static pages of earlier Web sites

Web 2.0 refers to websites that emphasize user-generated content, ease of use, participatory culture and interoperability for end users.

<span class="mw-page-title-main">Social networking service</span> Online platform that facilitates the building of relations

A social networking service or SNS is a type of online social media platform which people use to build social networks or social relationships with other people who share similar personal or career content, interests, activities, backgrounds or real-life connections.

<span class="mw-page-title-main">Social media</span> Virtual online communities

Social media are interactive technologies that facilitate the creation, sharing and aggregation of content, ideas, interests, and other forms of expression through virtual communities and networks. Social media refers to new forms of media that involve interactive participation. While challenges to the definition of social media arise due to the variety of stand-alone and built-in social media services currently available, there are some common features:

  1. Social media are interactive Web 2.0 Internet-based applications.
  2. User-generated content—such as text posts or comments, digital photos or videos, and data generated through all online interactions—is the lifeblood of social media.
  3. Users create service-specific profiles for the website or app that are designed and maintained by the social media organization.
  4. Social media helps the development of online social networks by connecting a user's profile with those of other individuals or groups.

An online marketplace is a type of e-commerce website where product or service information is provided by multiple third parties. Online marketplaces are the primary type of multichannel ecommerce and can be a way to streamline the production process.

The digital economy is a portmanteau of digital computing and economy, and is an umbrella term that describes how traditional brick-and-mortar economic activities are being transformed by the Internet and World Wide Web technologies.

<span class="mw-page-title-main">Digital marketing</span> Marketing of products or services using digital technologies or digital tools

Digital marketing is the component of marketing that uses the Internet and online-based digital technologies such as desktop computers, mobile phones, and other digital media and platforms to promote products and services. Its development during the 1990s and 2000s changed the way brands and businesses use technology for marketing. As digital platforms became increasingly incorporated into marketing plans and everyday life, and as people increasingly used digital devices instead of visiting physical shops, digital marketing campaigns have become prevalent, employing combinations of search engine optimization (SEO), search engine marketing (SEM), content marketing, influencer marketing, content automation, campaign marketing, data-driven marketing, e-commerce marketing, social media marketing, social media optimization, e-mail direct marketing, display advertising, e-books, and optical disks and games have become commonplace. Digital marketing extends to non-Internet channels that provide digital media, such as television, mobile phones, callbacks, and on-hold mobile ringtones. The extension to non-Internet channels differentiates digital marketing from online marketing.

<span class="mw-page-title-main">Targeted advertising</span> Form of advertising

Targeted advertising is a form of advertising, including online advertising, that is directed towards an audience with certain traits, based on the product or person the advertiser is promoting. These traits can either be demographic with a focus on race, economic status, sex, age, generation, level of education, income level, and employment, or psychographic focused on the consumer values, personality, attitude, opinion, lifestyle and interest. This focus can also entail behavioral variables, such as browser history, purchase history, and other recent online activities. The process of algorithm targeting eliminates waste.

<span class="mw-page-title-main">Social media marketing</span> Promotion of products or services on social media

Social media marketing is the use of social media platforms and websites to promote a product or service. Although the terms e-marketing and digital marketing are still dominant in academia, social media marketing is becoming more popular for both practitioners and researchers. Most social media platforms have built-in data analytics tools, enabling companies to track the progress, success, and engagement of social media marketing campaigns. Companies address a range of stakeholders through social media marketing, including current and potential customers, current and potential employees, journalists, bloggers, and the general public. On a strategic level, social media marketing includes the management of a marketing campaign, governance, setting the scope and the establishment of a firm's desired social media "culture" and "tone".

Digital labor or digital labour represents an emergent form of labor characterized by the production of value through interaction with information and communication technologies such as digital platforms or artificial intelligence. Examples of digital labor include on-demand platforms, micro-working, and user-generated data for digital platforms such as social media. Digital labor describes work that encompasses a variety of online tasks. If a country has the structure to maintain a digital economy, digital labor can generate income for individuals without the limitations of physical barriers.

<span class="mw-page-title-main">Dataveillance</span> Monitoring and collecting online data and metadata

Dataveillance is the practice of monitoring and collecting online data as well as metadata. The word is a portmanteau of data and surveillance. Dataveillance is concerned with the continuous monitoring of users' communications and actions across various platforms. For instance, dataveillance refers to the monitoring of data resulting from credit card transactions, GPS coordinates, emails, social networks, etc. Using digital media often leaves traces of data and creates a digital footprint of our activity. Unlike sousveillance, this type of surveillance is not often known and happens discreetly. Dataveillance may involve the surveillance of groups of individuals. There exist three types of dataveillance: personal dataveillance, mass dataveillance, and facilitative mechanisms.

The commercialization of the Internet encompasses the creation and management of online services principally for financial gain. It typically involves the increasing monetization of network services and consumer products mediated through the varied use of Internet technologies. Common forms of Internet commercialization include e-commerce, electronic money, and advanced marketing techniques including personalized and targeted advertising. The effects of the commercialization of the Internet are controversial, with benefits that simplify daily life and repercussions that challenge personal freedoms, including surveillance capitalism and data tracking. This began with the National Science Foundation funding supercomputing center and then universities being able to develop supercomputer sites for research and academic purposes.

A social bot, also described as a social AI or social algorithm, is a software agent that communicates autonomously on social media. The messages it distributes can be simple and operate in groups and various configurations with partial human control (hybrid) via algorithm. Social bots can also use artificial intelligence and machine learning to express messages in more natural human dialogue.

Surveillance capitalism is a concept in political economics which denotes the widespread collection and commodification of personal data by corporations. This phenomenon is distinct from government surveillance, though the two can reinforce each other. The concept of surveillance capitalism, as described by Shoshana Zuboff, is driven by a profit-making incentive, and arose as advertising companies, led by Google's AdWords, saw the possibilities of using personal data to target consumers more precisely.

<span class="mw-page-title-main">Platform economy</span> Economic and social activity facilitated by technological platforms

The platform economy is economic and social activity facilitated by platforms, typically online sales or technology frameworks. Platform businesses control an increasing share of the world's economy and sometimes disrupt traditional businesses.

Many markets are structured as platform ecosystems, they can be open or closed platforms, where a stable core mediates the relationship between a wide range of complements and prospective end-users.

Computational politics is the intersection between computer science and political science. The area involves the usage of computational methods, such as analysis tools and prediction methods, to present the solutions to political sciences questions. Researchers in this area use large sets of data to study user behavior. Common examples of such works are building a classifier to predict users' political bias in social media or finding political bias in the news. This discipline is closely related with digital sociology. However, the main focus of computational politics is on political related problems and analysis.

Algorithmic radicalization is the concept that recommender algorithms on popular social media sites such as YouTube and Facebook drive users toward progressively more extreme content over time, leading to them developing radicalized extremist political views. Algorithms record user interactions, from likes/dislikes to amount of time spent on posts, to generate endless media aimed to keep users engaged. Through echo chamber channels, the consumer is driven to be more polarized through preferences in media and self-confirmation.

Automated decision-making (ADM) involves the use of data, machines and algorithms to make decisions in a range of contexts, including public administration, business, health, education, law, employment, transport, media and entertainment, with varying degrees of human oversight or intervention. ADM involves large-scale data from a range of sources, such as databases, text, social media, sensors, images or speech, that is processed using various technologies including computer software, algorithms, machine learning, natural language processing, artificial intelligence, augmented intelligence and robotics. The increasing use of automated decision-making systems (ADMS) across a range of contexts presents many benefits and challenges to human society requiring consideration of the technical, legal, ethical, societal, educational, economic and health consequences.

References

  1. 1 2 Parker G, Van Alstyne M, Choudary S (2016). Platform Revolution: How Networked Markets Are Transforming the Economy. W. W. Norton & Company. ISBN   978-0393249132.{{cite book}}: CS1 maint: multiple names: authors list (link)
  2. ↑ Cusumano M, Gawer A, Yoffie D (2019). The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power. Harper Business. ISBN   978-0062896322.{{cite book}}: CS1 maint: multiple names: authors list (link)
  3. ↑ Baran, Paul (1964). "On distributed communications". RAND Corporation. RM3420PR.
  4. 1 2 3 Vergne, JP (2020). "Decentralized vs. Distributed Organization: Blockchain, Machine Learning and the Future of the Digital Platform". Organization Theory. 1 (4): 2631787720977052. doi: 10.1177/2631787720977052 . ISSN   2631-7877. S2CID   229449495.
  5. 1 2 3 4 Kenney M, Zysman J (2016). "The Rise of the Platform Economy". Issues in Science and Technology.
  6. ↑ Tilson, David; Lyytinen, Kalle; Sørensen, Carsten (2010-11-18). "Research Commentary—Digital Infrastructures: The Missing IS Research Agenda". Information Systems Research. 21 (4): 748–759. doi:10.1287/isre.1100.0318. ISSN   1047-7047. S2CID   5096464.
  7. ↑ de Reuver, Mark; Sørensen, Carsten; Basole, Rahul C. (2018). "The Digital Platform: A Research Agenda". Journal of Information Technology. 33 (2): 124–135. doi: 10.1057/s41265-016-0033-3 . ISSN   0268-3962. S2CID   13591491.
  8. ↑ Cohen, Julie (2017). "Law for the Platform Economy" (PDF). UC Davis Law Review. 51.
  9. ↑ "The pandora's box of the platform economy". Eurofound. Retrieved 2021-03-13.
  10. ↑ World Economic Forum (2015). "Expanding Participation and Boosting Growth: The Infrastructure Needs of the Digital Economy" (PDF). Archived (PDF) from the original on 2015-04-04.
  11. ↑ Clark, Ken. "Where to Find a List of the Stocks in the S&P 500". Investopedia. Retrieved 2021-03-13.
  12. ↑ "Global 2000 - The World's Largest Public Companies 2020". Forbes. Retrieved 2021-03-13.
  13. ↑ Rietveld, Joost; Schilling, Melissa A. (2020-11-27). "Platform Competition: A Systematic and Interdisciplinary Review of the Literature". Journal of Management. 47 (6): 1528–1563. doi: 10.1177/0149206320969791 . ISSN   0149-2063. S2CID   229464181.
  14. ↑ Chakravorti, Sujit (2003-06-01). "Theory of Credit Card Networks: A Survey of the Literature". Review of Network Economics. 2 (2). doi: 10.2202/1446-9022.1018 . ISSN   1446-9022. S2CID   201280730.
  15. ↑ Stemler, Abby (2019). "Platform Advocacy and the Threat to Deliberative Democracy". [MD.L.REV Kelley School of Business Research Paper]. 77 (101): 17.
  16. ↑ Vaidhyanathan, Siva. Antisocial media : how Facebook disconnects us and undermines democracy (2nd ed.). New York: New York : Oxford University Press.. ISBN   978-0-19-005654-4.
  17. ↑ Praiser, Eli. The Filter Bubble. Penguin. ISBN   978-0241954522.
  18. ↑ Howard, PN (2018). "Algorithms, bots, and political communication in the US 2016 election: The challenge of automated political communication for election law and administration". Journal of Information Technology &Politics. 2 (15): 87.
  19. ↑ DSA. "Digital Services Act".
  20. ↑ "Facebook faces fresh anti-trust investigation". BBC News. 2019-09-06. Retrieved 2021-03-07.
  21. ↑ Dina, Srinivasan (2019). "The Antitrust Case Against Facebook: A Monopolist's Journey Towards Pervasive Surveillance in Spite of Consumers' Preference for Privacy". Berkeley Business Law Journal. 16 (1).
  22. ↑ Zuboff, Shoshana (2019). The age of surveillance capitalism : the fight for a human future at the new frontier of power (1st ed.). New York. ISBN   978-1-61039-569-4. OCLC   1049577294.{{cite book}}: CS1 maint: location missing publisher (link)
  23. ↑ "California sues Uber, Lyft over alleged labor law violations". AP NEWS. 2020-05-05. Retrieved 2021-03-13.
  24. ↑ Tirole J. "Digital Dystopia" (PDF). Archived (PDF) from the original on 2020-12-18.
  25. ↑ Diaz Ruiz, Carlos (2023-10-30). "Disinformation on digital media platforms: A market-shaping approach". New Media & Society. doi: 10.1177/14614448231207644 . ISSN   1461-4448.
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