Societal Implications of the New Dominant Business Models of the Digital Economy

Online platforms and their associated ecosystems are the new and dominant organisational form of the digital age: Online platforms play a prominent role in creating digital value that underpins current and future economic growth in the EU. In this article Annabelle Gawer uses the terms ‘platforms’, ‘online platforms’ and ‘digital platforms’ interchangeably, to mean digital services that facilitate interactions via the internet between two or more distinct but interdependent sets of users (whether firms or individuals). Examples of such online platforms include online marketplaces, app stores, search engines, social media and platforms for the collaborative economy. Despite the variety of sectors that they operate in and the diversity of activities they facilitate, online platforms share common economic, business, and governance characteristics in creating and capturing value. These include: the generation of economies of scale and scope; network effects, which can lead to winner-take-all monopolistic positions; business models involving cross-subsidisation across platform sides; pervasive data generation, and data capture and usage; and the fact that platforms act as private regulators of their ecosystems which include businesses and individual users, effectively running as private turfs the business relationships, data exchanges, and transactions that they facilitate.

Annabelle Gawer is Chaired Professor in Digital Economy at the University of Surrey and Director of Surrey Centre of Digital Economy (CoDE). Her work focuses on digital economy, digital platforms, strategy and innovation and ecosystems. 

Annabelle Gawer (2021). Societal Implications of the New Dominant Business Models of the Digital Economy, Governing Work in the Digital Age. 

Photo: CC Shubham Dhage, Source: Unsplash