Public sector ambitions in the platform economy

Ecosystems in the platform economy can accommodate all and any stakeholders, and the public sector among other actors can decide on the degree of ambition in the role they want to take. The most lightweight option would be to simply follow the field and allow market driven development of platforms proceed. In a more active mode the public sector would monitor and react to upcoming challenges and, for example, adjust taxation and regulation to match with the new landscape. Further on, a genuinely proactive role would entail active support for platforms and participation as a partner in platforms. The most ambitious option would be to aim to become a forerunner and contribute to strategic steering of the platform economy development. In this role the public sector could take on responsibilities in ecosystem facilitation but also show the way by embedding public services and internal processes to platforms.

In this signal post we introduce a few examples of the public sector taking ambitious and active part in the platform economy. These cases exemplify how visions are being turned into the new normal and how implementation steps have been taken in Finland and Estonia. The three topics covered are (1) platforms of open public data (serving among others further platform development), (2) provision of public services in platforms and (3) the visionary idea of citizenship as a platform (and for sale).

Open public data

Open public data means information produced or administered by a public organisation, and it is made available free of charge for private and commercial purposes alike, very much in line with the platform economy thinking. In Finland, metadata of public open data is collated in the service and then the European Data Portal. Although ‘work in progress’, many forerunner examples of novel open data initiatives are already running or under preparation. Often regulatory changes are needed to proceed towards open data effectively yet safely and securely.

Example: The Finnish Transport Agency maintains the NAP service (National Access Point), where since the beginning of 2018 all passenger transport service providers are obliged to open up their data on their services. The foundation for the system was laid in the innovative regulatory update, the Act on Transport Services, and accessing this data in the service, maintained by the transport authority, is expected to accelerate development of, for example, more comprehensive journey planners and advanced transport services.

Example: The government is proposing in Finland a new act on the secondary use of health and social data, intended to enter into force in July 2018.  It would pave the way for a centralised electronic licence service and a licensing authority for the secondary use of health and social data. Finland already has extensive high quality data resources that could be put to more flexible and secure use instead of the current situation of dispersed datasets in different information systems by different authorities. The new act aims to streamline data requests and access as well as improve data security and thus benefit research, innovation and business but also teaching, monitoring, statistics, official planning, etc.

Public services in platforms

Digitalisation, in general, has been widely adopted as a target in public service provision, but the platform economy provides an even wider opportunity to more efficient, more accessible and less bureaucratic services. Education and social services among others are already making first steps in employing platforms, and a platform of platforms could also be envisioned, enabling seamless information exchange and navigation between services. For example, imagine managing your academic milestones, entitlement to study grants or other social assistance as well as medical records or unemployment situation not using separate manual processes but interlinked platforms with one-stop-shop principle. For a first implementation step, platform synergies could be built along administrative branches, such as education, or along specific fields of activity, such as administrative processes linked to building, construction and environmental permits.

Example: is an online service in Finland that functions as a portal to public services and information. Although not a fully developed platform of platforms, this online service already demonstrates the single point of access principle in action. empowers the user to find and then access a multitude of public services as well as their information and authorisations. For example, you could use the service to check your vehicle registry information and, if necessary, communicate electronically with the authorities to update it.

Citizenship as a platform

One imaginative or even utopian idea is to bring not only public sector data or services into platforms but to provide and exercise citizenship as a platform. Ultimately this would mean that an individual could choose their preferred digital citizenship platform and thus be, for example, entitled to public services and subject to taxation according to this choice. Citizenship as a digital platform would allow individual value-based decisions on citizenship rather than based on criteria such as country of birth. While the full concept remains theoretical, the first partial applications are running.

Example: E-Residency is a government issued digital identity launched by the Republic of Estonia in late 2014. It allows entrepreneurs from anywhere around the world to set up and run a location independent business but does not entail, for example, tax residency or citizenship rights to reside in Estonia. This legal and technical platform is the first of its kind, and the digitally accessible user benefits include company registrations, document signing, online banking, etc. The system also contributes to more transparent financial footprint through monitoring of digital trails. Between the launch and February 2018, over 33 000 applicants from 154 countries have established over 5 000 companies as e-Residents.

Selected articles and websites − Open Data and interoperabilty tools
European Data Portal
Finnish Transport Agency: Service providers of passenger transport can now store data in the NAP service
Ministry of Finance: Open data: Opening up access to data for innovative use of information
Ministry of Social Affairs and Health: Secondary use of health and social data
Republic of Estonia: eResidency – Become an e-resident – information and services for your life events
Wikipedia: e-Residency of Estonia

Heidi Auvinen

Research Scientist VTT Technical Research Centre of Finland Ltd
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Finland’s master plan for platform economy

A couple of weeks ago (October 2017) the Prime Minister’s Office, Ministry of Economic Affairs and Employment and Finnish Funding Agency for Innovation Tekes published the national roadmap for digital platform economy for Finland. The first half of the report paints the present picture of the platform economy as a global phenomenon and Finland’s position in it.  The second half drills into the national future aspirations for success and growth and introduces a vision and roadmap for Finland. Furthermore, an atlas of ten sector-specific roadmaps is presented and an action plan to fulfil the vision is outlined.

Top-down meets bottom-up

Finland is a pioneer in launching such a comprehensive national vision, roadmap and implementation plan for digital platform economy. Germany, Japan, Singapore and even the EU have touched upon the topic in their industrial or STI (science, technology and innovation) policies, but not with such focused dedication as Finland. The Finnish strategy is to harness platform economy as an enabling tool that has potential to generate growth for businesses as well as enhance productivity of the entire society. A key element of the vision is to develop national competitive edge out of the platform economy.

But why the choice of national and collective approach, when the leading platforms (from the US) have typically emerged as market-based business innovations? The Finnish initiative seems to embrace the platform economy as a wider phenomenon that covers the potential for value creation and capture not just for companies but for citizens and the state alike. Platform ecosystems therefore extend to all actors in the society, and governmental institutions can step up to take active part. According to the report, the foreseen role of public sector includes for example:

  • facilitating society-wide dialogue and aligned national vision
  • implementing a competitiveness partnership between public and private sectors
  • strengthening the development and business environment for platforms
  • developing the knowledge base, resources and tools
  • showing example by open public data and platforms launched by the public sector
  • other enabling support such as regulative measures.

In short, the Finnish hypothesis for how to accelerate and benefit from the platform economy is to activate both the bottom-up (innovators, businesses, individuals, etc.) and top-down (governments, authorities, regulators, etc.) stakeholders. No getting stuck in the chicken-and-egg dilemma, but getting started on all levels and in a nationwide public-private-partnership.

Other interesting messages

Strengthening of the knowledge base and education to support skills in the platform economy has received a lot of attention in the Finnish roadmap report. This covers both formal education as well as further training along the career path. What is especially highlighted is software design skills, but what about entrepreneurial mindset, data-driven innovativeness and cross-sectoral service thinking?

The value of data and the vast potential for its usage is also emphasized in the report. Data economy as a concept is being mentioned, and especially the role of the public sector is explored in terms of developing rules, providing common technical specifications as well as showing the way with public data resources.

Selected articles and websites

National roadmap report: Digitaalisen alustatalouden tiekartasto
Videos from the launching event (October 23, 2017): Suomi ja tekoäly alustatalouden aikakaudella
Further information: Suomi ja tekoäly alustatalouden aikakaudella

Heidi Auvinen

Research Scientist VTT Technical Research Centre of Finland Ltd
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Platforms and blockchain to bring on beneficial disruption to taxation

Digitalisation and platform economy are usually perceived as a challenge to taxation as it is difficult to monitor and enforce taxation in the digital and global economy. New rules are needed for deciding which activities are taxable and which are not in the in sharing, collaborative and platform economies. A recent US study points out that platform businesses such as Uber and Airbnb have an impact on all three of the major categories of revenue sources: consumption taxes, income taxes and property taxes. The situation is especially relevant for Nordic countries, where the tradition of a strong tax base has been the precondition for an affluent society. The main goal is to develop taxation so that the platform economy can strive while ensuring sufficient tax revenue without compromising innovativeness.

The platform economy could, however, be the solution to these new challenges. If we have a more comprehensive look at taxation, expanding from acute challenges to long-term system-level opportunities, platforms together with blockchain and artificial intelligence technologies could help reform and improve taxation systems.

Why is this important?

Tax authorities around the world are urgently trying to find short-term and long-term fixes to the challenges linked to digitalisation and platforms. The sharing economy is one of the areas, where heated debates have accompanied the introduction of new tax measures (see e.g. Finland, France, Sweden, the US or Australia). Approaches vary from exempting small-scale peer-to-peer activities from taxes to treating gig workers as business owners or considering ride-sourcing equal to taxi travel. The importance of the issue is put into the scale in a study by PwC, estimating the value of transactions in Finland’s collaborative market in 2016 to over 100 million euros.

The European Union (EU) has been active in surveying tax challenges in the digital economy and collaborative economy. Counter measures are being designed and implemented by the Member States respectively, but joint actions and strategies on a European level and globally are also needed to ensure fair operating environment. The EU agenda stresses that all economic operators, including those in collaborative economy, are subject to taxation either according to personal income, corporate income or value added tax rules.

While the authorities are baffled, so are the individual users and producers of platforms. We are currently in a paradoxical situation, where online platforms rely on digitalisation and automation, yet the related tax procedures, deductions and declarations are largely a manual and messy burden.

Things to keep an eye on

The responses from tax authorities do not, and should not, limit to quick fixes within current tax schemes but also explore long-term considerations on principles of taxation and novel means to implement them. Examples of progressive ideas include the suggestion of a specific tax on digital economy and taxation of platforms based on bandwidth or other activity measures such as number of users, flow of data, computational capacity, electricity use or number of advertisers. It has also been proposed that tax rates should differentiate according to the origin of revenues to better steer platform-based business: a different tax burden for revenues generated by one-time access and another tax rate for revenues generated by data exploitation.

Curiously enough, the challenge could be turned into the solution, as the platform economy especially together with blockchain and artificial intelligence technologies could provide the means to more efficient future schemes of taxation. One key problem is that information of and data from platforms does not reach tax authorities. By employing blockchain and distributed ledger it would be possible to remove the need for any intermediary and improve transparency and confidentiality. For example, blockchain applied to payroll would enable removal of businesses as a middle man and allow automatic tax collection using smart contracts. And having data in distributed ledgers would enable analysis of that data for monitoring of tax compliance and horizontal communication between authorities among other things. In fact, blockchain has been argued to provide solutions from digitalisation challenges ranging from anonymity and lack of paper trail to tax havens.

Another forward-looking idea to taxation from the world programmable economy domain involves smart contracts, cryptocurrencies and programmable money, such as Bitcoin or ether by Ethereum. These are currently perceived as a source of trouble to tax authorities, but what if they were soon to be the favoured choice and solution promoted by the state as an active party? This would mean tax authorities having access to the information on payments, on which employers would be obliged to report. Authorities could thus stay on-track in real-time even when the banking and currency system grows more and more decentralised. Furthermore, even national tax planning and writing could be transformed using artificial intelligence and machine learning in time.

Selected articles and websites

Australian Taxation office: Providing taxi travel services through ride-sourcing and your tax obligations
Australian Taxation office: The sharing economy and tax
EUobserver: Nordic tax collectors set sights on new economy
European Commission: A European agenda for the collaborative economy and supporting analysis
European Parliament: Tax Challenges in the Digital Economy
France Stratégie: Taxation and the digital economy: A survey of theoretical models
IBM: Blockchain: Tackling Tax Evasion in a Digital Economy
Institute on Taxation & Economic Policy (ITEP): Taxes and the On-Demand Economy
Kathleen Delaney Thomas, University of North Carolina Law School: Taxing the Gig Economy
OECD: Addressing the Tax Challenges of the Digital Economy
PWC: How blockchain technology could improve the tax system
Sitra: Digitalisation and the future of taxation
Sky Republic: Automating & Assuring Trust Using Enterprise Blockchain in the Era of the Programmable Economy
Skatteverket: Delningsekonomi – Kartläggning och analys av delningsekonomins påverkan på skattesystemet
TEM: Jakamistalous Suomessa 2016 – Nykytila ja kasvunäkymät (Collaborative Economy in Finland –Current State and Outlook)
The Financial: Artificial Intelligence to transform tax world
Verohallinto: Jakamistalous
Wikipedia: Bitcoin
Wikipedia: Ethereum
WU & NET Team: Blockchain: Taxation and Regulatory Challenges and Opportunities, Background note

Heidi Auvinen

Research Scientist VTT Technical Research Centre of Finland Ltd
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Digital activism

Internet, platforms and digital technologies offer new ways of spreading the message and organising action for different cause-driven movements and citizen activism. This digital activism is not limited to using platforms to support existing forms of activism, but also takes advantage of the new opportunities platforms give for distributing value and providing access for information.

Why is this important?

The clear benefit of platforms for activism is new tools for communicating, deliberating, organising and connecting. Platforms such as Enspiral support a collaborative culture, constructive deliberation and collective decision making. They pool together resources such as money, time and skills to promote a jointly agreed upon set of projects. There are also platforms aimed at explaining obscure policies or laws or doing the increasingly important fact-checking.

In addition to tools, there is a quieter form of digital activism, one aimed at changing societal structures of access of information and distribution of value. Projects building ad hoc digital networks or internet access points aim to circumvent restrictions on the access to information. Platform cooperatives aim to reshape the way value is distributed within the system. In general, the aim is to improve the possibilities of those that are respressed or silenced via digital cencorship, or left out in the winner-takes-all forms of digital economy.

Things to keep an eye on

Digital activism suffers from so called “clicktivism”, where people are eager to support a cause if it just means clicking a button. Then when nothing changes, people lose their faith also in other forms of activism. Therefore digital activism needs also “off-line” activism. At best, digital activism can support other forms of activism, at worst it can undermine them.

There are also interesting examples of what can emerge out of the interface between the physical and digital in the age of smart phones and ubiquitous connectivity. One such example is the “I’m being arrested” app, which is a panic button for demonstrators to let a preselected group of people know that they are in trouble. Using location aware and camera equipped smartphones provides new tools for ensuring transparency and fair treatment.

On the flipside, digital activism raises also questions about ethics and responsibilities. Whistleblowing and the leaking of classified information may be a necessary alarm call in some cases, and in others it may just do more harm through unintended side effects. It is worth noting where the activism rises and what are its underlying intentions. There is also the question of drawing a line between civil disobedience, mischief “for the lolz” and outright criminal activity.

A potential transformation may happen  through the adoption of the tools for collective decision making and deliberation, as they find their way increasingly to more conventional arenas of decision making. It is interesting to see if they change the forms of governance.

Selected articles and websites

How a new wave of digital activists is changing society
Digital and Online Activism
Flex your political activist muscles with these resources
Mobile Justice (Team Human podcast with Jason van Anden)
Enspiral – more people working on stuff that matters
Loomio – making decisions together

See also our signal on persuasive computing

Mikko Dufva

Research Scientist VTT Technical Research Centre of Finland Ltd
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New technologies such as cloud computing, virtual collaboration tools, and ubiquotous smart mobile devices are enabling new forms of public debate and policy making. At the same time, more data is collected, and it is becoming more open and accessible. Active citizens, NGOs and grassroot movements catalysed by social media are challenging the existing societal structures. These developments create both opportunities and challenges for government.

Why is this important?

Governments can use platforms to foster the growth of specific industries by e.g. ensuring open access to all publicly funded data and providing crowdfunding and other platforms for companies. At the same time, platforms challenge the way governments to work by enabling new types of decision making, suited for a truly distributed and self-organising communities. Also, governments have to cope with the impacts of current big platform players, who disrupt existing industries and challenge existing regulation.

Things to keep an eye on

Estonia is the example to keep an eye on when it comes to the digitalization of different government activities; it provides e-residency and has solved the problem of Uber and taxation. Blockchain could offer interesting solutions for “hacking the society”, starting from secure healthcare records and going on to making basic income a platform. Data privacy, access and ownership are key issues to keep in mind.

Selected articles and websites

Government as Platform
These Online Platforms Make Direct Democracy Possible
Open Government Platform – OGPL To Promote Transparency And Citizen Engagement
A federated architecture – choose and combine the tools you need for your democratic process

Mikko Dufva

Research Scientist VTT Technical Research Centre of Finland Ltd
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