[Book Review] Platform Capitalism – Nick Srnicek
Mon, 31 Dec 2018 || By Muhammad Rasyid Ridho

The world is entering what we call as “Age of Disruption”. We are in an era which things are changing rapidly, and sometimes radically. This era demands people to adjust their pace and strategy following the disruptions. This phenomenon is mainly supported by the Industrial Revolution 4.0, which is being a catalyst for the emergence of digital economy. This concept implies a mode of business that depends on three foundations, which are technology, data, and internet.

The pervasiveness digital economy as the infrastructure for the economy probably makes its collapse has a detrimental effect on the economy. Digital economy reaches into a hegemonic level which determines how political and non-political society must do. Under this scheme it becomes a necessity for a business to be disruptive, the competition to be smarter cities, flexible workers, and last but not least, lean and intelligent governments.

To bring a new fresh point of view of digital economy, Srnicek book “Platform Capitalism”, would be an option to be added on your reading list.  Srnicek argues that platform capitalism as the direct result of massive digitalization of the business realm, such as the rise of technology, automation, sharing economy, and Internet of Things (IoT). Data become the centre of economic activities and as a consequence; the economy is slowly running on the basis of information control. Hence, the platform appears as a response to this new improvement. This notion of platform refers to a digital infrastructure, which acts as an intermediary between different users or groups to interact. Moreover, the platform provides a series of tools for users to build their own products, services, and marketplaces. Thus, complements the praxis of the other capitalistic mode of production with technological force.

Platform capitalism is characterized by its value dependence on a network. The more people use the platform, the more valuable it is. Besides, platforms exercise cross-subsidisation. While a business entity has several sectors, it subsidises other sectors, yet keeps taking charge for the rest. Srnicek gives Google as the example, which taking no charge in its email and searching engine service, but does the otherwise in advertisements.

There are many forms of platforms capitalism, which manifests in several types: (1) Advertising Platform, which extracting info from users and attempts analysis to sell ad-spaces; (2) Cloud Platform, renting the cloud system; (3) Industrial Platform, based on building hardware and software to undergo the internet-connected production. (3) Product Platform and (4) Lean Platform that virtually utilize zero capital in its operation. Yet, it only provides software as its platforms to conduct its business. For the rest of the components, it outsources outside the firm itself. Uber and Airbnb are the prominent examples when these companies do not own transportations and hotels as their capital. Instead, they offer software as their means to connect the consumer with the respective services. In short, they act as the middleman in the business.

Srnicek gives several impacts when platforms companies start operating. In the platform, the more data can be extracted from it and the more value that can be generated. Google serves as a decent example, since it obtains data when people give access to their calendar, email, and search histories. As a result, it improved the predictive ability to give the preferred result. For another impact, there is a tendency for a software developer to create software to a popular platform. For example, much software is created and operated in Android, and it leads many consumers to shift their preferences to use Android. These phenomena lead to a conclusion, which is monopolization either in the resources (data) or the market scope.

Platforms are forced to be more innovative and adaptive. Srnicek gives an example related to the massive migration of consumer behaviour from personal computers to smartphones. Even though Apple started to give attention to smartphone operating system (OS) first, but Google tried to catch up by using the cross-subsidisation strategy –to license Android free for hardware makers–. As a result, Android has 80% portion in smartphone OS market. Besides, Srnicek finds platforms are forced to be more intensely extracting, analysing, and controlling the data in order to compete in this situation.

As the discussion of this book is mainly about the centrality on data and monopolisation tendency as the core of platform capitalism, however, Srnicek also mention his idea of to make a public-based platform in order to collectivise the platform ownership. It is believed this idea comes as Srnicek put his concern that regulation will not be enough to tackle the monopolisation issue. Unfortunately, Srnicek does not elaborate in detail on how the scheme is going to work despite his fear. The public-based platform could be a new form of business that may distribute more portion of wealth to people.

Overall, this book is structured to make general reader can categorize easily which characteristics are included in platform economy. It shows platform as a business form is not monolithic when there are several subcategories below it. This book successfully brings the historical economy background that might be the catalyst of platforms' appearance in an organized way. For those readers who want to dig more on how technology advancement tends to bring a new form of capitalism and its consequences for market players’ behaviour, Srnicek’s work could provide  with a detailed yet concise elaboration. Besides, since this book clearly defines what platform capitalism is, it could give a useful conceptual base for researchers who want to conduct further research on capitalism pattern in Industrial Revolution 4.0.


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Editor: Anisa Pratita Mantovani