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.
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.
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.
The platform economy is much more than business giants Uber, Amazon or Google. Platforms can facilitate a transformation in ways of organising work, value creation, sharing, and resources. While the currently dominant development direction tends to favour large platform companies with monopoly statuses, alternative undercurrents can be identified.
Why is this important?
The focus in the platform economy has largely been on how it enables new ways to create value. Value comes from both users and producers while the platform adds its value to the ecosystem by providing tools for matching and curating the content. Network effects further multiply the value based on the extensiveness of the network.
The sole focus on value creation has, however, lead to ignoring the mechanisms by which value is distributed in the network. Platforms both mediate value creation and add value through connecting actors, sharing resources, and integrating systems, but the question is, how is this value shared? Especially platforms with near monopoly status tend to aggregate much of the value to the platform itself and not share it back to the users of the platforms in a fair amount. Platform companies, like other companies, give the surplus to their shareholders. In some cases, it could even be said that platforms exploit their users by treating them as workforce without benefits or as sources of data to be sold to advertisers. At the same time, little attention is put into how platforms serve society. The discussion is more about how they disrupt existing industries and navigate in the gray areas of legislation.
Three approaches challenging the dominant platform business
Although the big platform companies produce most of the headlines, there are interesting initiatives for alternative forms of platform economy. One is the revitalisation of the idea of commons. In the context of platforms and peer-to-peer economy, commons is understood as a mode of societal organisation, along with market and the state, and combines a resource with a community and a set of protocols. A key question related to platform economy is what data, tools or infrastructure should be treated as commons, how to govern them and how to build both for-profit and non-profit services on top of them. These and other questions of a “commons economy” are being experimented with in peer-to-peer initiatives, platform cooperatives, and blockchain-based distributed autonomous organizations.
In the same way that commons challenges the notion of ownership, a growing number of companies called “Zebras” are challenging the notion of growth. “Zebras” are companies that aim for a sustainable prosperity instead of maximal growth like “Unicorns”. They can still be for-profit but also do social good. An interesting question is whether platform economy can be used to transform the current growth-based economic system towards a more sustainable version, or will the “Zebras” as well as cooperatives and commons be left to the margins in the dominance of platform monopolies.
A third interesting idea utilising the new possibilities of connecting and collaborating through digital platforms is the idea of team economy by GoCo. It challenges the idea of a permanent organisation. In team economy, groups form around an issue or a problem and disperse once the work is done. In contrast to gig economy, the tasks aren’t simplified or clearly defined, but rather what needs to be done is jointly explored with the customer. A platform is needed to connect and offer a collaborative workplace but also provides a record of everything a person has done, a sort of online CV for the platform age.
It remains to be seen to what extent commons, “zebras” and team economy can influence the development of platform economy, but they are interesting ideas to keep an eye on.
Often it may feel like we are all anonymous and equal in the online world, but at other times age, gender and other demographic and socio-economic factors seem to matter greatly. In this signal post, we discuss gender in the context of the platform economy. (See also previous post focussing on age.) What is the gender balance among platform users? Who designs and programs platforms? And what is the role of user behaviour and online culture?
Why is this important?
Platform economy has potential to support societal integrity by providing an abundance of opportunities to women and men alike. For example, gig work enabled by digital platforms brings flexibility regarding working hours and location, which is assumed to benefit stay-at home parents, who under other circumstances would stay outside the workforce.
Another central point of interest is for whom platforms are designed. And who designs them? The inherent male-dominance in the software industry and venture capital is reflected in platforms in that it is dominantly men who design and make decisions about how platforms function. A characteristic example of challenges in this area is the recent controversy over a Google employee manifesto, which shows that despite efforts to increase diversity, old attitudes are very much alive.
An equally important question is how people behave and treat one another when using platforms. A case in point is the numerous incidents of online harassment and doxing (e.g. maliciously gathering and releasing private information about a person). One alarming example from video game culture gone astray is the Gamergate controversy. Online culture also shows in reputation and rating systems, where disclosing of background information such as gender may influence behaviour unfairly.
Things to keep an eye on
For new as well as existing platforms, the topic of gender is an important aspect of consideration in platform design. User strategies can at best pinpoint specific gender-related needs and provide targeted and tailored solutions. Platform owners should also acknowledge the responsibility and equality points of view to ensure the platform welcomes all unique users and treats them on an equal footing. Underlying algorithms as well as the culture of the user population should support equal opportunities and broadmindedness.
Also, it will be increasingly important for governments to keep gender equality in view when promoting digitalisation agendas, especially to involve women. Nations do face different types of challenges based on cultural context and nuances as well as status in financial and technological development, and some recommendations on how to harness women’s potential are given in a recent study.
Intuitively thinking online platforms seem to be all about empowerment, hands-on innovation and equal opportunities. In the digital world, anyone can become an entrepreneur, transform ideas into business and, on the other hand, benefit from innovations, products and services provided by others. But how accessible is the platform economy for people of different age? And how evenly are the opportunities and created value distributed? Some fear that platforms are only for the young and enabling the rich get richer while the poor get poorer.
In this signal post, we discuss age in the context of the platform economy. In future postings, we will explore other factors such as gender and educational background.
Why is this important?
When it comes to ICT (Information and Communication Technology) skills and adoption, the young typically are forerunners. For example, social media platforms were in the beginning almost exclusively populated by young adults. But studies show that older generations do follow, and at the moment there is little difference in the percentage of adults in their twenties or thirties using social media in the US. And those in their fifties are not too far behind either!
Along with the megatrend of aging, it makes sense that not only the young but also the middle-aged and above are taking an active part in the platform economy. Some platform companies already acknowledge this, and tailored offering and campaigns to attract older generations have been launched for example in the US. In Australia, the growing number of baby boomers and pre-retirees in the sharing economy platforms, such as online marketplaces and ride-sourcing, has been notable. Explanatory factors include the fact that regulation and transparency around platform business have matured and sense of trust has been boosted.
One peculiar thing to be taken into account is that many platforms actually benefit from attracting diverse user segments, also in terms of age. This shows especially in peer-to-peer sharing platforms. The user population of a platform is typically heavy with millennials, who are less likely to own expensive assets such as cars or real estate. Instead, their values and financial situations favour access to ownership. But the peer-to-peer economy cannot function with only demand, so also supply is needed. It is often the older population that owns the sought-after assets, and they are growingly willing to join sharing platforms. Fascinating statistics are available, for example, of Uber. As much as 65% of Uber users are aged under 35, and less than 10% have passed their 45th birthday. The demographics of Uber drivers tell a different story: adults in their thirties cover no more than 30%, and those aged 40 or more represent half of all drivers. In a nutshell, this means that the older generation provides the service and their offspring uses it.
Things to keep an eye on
In the future, we expect to see more statistics and analysis on user and producer populations of different types of platforms. These will show what demographic segments are attracted by which applications of the platform economy as well as which age groups are possibly missing. The information will help platforms to improve and develop but also address distortion, hindrances and barriers.
It may also be of interest to the public sector to design stronger measures in support of promoting productive and fair participation in the platform economy for people of all ages. Clear and straightforward regulation and other frameworks will be important to build trust and establish common rules.
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.
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.