Platform Capitalism

History

Platform-like institutions that mediated economic and social exchange long predate the digital era: matchmaking services in China attested from at least 1100 BC, ancient grain exchanges in Greece and medieval fairs are compared to modern transactional platforms. Production clusters later served as innovation platforms, formalised in the 1980s with technology platforms such as Wintel.

The digital-platform lineage began with the rise of the internet in the 1990s and the rapid expansion of Craigslist and eBay; social-media platforms such as Myspace and collaborative projects such as Wikipedia followed in the early 2000s. Scholarly focus on the platform as a distinct business model began in the 1990s and expanded to digital matchmakers and multi-sided markets. The specific platform-capitalism phase is anchored in the post-2008 financial crisis expansion, when sharing-economy services such as Airbnb and labour-market platforms such as TaskRabbit multiplied. Its foundational academic treatment is Nick Srnicek, Platform Capitalism (Cambridge, UK: Polity Press, 2016). Srnicek (born 1982) is a Canadian writer and academic, a lecturer in Digital Economy in the Department of Digital Humanities at King's College London, associated with accelerationism and a post-scarcity economy.

Relations

Platform capitalism is contrasted with platform cooperativism: cooperatives emphasise fairness and sharing rather than the profit motive alone, whereas platform capitalists such as Airbnb and Uber are more traditional multi-sided businesses focused on profit and returns to investors. Projects relying on unpaid volunteer labour, such as Wikipedia, are classified as commons-based peer-production initiatives, distinct from platform cooperatives. Trends in platform capitalism overlap with what is described as surveillance capitalism. Some scholars compare digital platforms to traditional infrastructure such as railroads and utilities, arguing that platforms now function as essential infrastructure similar to late-19th and early-20th-century monopolies. The platform economy has spread globally: US-based firms dominate by market capitalisation, while Asian platforms in India and China and African platforms such as Kenya's M-Pesa grow rapidly.

Examples

Sharing-economy platforms such as Uber, Airbnb and Deliveroo outsource costs to workers, who bear fuel, maintenance and insurance, and to hosts, who bear cleaning and insurance; they offer low wages and no benefits and siphon off a rent from every transaction. Many are nonetheless unprofitable and survive on venture-capital subsidy, with Uber reported to have lost about US$1 billion annually while fighting a Chinese competitor. Facebook and Google connect advertisers, businesses and users; Uber connects riders and drivers; Amazon and Siemens build and rent the platform infrastructure underlying the contemporary economy. Firms outside the technology sector also adopt platform elements as data becomes central: John Deere, the world's largest agricultural machinery company, is building a platform linking farmers, seed producers, chemical producers, equipment sensors and tractors, extracting data to improve its services and products.

Distinctions

Platform cooperatives are cooperatively owned, democratically governed businesses that establish a two-sided market via a computing platform, an alternative to venture-capital-funded platforms. The term was coined by New School professor Trebor Scholz in a 2014 article criticising the 'sharing economy' and calling for democratically controlled cooperative alternatives; the movement grew with Nathan Schneider's 'Owning Is the New Sharing' and a 2015 New School conference, and advocates platforms owned and governed by workers, users and relevant stakeholders. Platform capitalism is the contrast case of profit- and investor-return-focused multi-sided businesses. Researchers and labour advocates argued that platforms such as Uber and TaskRabbit unfairly classified full-time workers as independent contractors rather than employees, avoiding minimum-wage laws, union and collective-bargaining rights and benefits such as time off, unemployment insurance and healthcare; workers faced automated algorithmic management, including Uber's surge pricing and ride-acceptance and rating thresholds, without recourse.