Platforms as Enterprise part 1

Over a decade ago a news and essay magazine sent each of its subscribers a customized issue that showed the block where they resided. That was also a time where simple word processing systems could customize targeted mailings. Today, in the world of large, sophisticated databases that have more extensive individual profiles, customized messages can “speak” directly to that person so that individual messaging is sent only to a specific person about issues that were generalized for an audience and mass mailed.

Similarly, jet engine manufacturers can track the operations of individual engines in real time, combining it with weather data, aircraft loading and other bits and pieces that let them customize maintenance and spot potential problems in operation and management of that specific unit. With a variety of sensors, a product can be tracked from point of manufacture to the ultimate end user.

Today “data” is the new raw material to be staked out, defined, controlled, extracted, processed and marketed. Platforms that capture and monetize these processes are the new industries. Nick Srnicek’s “Platform Capitalism” describes five platform industries that capitalize on control and application of the differentiated data resources much like traditional mining and manufacturing industries did with physical resources.

The most familiar is the “advertising” platform that collects information about persons that allows them to be targeted by parties seeking to market products, services and ideologies. Google, Facebook and Amazon are the most prominent examples. The data that is collected provides a profile of personal information as well as preferences for products, services and even political and social beliefs in a dynamic format. For example, Amazon knows when and where on their site you have visited. Based on that it can select other items that should meet your wants or needs, conscious or unconscious.

In other words, the mining algorithms can anticipate possibilities that are connected but not actually part of the search terms the individual has used. It can infer based on current and previous histories. It also has a quasi-auction function in that it can use this profile to engage in dynamic pricing. This is the same practice used by other parties such as airlines and the entertainment industry.

Of greater concern are the political and security and defense applications. The issue of “fake news” designed to influence individuals and organizations and the tracking of various organizations engaged in a variety of activities that may be antithetical to a particular government and similar practices, all fall in this domain.

There are increased concerns about the misuse and abuses of this data that were not raised until the number of applications in this area have become problematic in the non-commercial, goods and services, arena. The issue is critical for platforms that are working on paths to mitigate these practices. Unfortunately there are critical issues that do not seem resolvable.

First, the entire business model that underpins the profitability of these platforms depends on increasingly more sophisticated algorithms for targeting markets. Any alternatives that try to filter or shelter parties from problematic targeting must also decrease the market value of the algorithms for the principle client base.

Second, attempts to qualify parties who can access the mined and classified databases has severe ramifications for both clients and the parties who are part of the refined data.

Third, there are national and international political and security issues as to who can have or demand access to this information and the legal issues that may come into play. Who gets access and who knows who has been given or denied access are only the tip of an increasingly complex situation. It becomes more problematic than conflict minerals and illegal transport of restricted products and services.

Part of the answer may rest in the ability for an advertising platform to diversify. Amazon is a paradigmatic example in in Amazon Web Service which is a cloud based platform that owns and manages large server farms for its own use and for others needing storage and support functions. Google is focusing in acquiring and managing driverless vehicles using its mapping capabilities with the ability to get into the transportation of goods or to provide ride services much like Lyft. Other capabilities play on similar strengths such as products like Amazon’s Echo or Nest’s home environmental management systems, all of which could enter areas such as patient monitoring and care or personal assistants using increasingly capable artificial intelligence systems coupled with the in-place refined database systems.

* This essay is part of a series of articles at which are extended reviews of Srnicek’s Platform Capitalism and Williams and Srnicek’s Inventing the Future


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