Digital Platforms: Types and Competitive Landscape

Posted on Jan 10, 2025 in Business Management and Marketing

Digital Platforms

For cities to become smart, businesses must be disrupted, workers are to become flexible, and governments are to become lean and intelligent. If data has become a massive new raw material for capitalism, then platforms are the engines that allow it to process this data.

  • Advertising Platforms

    (e.g., Google, Facebook), which extract information from users, analyze it, and use the outcome of that process to sell advertising.

  • Cloud Platforms

    (e.g., AWS, Salesforce), which own the hardware and software used by digitally-dependent businesses and rent them as needed.

  • Industrial Platforms

    (e.g., GE, Siemens), which build the hardware and software necessary to transfer traditional manufacturing into Internet-connected processes.

  • Product Platforms

    (e.g., Rolls-Royce, Spotify), which generate revenue by transferring a traditional good into a service.

  • Lean Platforms

    (e.g., Airbnb, Uber), which seek to connect buyers and sellers of a service while maintaining a minimum of assets.

Advertising platforms have been hugely profitable, to the point where they don’t know what to do with their cash, but are running out of road in terms of growth and monetization.

Cloud platforms generate good returns (AWS is by far the most profitable part of Amazon) but require significant scale and investment, as well as robustness.

Industrial platforms are specialist versions of cloud platforms; they need scale and to be able to handle prodigious amounts of data.

Product platforms, perhaps better thought of as service platforms, own the asset that they lease to the end user (this is the difference between Zipcar and Uber), although in the case of Spotify, that “ownership” takes the form of a license from the underlying rights holders, which is a problem for its business model.

Finally, lean platforms need to own the relationship with both buyers and sellers. They are lean because they outsource everything else.

The expansionary nature of these platforms means that firms that were operating in completely different areas are now converging together under the pressures of competitively extracting data. Google, originally a search engine company, is now competing with Facebook, a social networking site when it began, and they are all competing with Amazon, which was once only an e-commerce company. While overt antagonism between these major platforms is at a low ebb for now, as they expand into new areas, they will increasingly come into direct competition. The consumer Internet of Things is a good example here, with Amazon and Google making major plays in an effort to dominate this arm of their data extraction empires. Online commerce forms another friction point, with Facebook aiming to bring more and more business transactions onto its platform, in more or less direct threats to Google and Amazon. As these businesses expand, we should expect them to become more aggressive towards each other, as the capitalist imperative to compete takes hold.