In this signal post I will share my takeaways from attending the Platform Economy Summit Europe in Frankfurt, September 17-18, 2019. The summit brought together business leaders, investors, policy makers and platform strategists to discuss opportunities and threats of platform-based business models. Political, technological and societal dimensions were also explored, especially from the European perspective, and a wide range of strategies to harness the potential of the platform economy were laid out.
The two-day summit featured inspirational in-depth talks by the platform economy experts and gurus, most notably by Professor Marshall Van Alstyne from MIT IDE and co-author of Platform Revolution Sangeet Paul Choudary. Success stories, lessons learned as well as future aspirations were shared by companies and organisations from all walks of life, such as Alibaba Group, Deutsche Bank, European Commission, World Economic Forum, Apigee, FoundersLane, MaaS Global and Amadeus. Lively panel discussions occasionally evolved into profound debates, and the interactive participation of the audience ensured all points of view were being heard.
Next I will summarise my main takeaways under the following statements:
- “The platform game has only just begun.”
- “There is no ONE platform strategy.”
- “Emerging technologies will rule in round two.”
- “The bold yet patient mindset will succeed.”
These statements reflect the overall tone of discussions at the summit, and I will explain them using what was heard and seen in the presentations, talks, panel discussions, message board conversations and polls, written materials and networking activities.
”The platform game has only just begun”
As discussed in one of our previous signal posts, the platform economy is still in its infancy, and we have only seen the very first success stories. This was also the message at the summit, and future potential across different sectors and industries was widely discussed. In fact, platforms have potential to transform all and any traditional industries but also to blur sectoral boundaries. Platform business is all about ecosystems (not egosystems) that allow different fields to collaborate and innovate something new.
Expected next steps in platform development assume tighter B2B ecosystems to form and blossom. Platforms and “platforms of platforms” will enable business relationships among competitors as well as complementors to evolve. From the European perspective the regulatory harmonisation and solid foundations in public digital infrastructure provide a good breeding ground for this. Unlike what we often hear in the mass media, various speakers at the summit saw European public sector initiatives as profoundly productive support actions to foster responsible and healthy platform business. Examples include national and EU-led actions to re-regulate and de-regulate, such as the GDPR (General Data Protection Regulation) and PSD2 (Payment Services Directive 2). European Single Market was also seen as an encouraging environment for European platforms to grow in and scale up from, on the path from local or national to global business.
Silicon Valley may be the mecca of technological innovation, and China has recently established itself as the leading business model innovator. Europe can learns from these, but also highlight its own strengths, such as its special focus on social and societal value creation. Awareness of the various pros as well as cons of the platform economy is high in Europe and keeps growing, and this attitude supports balanced and responsible development of platform activities.
”There is no ONE platform strategy”
All companies, organisations, business sectors, industries and markets have their unique qualities, and consequently there cannot be one single platform strategy that would fit all. The “digital natives” that have grown into global platform giants are obviously very different from moderate-sized incumbents in traditional industries, local markets and long business traditions. Understanding of what types of platform strategies fit with different situations is growing, and an integral part of it is also to find your own role relative to other actors in the so called ecosystem economy.
The strengths and weaknesses of an organisation help determine the best platform strategy. The size, maturity, traditions, legacy, resources, capabilities and skills are all important factors. Not everyone needs to set up their own platform, and an important step is to assess which one of the basic roles in the platform economy could suit you: the orchestrator, partner or contributor. You also need to consider who you want to join forces with and experiment and collaborate with. And who do you want to challenge and compete against?
”Emerging technologies will rule in round two”
Discussions on the platform economy are often coloured with technologically visionary ideas on AI (artificial intelligence), machine learning, blockchain technologies, big data and APIs (application programming interfaces), cloud computing, IoT (internet of things), etc. These technologies will improve functionalities such as identity management, ecosystem coordination, fostering of openness and trust, decision assistance and anomaly detection. These and more opportunities were addressed at the Platform Economy Summit, and amazing future aspirations were laid out by speakers on how these advanced technologies will be harnessed in the future.
However, the message was also pretty clear that there is no need to procrastinate and wait for all of these technology solutions to mature, even if they will be game changers later on, in the “round two” of the platform economy. Currently available technologies are more than enough to get started with, and the first round of the platform economy game is in full swing. To get your platform strategy ready and implemented is the thing to do right now, and in practice this could mean for example getting a good understanding of what is the potential with data in your branch of business. There is static and dynamic data, and there is also primary and secondary data. APIs are an important tool in ecosystem building, and B2B API activity correlates well with business growth and success.
”The bold yet patient mindset will succeed”
The often repeated message of the summit was, that companies willing to embrace the platform economy should get started and crystallise their platform strategy as soon as possible. Studies show that even a “failed” platform strategy results in better financial outcomes than no strategy at all. Developing a platform strategy necessitates boldness, radically innovative thinking and support from the top management. A platform strategy needs to go beyond digitalisation and incremental improvements, with the aim to operationalise new business models enabled by platforms. It needs to be integrated into the overall corporate strategy and show willingness to change and rethink the old ways.
But even if a platform strategy requires risk taking and changes in many aspects, including the company culture, it does not need to mean suddenly abandoning the core business. Instead, the platform strategy could be implemented, for example, in a separate business unit that is granted the resources and support to explore and develop the company in its new role as an actor in platform ecosystems.
Lack of boldness and leadership were mentioned as the common delimiting factors in platform strategy uptake. But along the next steps, if platform opportunities were being explored, the consequent challenge was often the lack of patience in fostering platform business growth. We are so used to hearing the overnight success stories of global platform corporations that our expectations of the pace of growth may be unrealistic. Instead, a patient mindset is needed, so that innovation horizons are conquered one step at a time. Also, monitoring the development of platform initiatives may often require different performance metrics and KPIs than what the traditional business is measures with. Therefore new approaches and patience will be also needed in follow-up processes.
Selected articles and websites
Jacobides, Michael G. (2019). In the Ecosystem Economy, What’s Your Strategy? Harvard Business Review
MIT: Marshall Van Alstyne
Platform Economy Summit Europe
Platform Strategist: Sangeet Paul Choudary
Is cyber security next to be disrupted by digital platforms?
In this signal, we will examine the driving forces, pressures and trends of digitization in the platform economy that are affecting the security of governments, corporations, and individuals. As digitization becomes more pervasive, we are at the stage where we can no longer afford even a brief outage without significant consequences. IBM in a research study interviewed 500 companies around the world who had experienced a data breach between July 2018 and April 2019. The study reported that the total average cost of a data breach totals to 3.92 M$ and that it takes as long as 279 days to identify and contain it.
At the same time as security threats are increasing, businesses are going through other digital transformations and expanding their digital ecosystems, shifting to cloud services and adding more devices to their networks (IoT, Internet of Things). All of these put tremendous pressure on IT infrastructure and required expertise of the staff. These challenges are discussed among different stakeholders in cyber security conferences like GCCS (Global Conference on CyberSpace) aiming to discuss the development of an international strategic cyber security framework. This is an indication of how complex and important an issue security has become and the need for international collaboration to aid in solving the problem.
Are there clear leaders leading the cyber security solutions?
Security has many aspects, such as physical security, identity management, authentication, access control, confidentiality, data integrity, and physical security to name a few. There is no one solution to meet all protection needs.
For example, take a look at Gartner’s August 2019 magic Quadrant for endpoint protection platforms, where companies are mapped in terms of completeness of their vision and their ability to execute. It seems that there is no particularly strong leader or challenger with a supreme ability to execute.
There is no one size fits all security product. Companies must knit together their own solutions. The problem is also compounded by manufacturers and vendors reluctance to share data. Even more concerning is the fact that raw data related to parts of critical infrastructure may be in the hands of private industry (for example power generation and distribution facilities, water, and wastewater treatment plants, transportation systems, oil and gas pipelines, and telecommunications infrastructure). This may prevent the countries national security teams from analyzing such data to aid in protecting this critical infrastructure and causing cyber blind spots.
Who owns cyber security in the enterprise?
Cyber security touches so many assets within an organization that it needs to definitely have oversight by the companies board of directors. At the same time, IT management and chief security officers need to learn how to communicate risks to CEO’s and boards. Given what assets need protecting is different for each company, it becomes a risk conversation and often needs to also involve the legal department.
Can blockchain help to increase the security of platforms?
A core feature of blockchain technology is encryption and decentralized data storage which can provide increased security for cloud platform infrastructures. Blockchain is being explored in the cyber security space to assist companies to maintain data integrity and to manage digital identities. PWC’s 2018 Global Blockchain Survey showed that 84% of the 600 executives surveyed across 15 territories indicated they were actively looking at blockchain. Blockchain could be a promising solution for security, but it is not yet applied widely.
What role will AI play in preventing cyber security breaches?
AI tools are being used to identify attempted, successful and failed cybersecurity attacks, learn from these attacks and update algorithms to detect these types of attacks in the future. AI may be used in endpoint protection software and vulnerability management software solutions in the future. Examples of some companies working on these types of solutions are IBM, Cylance, and Darktrace.
Examples of Security Platforms
Security is an actively developing field. In Finland alone, we can identify 375 companies dealing with security. F-Secure is one of the leading companies offering cybersecurity and privacy detection and response solutions. Given Finland’s reputation of being reliable, they have an opportunity to offer trustworthy solutions to the world.
Although we mentioned about not having a one size fits all integrated security platform there are companies with platform business models addressing pieces of the problems. Anomali Threat Platform integrates seamlessly with many security and IT systems to operationalize threat intelligence and their Developer SDK allows organizations to build custom integrations as well. GRF (Global Resilience Federation) builds, develops and connects security information-sharing communities. GRF is a provider and hub for cyber, supply chain, physical and geopolitical threat intelligence exchange between information sharing and analysis centers (ISACs), organizations (ISAOs) and computer emergency readiness/response teams (CERTs) from many different sectors and regions around the world. ILOQ advances in physical security with self-powered digital locking and mobile access management solutions that are revolutionizing the locking industry. Security Now RiskSense Solution is a vulnerability management and cyber risk platform, which helps companies manage their cyber risks through their vulnerabilities.
Selected Articles and Additional Websites
IBM Security (2019): Cost of a Data Breach Report
Internet Society (2017) GCCS – Global Conference on Cyber Space
Gartner (2019) GCCS – Global Conference on Cyber Space
The Hill – Dave Weinstein (2019): Cyber Blind Spots
PWC (2018): Blockchain in Business
IBM: Artificial intelligence for a smarter kind of cybersecurity
Cylance. AI Driven Threat Protection
Darktrace. Cyber AI Platform
Security Informed. Security Companies in Finland
Anomali. Secure Platform for trusted collaboration
F-secure
Global Resilience Federation. Multi Sector Security
Ilog. Self-powereed digital locking system
Security Now (2018). RiskSense Platform Demonstration
Cyber Balance Sheet (2018) Report Sponsored by Focal Point Data Risk
Wedge Networks (2016) Orestrated threat management
Gartner (2019). Top 7 Security and Risk Trends for 2019
Gartner 2019). 5 security questions boards will definitely ask
Insights to platforms from Silicon Valley
This signal post discusses the experiences gained by interviewing different platform experts in Silicon Valley and the San Francisco Bay Area, California, in April 2019.
What is different in Silicon Valley?
Silicon Valley and the Bay Area are known as the birthplace of many technological achievements and innovations, including the platform economy. The biggest platform companies – Facebook, Apple, Microsoft, Airbnb, Uber and Slack, for example – have their origins and headquarters in the region. There are clear reasons for this development: investment funds, expertise and networks are available all in the same place. It is possible to get the attention in the start-up phase, get funding and support and build networks to grow the company. The good reputation of Silicon Valley certainly also contributes to its importance.
Even though Silicon Valley is known for its B2C (business to consumer) platform giants, other types of platforms also flourish there. One could say that the innovation and business networks are also organized like platforms. For example, the start-up incubator SVAdvantage connects innovators and companies that need solutions. They also offer facilities to develop and test technologies. Suchlike B2B (business to business) platforms are not as well-known as the B2C platforms.
The other difference between Silicon Valley and Finland is the mindset. In the Bay Area, trust is born from success and from sharing it. This in turn creates a positive feedback loop resulting in even more success. It is pure business even though there is often an element of tribal – referring to fostering of loyalty between employer and employee – culture in technology companies too. In Finland, emotions – reflecting traditional responsibility culture – are important also in creating business. In the US, to set up a company with the intent to quickly sell it to a larger company interested in their technology versus grow the business themselves, is a popular strategy, whereas in Finland we may regard such exit strategies even as treachery or failure. The same difference appears in the attitude to going bankrupt: in Finland, it is a shame, but in the US, learning from ones failures can be viewed as a precondition for success and people are encouraged to try again. The cultural differences appear also in the attitude toward copying or emulating business ideas and strategies from others in the US, whereas it is not at all a popular ideology in Finland.
Security, privacy and ethics
Freedom is a distinctive feature in the US, and it applies especially to business. Data – the essence of a platform – is a free resource to be exploited. However, security is an important issue for a company as well as for the whole nation. One of the crucial preconditions for safety and security is situational awareness, which can be the essence of a security platform. The fast grown platform company Slack is a good example of a platform that has developed new security related solutions. They are using their own product in-house, “drinking the company Kool-Aid”, and pioneering in showing how Slack can be used in security.
The traditional physical security business, on the other hand, is heavy with old risk averse thinking and legacy. Culture change is needed, and platforms can offer a solution. The physical environment is being digitalized. For example, ID batches or keys are disappearing and replaced by biosensors and the need for human physical presence in a space for surveillance and monitoring purposes is being replaced by robots. Integrating security data on a platform, will allow for any situation to be shown, monitored and controlled on a single pane of glass. On the regulatory level, the role of government is to provide safety and security for the citizens participating in the platform economy.
Due to some local privacy and ethical cases (e.g. Facebook and Uber) and due to the developments in Europe, the privacy and ethics discussion has started also in US.
What next? Future of platform economy
The typical thinking of rapid and continuous growth seems to dominate the platforms economy discussion. New technologies enable capacity to integrate more and more functions and operations at lower cost and thereby advance integration. Platforms can also be integrators forming “platforms of platforms” or “meta platforms”. For example, traditional safety and security services may be disrupted by new platforms, which offer the situational awareness in the digital form on a single pane of glass.
The giant US based platforms have lately got negative publicity for privacy and ethical reasons. A new attitude in platform development seems to, however, be about to emerge, aiming to offer trust, ethics and empowerment.
References and links
Tackling fake news and misinformation in platforms
The online world is increasingly struggling with misinformation, such as fake news, that is spreading in digital platforms. Intentionally as well as unintentionally created and spread false content travels fast in platforms and may reach global audiences instantaneously. To pre-screen, monitor, correct or control the spreading is extremely difficult, and often the remedial response comes only in time to deal with the consequences.
In this signal post we study the problem of misinformation in the platform economy but also list potential solutions to it, with forerunner examples. Defining and establishing clear responsibilities through agreements and regulation is one part of the cure, and technological means such as blockchain, reputation systems, algorithms and AI will also be important. Another essential is to support and empower the users to be aware of the issue and practice source criticism, and this can be done for example by embedding critical thinking skills into educational curricula.
Misinformation − the size of the problem
Fake news or misinformation, in general, is not a new phenomenon, but the online world has provided the means to spread it faster and wider with ease. Individuals, organisations and governments alike can be the source or target audience of misinformation, and fake contents can be created and spread with malicious intentions, by accident or even with the objective of entertaining (for example the news satire organization The Onion).
Digital online platforms are often the place where misinformation is being released and then spread by liking, sharing, information searching, bots, etc. The online environment has not yet been able to adopt means to efficiently battle misinformation, and risks and concerns involved vary from reputation damage to global political crises. The most pessimistic views even warn us of an “infocalypse”, a reality-distorting information apocalypse. Others talk about the erosion of civility as a “negative externality”. This view points out that misinformation could, in fact, be tackled by companies in the platform economy analogously to how negative environmental externalities are tackled by manufacturing companies. It has also been suggested that misinformation is a symptom of deep-rooted systemic problems in our information ecosystem and that such an endemic condition in this complex context cannot be very easily fixed.
Solutions − truth, trust and transparency
Remedies to fake news and misinformation are being developed and implemented, even if designing control and repair measures may seem like a mission impossible. Fake accounts and materials are being removed by social media platforms, and efforts to update traditional journalism values and practices in the platform economy are being initiated. Identification and verification processes are a promising opportunity to improve trust, and blockchain among other technologies may prove pivotal in their implementation.
Example: The Council for Mass Media in Finland has recently launched a label for responsible journalism, which is intended to help the user to distinguish fake content and commercials from responsible and trustworthy journalism. The label is meant for both online and traditional media that comply with the guidelines for journalists as provided by the council.
Algorithms and technical design in general will also have an important part to play in ensuring that platforms provide the foundation and structure that repels misinformation. Taking on these responsibilities also calls for rethinking business models and strategies, as demand for transparency grows. One specific issue is the “filter bubble”, a situation where algorithms selectively isolate users to information that revolves around their viewpoint and block off differing information. Platforms such as Facebook are already adjusting and improving their algorithms and practices regarding, for example, their models for advertising.
Example: Digital media company BuzzFeed has launched an “outside your bubble” feature, which specifically gives the reader suggestions of articles providing differing perspectives compared to the piece of news they just read.
Example: YouTube is planning to address misinformation, specifically by adding “information cues” with links to third party sources when it comes to videos covering hoaxes and conspiracy theories. This way the user will automatically have suggestions to access further and possibly differing information on the topic.
Selected articles and websites
BuzzFeed: He Predicted The 2016 Fake News Crisis. Now He’s Worried About An Information Apocalypse.
BuzzFeed: Helping You See Outside Your Bubble
Engadget: Wikipedia had no idea it would become a YouTube fact checker
Financial Times: The tech effect, Every reason to think that social media users will become less engaged with the largest platforms
Julkisen sanan neuvosto: Mistä tiedät, että uutinen on totta?
London School of Economics and Political Science: Dealing with the disinformation dilemma: a new agenda for news media
Science: The science of fake news
The Conversation: Social media companies should ditch clickbait, and compete over trustworthiness
The Onion: About The Onion
Wikipedia: Fake news
Wikipedia: Filter bubble
The environmental footprint of the platform economy
The platform economy is inevitably responsible for a myriad of environmental impacts, both positive and negative. These impacts are, however, difficult to identify and measure because of the complex impact chains and rebound effects. Very little research results (especially quantitative) on the topic exists at present moment. In the accompanying video, we list some key factors of the environmental footprint of the platform economy relating to (1) technology, (2) digitalisation and (3) patterns of consumption and production.
Technology
Platforms, as any other digital products and services, rely on large volumes of data centres and computing power. These require considerable amounts of energy, especially in the form of electricity and cooling. On the other hand, in the most hands-on meaning of technology, we need various devices to access platforms. Production of smart phones, tablets, computers, etc. is resource consuming and new models come up constantly. Short-lived, out-dated devices end up as electronic waste.
Digitalisation
Intuitively one might assume that through digitalisation, the platform economy would replace physical and material functions with digital and virtual solutions, and thus diminish use of natural resources and reduce harmful environmental impacts. But in fact, oftentimes platforms have a way of mixing the virtual and physical worlds, in some cases even accelerating material transactions. Secondly, digitalisation enables a global outreach, which in turn can increase global logistics. We have already seen this phenomenon with ever-growing online market places with global user populations.
Consumption and production
Perhaps the most intriguing and crucial factor is the question of consumption and production patterns in the platform economy. It brings us to analyse issues such as societal values, user behaviour, business strategies and political agendas. Will our underlying objective within the platform economy be “more with less”, “more and more” or “less is more”? The topical concepts of the circular economy and sharing economy highlight sustainable and responsible aspirations. In the optimal case the platform economy can align with these concepts and for example implement in practice innovations that promote access instead of ownership.
Selected articles and websites
World Economic Forum: How can digital enable the transition to a more sustainable world?
MRonline: The hidden environmental impacts of “platform capitalism”
Government of the Netherlands, Ministry of Economic Affairs: Argument map The Platform Economy
Bemine, Emma Terämä: Sharing – more common than ever & an integral step on our way to sustainable consumption
Problems with blockchain
A lot of hopes are placed on blockchain technology. They range from more modest aspirations, like ensuring secure food chains, to hyperbolic claims of creating economic and socio-political emancipation of humankind. Blockchain is said to offer a decentralised way of doing things while solving the problem of trust, which makes it very appealing for platform economy. What is often left out is the consideration of the negative consequences and the barriers to the wide adoption of the blockchain.
Negative consequences and barriers
The main negative impact on current implementations of blockchain relates to energy usage and consequential environmental and other impacts. Blockchains require a lot of computing power, which in turn requires a lot of electricity and cooling power. For example, for Bitcoin alone it has been calculated that by 2020 it might use as much energy as Denmark. While blockchain-based solutions – or cryptogovernance in general – has been offered as a way to alleviate some environmental problems by increasing traceability and ensuring ownership, the negative impact of these solutions to the environment should not be ignored.
The current architecture of the blockchain is high on energy consumption, and also has problems with scaling. The root problem is that all transactions in the blockchain have to be processed by basically everyone and everyone must have a copy of the global ledger. As the blockchain grows, more and more computing power and bandwidth are required and there is a risk of centralisation of decision making and validation power in the blockchain as only a few want to devote their efforts to keeping the blockchain running.
Along with problems of scaling, the issue of governance in blockchains is an unsolved challenge. Since there is no central actor, there needs to be mechanisms for solving disputes. The forking of The DAO and the discussions around it are a case in point. So while blockchain may offer new decentralised solutions to governance, the technology in itself is not enough.
Possible solutions
There are some solutions to the problem of scaling, such as increasing block size, sharding (breaking the global ledger into smaller pieces) and moving from proof of work consensus mechanism to proof of stake. One interesting solution that also decreases the computational power needed is Holochain. Instead of having a global ledger of transactions, in a holochain everyone has their own “blockchain”, and only the information needed to validate the chains is shared. This means basically that while a blockchain validates transactions with global consensus, a holochain validates people – or to be more precise, the authenticity of the chains of transactions people own.
Whatever the technological solution, a discussion on the negative consequences of blockchain is required to balance the hype. Do we want to implement blockchains everywhere no matter the environmental costs? What are the tradeoffs we are willing to make?
Selected articles and websites
- Hackernoon: Blockchains don’t scale
- Motherboard: Bitcoin could consume as much electricity as Denmark by 2020
- Coindesk: Blockchain’s 4 biggest assumptions
- Cointelegraph: Why blockchain alone cannot fix the privacy issue
- Cryptocoinnews: Blockchains will enhance the economic and socio-political emancipation of humankind
- Nature: The environment needs cryptogovernance
- Ensia: What can blockchain do for the environment?
- Ceptr: Holochain
Social connectivity in platforms
Platforms are all about enabling connections to form between actors, typically producers and users of any given tangible or intangible commodity. But to what extent do these connections result in social value for individuals? There are of course social media platforms that by definition focus on maintaining or creating human relationships whether based on family ties, existing friendships, professional networking, dating or shared hobbies or interests. Interaction, communication and social ties nevertheless take place in other platforms too, and the positive and negative impacts of these may come as a rather unexpected side effect to the platform owner as well as users.
For example, ride-sourcing and hospitality platforms are virtual matchmakers, whose work comes to fruition when the virtual connection proceeds to a face-to-face meeting. A ride is then being shared with or a home is being rented to someone who only a little while back was a stranger. Many suchlike relationships remain one-time transactions, but they can also grow to regular exchanges over the platform or profound relationships outside the platform. Connectivity is as much a part of peer-to-peer platforms as professional and work-related platforms. You may form a personal connection with a specific IT specialist over the IT support system platform even if you never met them offline. Or supply chain business partnerships may evolve out of a one-time task brokerage platform transaction.
Why is this important?
The benefits of platform economy regarding social connectivity are the wide outreach and extremely fast and efficient matchmaking based on personal, professional of other mutual interests. In spite of complex technologies and big data flows, these social connections on platforms can be truly personalised, intimate and rewarding. The flipside of the coin is risks around privacy, safety and security. Reputation, review and rating systems are important ways to tackle these and could help to strengthen the sense of trust and community across user populations of platforms. In fact, one interesting finding of social connectivity in platforms is that relationships are maintained and formed bilaterally between the individual as well as among groups, communities and actor ecosystems. Short-term or long-lasting, these relationships often mix online and offline realities.
Additional concerns related to social connectivity in platforms is how much they eventually promote equality and fairness or if the social interaction is more of a burden than a benefit. Reputation and rating systems may result in unfair outcomes, and it may be difficult for entrants to join in a well-established platform community. Prejudices and discrimination exist in online platforms too, and a platform may be prone to conflict if it attracts a very mixed user population. In the ideal case, this works well, e.g. those affluent enough to attain property and purchase expensive vehicles are matched with those needing temporary housing or a ride. But in a more alarming case, a task-brokerage platform may become partial to assigning jobs based on criteria irrelevant to performance, e.g. based on socio-economic background. Platforms can additionally have a stressful impact on individuals if relationships formed are but an exhaustingly numberous short-term consumable.
Emerging technologies linked to platforms are expected to bring a new flavour to social aspects of the online world. The hype around blockchain, for example, holds potential to enhance and ease social connectivity when transactions become more traceable, fair and trustworthy. It has even been claimed that blockchain may be the game changer regarding a social trend to prioritise transparency over anonymity. Blockchain could contribute to individuals and organisations as users becoming increasingly accountable and responsible for any actions they take.
Things to keep an eye on
Besides technology developers and service designers’ efforts to create socially rewarding yet safe platforms, a lot also happens in the public sector. For example, European data protection regulation is being introduced, and the EU policy-making anticipates actions for governance institutions to mobilise in response to the emergence of blockchain technology.
An interesting initiative is also the Chinese authorities’ plan for a centralised, governmental social credit system that would gather data collected from individuals to calculate a credit score that could use in any context such as loans applications or school admissions. By contrast, the US has laws that are specifically aimed to prevent such a system, although similar small-scale endeavours by private companies do to some extent already exist.
Selected articles and websites
Investopedia: What Is a Social Credit Score and How Can it Be Used?
General Data Protection Regulation (EU) 2016/679 – EUR-Lex
European Parliament: What if blockchain changed social values?
European Parliament: How blockchain technology could change our lives
Rahaf Harfoush: Tribes, Flocks, and Single Servings — The Evolution of Digital Behavior
Koen Frenken, Juliet Schor (2017): Putting the sharing economy into perspective, Environmental Innovation and Societal Transitions
Paolo Parigi, Bogdan State (2014): Disenchanting the World: The Impact of Technology on Relationships
Accounting of information flows: Data balance sheet
Systematic accounting of data and information flows is about to be acknowledged as an integral part of regular internal and public reporting by organisations. Alongside finances and corporate social responsibility, the topic of data has now found its way to annual reports. Forerunners publish even dedicated accounting reports for data and information flows, something which can be recommended in data-driven sectors.
For example, Finnish Transport Safety Agency Trafi recently published their second data balance sheet (tietotilinpäätös), an annual report describing their data strategy, related architectures and inventory of data and information flows. This supports Trafi in their aim to be a forerunner in collecting data but also opening it up for maximum use for societal benefit. Through digital public sector services and open data policy, Trafi among others encourages data flows between authorities, between authorities and (typically data-producing) users and towards companies to boost business. Examples of Trafi’s data include statistics and registers on vehicles, licences, permits and accidents. Another pioneer in data accounting is the Finnish Population Register Centre, having compiled data balance sheets since 2010, although due to the nature of the registers only a summary of the report is available for the public.
Why is this important?
Platform economy is all about unleashing the cornucopia of opportunities linked to data. Users and producers as well as the functioning of the platform create, process, store and exchange data, and these data and information flows form the key type of interaction in platform economy. Furthermore, many of the emerging technology areas linked to platforms, such as artificial intelligence, blockchain or automation, are extremely data-intensive.
Management of data has therefore become an increasingly critical and strategic part of activities of companies, public sector authorities and even individuals. On the one hand, data is an asset of real value, but on the other hand, this value can only come to fruition and grow through sharing and opening. This challenges existing business logics in many sectors, where data previously had little or no role or where data flows and information systems used to be strictly in-house matters.
Arguments favouring the introduction of data accounting to regular managerial and strategy work of organisations include both discovering opportunities but also addressing threats and uncertainties. Systematic data accounting helps internal monitoring and improvement, and an open approach helps to expand collaboration and partnerships with others (users, customers, companies and authorities). Accounting should also include responses and preparedness for safety and security issues as well as strategies related to data ownership, surveillance and fulfilment of possible regulatory requirements.
Things to keep an eye on
A significant change factor in the topic of data management in Europe is the data protection regulation (EU) 2016/679 that is to be applied in all European Union Member States in May 2018. This regulation addresses the protection of natural persons with regard to the processing of personal data and on the free movement of such data.
European Data Protection Supervisor lays out a definition of accountability in the meaning that organisations need to “put in place appropriate technical and organisational measures and be able to demonstrate what they did and its effectiveness when requested”. Suchlike measures include “adequate documentation on what personal data are processed, how, to what purpose, how long; documented processes and procedures aiming at tackling data protection issues at an early state when building information systems or responding to a data breach; the presence of a Data Protection Officer that be integrated in the organisation planning and operations etc.”
Another great resource on the topic is the recent publication by the Finnish Government´s analysis, assessment and research activities on use and impacts of open data. The report describes the openness of major data resources maintained by the public administration and on means to assess the economic impacts of open data in Finland. An analysis of the relationship between firms’ use of open data and their innovation production and growth is also provided. To conclude, the report proposes specific recommendations how to enhance the impact of open data in our society, including the use of tools such as data balance sheets.
The European Digital single market strategy and especially the subtopic of online platforms fits well into the above-mentioned discussion. Issues addressed under these activities include for example concerns about how online platforms collect and make use of users’ data, the fairness in business-to-business relations between online platforms and their suppliers, consumer protection and the role of online platforms in tackling illegal content online.
Guidance on how to prepare a data balance sheet is provided by for example the Finnish Data Protection Ombudsman in English and Finnish.
Selected articles and websites
General Data Protection Regulation (EU) 2016/679 – EUR-Lex
European Data Protection Supervisor: Accountability
European Commission: Digital single market – Online platforms
Valtioneuvoston kanslia: Avoimen datan hyödyntäminen ja vaikuttavuus
Liikenteen turvallisuusvirasto Trafi: Tietotilinpäätös 2016
Väestörekisterikeskus: Tietotilinpäätös
Data Protection Ombudsman: Prepare a data balance sheet
TechRepublic: Data’s new home: Your company’s balance sheet
Social impacts of the platform economy
Platforms create value well beyond economic profits, and the topic of social and societal impacts resulting from the emerging platform economy has been getting more and more attention lately. Platform economy undoubtedly has both positive and negative impacts on individuals and families as well as wider communities and entire societies. However, the range and depth of these impacts can only be speculated, as only very early evidence and research on the topic has been produced. After all, the platform economy is only in its infancy.
Why is this important?
Platforms have potential to address major societal challenges such as those connected to health, transport, demographics, resource efficiency and security. They could massively improve our individual daily lives as well as contribute to equal opportunities and progress in developing economies. On the other hand, platform economy can result in negative impacts in the form of disruptions and new threats. Privacy and safety concerns have deservedly been acknowledged, and other possible risks include those related to social exclusion, discrimination and the ability of policies and regulations to manage with whatever platform economy may bring about.
Some examples of positive and negative social impact categories of the platform economy include the following, which may distribute equally, create further division or bridge the gap among various social segments:
- employment and unemployment
- livelihood and wealth
- education and training
- skills, knowledge and competences
- health and physical wellbeing
- mental health and wellbeing
- privacy, safety and security
- social inclusion or exclusion, access to services, etc.
- new social ties and networks, social mixing
- social interaction and communication: families, communities, etc.
- behaviour and daily routines
- living, accommodation and habitat
- personal identity and empowerment
- equality, equity and equal opportunities or discrimination
- citizen participation, democracy
- sufficiency or lack of political and regulatory frameworks.
Platforms may have very different impacts on different social groups, for example, based on age, gender, religion, ethnicity and nationality. Socioeconomic status, i.e. income, education and occupation, may also play an important role in determining what the impacts are, although it is also possible that platform economy balances out the significance of suchlike factors. One important aspect requiring special attention is how to make sure that vulnerable groups, such as the elderly or those with disabilities or suffering from poverty, can be included to benefit from the platform economy.
Things to keep an eye on
Value captured and created by platforms is at the core of our Platform Value Now (PVN) project, and there are several other on-going research strands addressing social and societal impacts of the platform economy. One key topic will be to analyse and assess impacts of the already established platform companies and initiatives, which necessitates opening the data for research purposes. To better understand the impacts and how they may develop as platform economy matures is of upmost importance to support positive progress and to enable steering, governance and regulatory measures to prevent and mitigate negative impacts.
Selected articles and websites
Koen Frenken, Juliet Schor, Putting the sharing economy into perspective, Environmental Innovation and Societal Transitions, (2017)
The Rise of the Platform Economy
Uber and the economic impact of sharing economy platforms
VTT Blog: Openness is the key to the platform economy
SUSY project: Solidarity economy