Interconnected Platforms

In the modern world, nearly everything is interdependent and interlinked. Data plays an essential role in this integration and is the feedstock for platforms. We understand the platform economy as a way of creating value and organizing layered (business or other) activities enabled by digital platforms, information and data. Based on the data, platforms typically are able to offer personalized, timely and optimized services for their users, and better service offerings for the service producers. The higher the quality of the data on the platform, the better it can serve the needs of the platform and its users and producers. Therefore, the quantity and quality of the data play an important role in platforms. Platforms develop new ways to access data across a variety of sources and develop new technologies for analysing and utilising data. Consequently, platforms are becoming increasingly connected and interlinked.

In this signal post, we discuss how platforms play an important role in the integration of the world by discussing examples from different platform categories.

X as a service

The concept of “X as a Service” refers to the delivery of anything as a service. The concept implies the integration of the client’s needs and the provider’s offerings (which at the same time is the basic concept of a platform). The concept has spread from the information technology industry to other sectors and now, with the advancement of digitalization, nearly anything as a service is available. Many of these services have interrupted conventional businesses, like Airbnb and Uber, for example. Some common examples of different XaaS include mobility, information, food, music, movies, manufacturing, security, maintenance, finance, procurement, purchasing, design, car wash, and lighting as a service.

Mobility as a Service (MaaS) is one example of how platforms integrate different traditional businesses with new technologies. In MaaS, different modes of transportation are integrated with new technologies like AI, eCommerce, autonomous vehicles, etc.  The result is a shift away from the concept of car ownership towards a real-time, customer-centric transportation platform that includes diverse modes of transport, including public transit, ride-sharing, car rentals, and autonomous taxis.

Other “X as a Service” platforms integrate new technologies and aggregate data from other devices like refrigerators, ovens, toothbrushes, smartwatches or even mirrors.  This enables the creation of mega platforms that gather large amounts of data on users and make that data available across a network of platforms that offer services and products.

Smart city

The Smart city concept is nicely described by Aveva: “Firstly, a smart city connects and collects information about itself through sensors, other devices, and existing systems. Next, it communicates that data using wired or wireless networks and databases. Thirdly, it analyses that data to understand what is happening now and what is likely to happen next. Finally, it must act based on this intelligence.” Application platforms can then utilize the data collected by the Smart city. Habibzadeh et al. give some examples of these platforms including Smart home, Smart parking, Smart driving, Smart health, Air quality monitoring and Smart transportation. Obviously, the availability of the data enables new platforms and services to be created. Helsinki has been a forerunner with its ambitious Forum virium Helsinki project and has been recognised in global rankings.  Examples of those include second place in the world by the Smart city index in 2020 and the first prize in the “Year in Infrastructure world congress”.

The Smart city concept has been adopted around the world as in Vietnam, Latin America, Cape Town in Africa, for example. While it initially appears counter-intuitive, smart city development is progressing faster in developing countries than in the developed world because the developing cities can jump directly over building “traditional” infrastructure and go directly to the smart era. Once the core Smart city technology has been implemented, it creates opportunities for the continued development of smart city infrastructure as well as for offering new services in the smart city environment.

Recycling

Resources like materials, energy and data can be recycled. Recycling of goods and materials takes place commonly via platforms. On an industrial scale, ecosystems are formed to allow the reuse of waste materials and energy and to provide related data. The ultimate aim of recycling nowadays is to optimize the operations and to minimize emissions. Platforms having online access to data have the best possibilities in this optimization and are able to manage the operations in an optimal way.

European Circular Economy Stakeholder Platform is a joint initiative by the European Commission and the European Economic and Social Committee. The platform has 85 member platforms, which enable national, Pan European and international collaboration in order to activate a circular economy in all possible ways. The member platforms include ones directed to specific sectors such as the Chemical Recycling Europe, EU Platform on Food Losses and Food Waste and Furn 360, for example.

Recycling products at the end of their life is more efficient if it is considered as part of the product design process. Many platforms gather and analyse data that provides knowledge to improve product design. On the other hand, materials tracking systems based on AI, RFID, block chain can optimise the entire value chain from the production of raw materials to product production to product transportation and its eventual recycling.

Industrial platforms and technology integration

One of the best-known examples of industrial platforms may be Industry 4.0, which “refers to the intelligent networking of machines and processes for industry with the help of information and communication technology (Plattform Industrie 4.0)”. Industry 4.0 (another example) implies both vertical and horizontal integration of data and operations as well as new technologies and new business models to achieve efficient and sustainable production and personalized offerings. Smart industry is a synonym to Industry 4.0.  Smart manufacturing and Integrated Intelligent Manufacturing (I2M) concepts add data sharing and intelligence into the manufacturing chain, allowing better optimization and control over ever-larger operations.

The steel industry has launched its own Smart Steel initiatives and programs. The EU launched the Smart Steel research program, the Swedish-Finnish steel company SSAB collects and provides data on their products along the whole service chain thus helping the selection of materials and recycling of steel, Anstair Smart Steel supports efficient and modern building in challenging circumstances, etc.

A good example of how different production plants can operate together and form a whole self-standing bioeconomy ecosystem is the Äänekoski mills. Äänekoski mills integrates a wide variety of different materials, processes and outcomes. It optimizes the use of materials and energy, producing even excess energy. Its core products are pulp, tall oil and turpentine, and various formats of bioenergy. In addition, it produces sulphuric acid, product gas, biogas and biopellets for its internal use, and biocomposites from pulp for plastic replacement. Moreover, new biofuels, fertilizers and earthwork materials, lignin-based bioproducts and pulp-based textile fibres are in the pipeline. The mill produces electricity, district heat and steam, and solid fuels for sale.

One different example of an industrial platform is the integration of transportation and 3D printing, which would allow for manufacturing components close to the client and thereby decreasing transportation and related emissions.

Health

In the health sector, it is essential to share and integrate data and knowledge in order to enable efficient collaboration between different health providers. New technologies support the diagnosis and treatment of illnesses but also the storage, transmission, and access to sensitive personal data. The Kanta platform, for example, includes every citizen’s health data in Finland and offers different health sector experts access to the data when needed. Broader integration of data and different platforms is developed in the Aurora system, which aims to create the conditions for a people-oriented, proactive society.

DNA (Deoxyribonucleic acid) molecules define the uniqueness of each of us and are passed from adult organisms to their offspring (NIH). Making use of DNA requires gathering large interconnected datasets, performing complex analysis, and providing a way for scientists and organisations to access the data. A number of platforms have emerged to meet these needs and support the research of inherited illnesses and the development of new treatments. DNA-based platforms are also used when investigating crimes and even when deciding what food “compliments” your DNA. Other use cases include the search for family members by using DNA heritage platforms like MyHeritage or Ancestry.

Platforms and their integration nowadays play an important role in the prevention of communicable diseases like COVID-19. ECDC, WHO and others provide situational awareness data and instructions during epidemics. Many researchers are trying to develop a vaccine for COVID-19. Finnish researchers are developing a ‘vaccine platform’, which could be used to produce a vaccine for COVID-19 and related other diseases afterwards.

The most broadly integrated platforms are so-called Super-platforms. In China, where the government manages the collection of citizen data, Tencent is an ultimate example of a super-platform and it operates also in the health sector. Tencent, in collaboration with other platforms and companies “tries to develop a complete digital representation of one’s biological self – taking into account genetics, epigenetics and other factors, and allowing for a truly personalized medicine to emerge”. Google is collaborating with its partners to do the same and so are the big pharmaceutical companies.

Education

For some years already, universities and private organisations have offered platforms and portals for self-education. Important aspects of learning platforms are presented in a literature summary by the University of Jyväskylä. Verywellfamily listed the seven best online learning platforms this year. The platforms offer education in various areas like IT coding, innovation, child development as well as Shakespeare; the most popular courses being related to ICT. Some universities offer online professional degree certificates, micro or nano degrees.

COVID-19 created a tremendous challenge for education when schools and universities had to rapidly switch from in-person to remote learning. This was a world-wide transition and UNESCO has summarized the national platforms used at schools in various countries. In addition, new educational platforms are continuously being developed. Universities play an important role in this.  The Finnish company Gofore aims to develop a meta platform, called Digione, which will integrate different educational actors by allowing the integration of the different systems they use.

New trends in educational platforms include benefitting from new technologies like augmented and virtual reality as well as mobile applications, 5G and new ways to support education.

Marketing

Platforms have disrupted the traditional marketing industry. Paper brochures and leaflets are replaced by ads on social media and internet sites. Many subscribers of newspapers and magazines read their papers digitally, which implies that more and different ads can be offered to the readers. Digital advertisement can benefit from new technologies such as 3D, VR, AR and links that offer more data and experience.

Big social media and internet companies like Facebook and Google collect a big part of their income from personalized advertising that improves the efficiency of marketing. Social media companies collect data by offering ‘free’ applications such as Facebook, Instagram, Twitter etc. for citizens but also for companies. Their data reserve is huge, which enables them to become super platforms that have a bigger budget and more power than many of the world’s nations.

In addition to the global giants, smaller companies, such as Finnish-based company Smartly, have created successful businesses by specializing in social media marketing.

Banking & Financing

The platform economy requires a trustworthy digital transaction system to operate. That is what banks are offering and, consequently, banks are an inevitable part of successful platforms. In addition to transactions, banks offer a reliable identification system for safe entry to other systems. Therefore, a bank account is a key to most platforms and banks are integrated into most platforms. The revised Payment Services Directive (PSD2) has been essential in fostering innovation in the financial services sector as it requires banks to open their payment services to other companies.

Banks themselves are entering the platform business actively and forming alliances to offer a broader variety of services to their clients. As an example, one of the new marketplaces offers “non-financial products from third-party service providers, such as business management services, health-related products, or even e-hailing functionality, aimed at providing a one-stop shop “platform-as-a-marketplace” service, accessed through their banking interface”.

Governments support the trustworthiness of the banking system. In addition to international agreements, some mutual ones aim to guarantee two-sided data sharing and transactions as in the case of Singapore and Australia, for example.

One challenge in developing countries is that many poor people do not have the official identification needed to open a bank account. The Asian Development Bank, for example, is funding the development of a low-cost identification system, which would allow the poorest people to open a bank account – and be a part of the digital economy. About 80% of the Africa’s 1.2 billion people don’t have a bank account or credit history.  Banking platforms that offer micro-loans, like Social Lender, are overcoming this by integrating with users’ social media profiles to determine a “social reputation score” that acts as a proxy for the users’ trustworthiness and likelihood they will re-pay the loan.

A Finnish example of a new financial offering is the DIAS platform for the housing market. It combines several actors such as lawyers, inspectors, and bankers along with new technologies like distributed ledger and digital signatures to offer digitized and distant transactions for buying and selling real estate, houses and flats. Zillow is a corresponding platform in the US.

Discussion

Interconnected and integrated platforms have gained enormous economic and social power in the world. Accessing and aggregating data is the key aspect of this development. Data can be collected from free markets (US-based platforms) or in a centralized way like in China; both ways seem to produce huge super platforms. Indeed, data has become such an important aspect of our economy that the old saying that “data is the new oil” has become true. The power of the platform economy is accepted broadly and companies need to be involved, whether they like it or not, to be profitable. The big question in industry often is “who owns the data?”.

Trust and security are necessary preconditions for a successful platform. Banks – supported and owned by state governments – form a layer above or beside platforms thus securing safe access. The security is supported by international initiatives and agreements such as the Singapore Australia digital economy initiative or the GAIA-X, a Federated data infrastructure for Europe. GAIA-X aims to develop common requirements for a European data infrastructure. The discussion seems to have moved from platforms and integrated platforms to the data economy. Banking seems to have taken an important role as a necessary infrastructure component to guarantee the security of financial transactions and data handling.

Platforms have become a necessity in our lives. On one hand, platforms enable equal possibilities to participate in various activities in society but on the other hand, as platforms grow and become interconnected they have gathered significant power such that they now have more power than most of the world’s nations. Ethics and especially privacy are the prevailing topics related to platforms.

LINKS

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Raija Koivisto

Principle Scientist VTT Technical Research Centre of Finland Ltd

Phill White

Research Scientist Global X-Network

Heidi Korhonen

Senior Scientist VTT

Brenda Fox

Founder, CEO Global X-Network
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Managing health in the digital age

The world of healthcare has many facets and is constantly evolving. In this signal post, we look at how digital platforms are driving advances in healthcare delivery, hospital management, and the development of new treatments.

Harnessing the power of the cloud

Many organizations have transitioned to cloud-based solutions for key business functions such as accounting, sales force management, and maintaining customer data. Healthcare is a complex industry with many disparate service providers that people interact with throughout their lives. Family physicians, testing labs, specialists, and hospitals are just a few of the service providers responsible for patient care that are likely to use disparate paper-based and computerised systems that don’t talk to each other.

Finland is a world leader in Electronic Health Records (EHR) with its MyKanta platform. While Google and many other large players have cloud-based EHR platforms, a report from Health Europa highlights the benefits and challenges of replicating Finland’s success in other countries. Data privacy is a key issue for EHRs. When Google announced a partnership with Ascension, a large US-based healthcare provider, it triggered calls for oversight and stricter privacy provisions as more healthcare providers look to move their patient records to cloud-based platforms.

Augmenting diagnosis with Artificial Intelligence

Historically, doctors and specialists relied on years of experience, second opinions, and impressive memories to diagnose illnesses and decide on the best type of treatment. New tools are emerging to augment doctors’ ability to diagnose and treat disease.

Simply keeping track of new research and illnesses is a challenge for doctors and patients. Many patient-centred platforms include “symptom checkers” and provide medical reference information in simplified terms to help people determine if they have an illness and how it should be treated. While this can feed into some people’s medical paranoia, the platforms provide valuable information that helps people decide if their illness is serious. Some examples include Duodecim, WebMD, and MedLine Plus. Doctors can make use of more advanced platforms, including platforms like EvidenceAlerts that provide customised alerts when new research is published.

Artificial Intelligence and Machine Learning (AI and ML) platforms can analyse patterns in large amounts of data and build algorithms to make predictions. New platforms like Bering Research’s Brave AI are being piloted in the UK to give family doctors a tool that can analyse patient history and key medical markers to predict which patients are likely to experience a decline in health and need hospitalisation in the future. This allows doctors to start pro-actively managing patient health before a crisis occurs.

The strengths of AI and ML are also being used to interpret diagnostic images, such as ultrasounds and MRIs. While not yet capable of replacing humans, Google Health and Imperial College London have made progress using AI to review mammograms and detect breast cancer. Google has also been behind other advances such as diagnosing eye diseases and lung cancer. In Singapore, Automated Vascular Analysis (AVA) from See-Mode Technologies has been approved for clinical use to analyse vascular ultrasounds, before a final review by a human radiologist.

The Internet of Things (IoT) and the rise of smart health devices

Small, connected devices are making it possible to gather health information continuously and feed it into platforms that allow users and healthcare professionals to access and analyse the data. Many people already wear a smartwatch or carry a mobile phone. Sensors built into these devices and customised apps are being used to track heart rate and blood oxygen levels (FitBit), ensure medication adherence, and monitor the behaviour of seniors to identify cognitive decline (MindYou).

Specialised devices are emerging, such as Oura’s smart ring, that measures general health and can also be used to check for fevers and alert wearers of a potential COVID-19 infection. H2Care’s blood pressure reader resembles a small wristwatch and integrates with an app to provide trend tracking.  Researchers have made several advances, such as a metabolite measuring device the size of wristwatch to analyse perspiration and assess the wearer’s body chemistry, a smart contact lens to help diabetics manage their condition, and electronic pills that monitor a patient’s digestive tract.

IoT and mobile communication are transforming hospitals into “Smart Hospitals”.  Ambulances equipped with cameras, sensors, and devices like mobile MRIs will allow paramedics and specialists to begin treating complex cases before they arrive at the hospital. Once at the hospital, the Electronic Health Record (EHR) platform integrated with patient diagnostic and monitoring devices, along with AI-augmented care planning will allow entire care teams to provide seamless care. Advanced technologies like Augmented Reality/Robotic surgical devices and 3D printed organs and devices will dramatically improve patient outcomes. However, in addition to issues like data privacy and cybersecurity, most hospitals face fundamental challenges in implementing smart technologies, namely finding adequate funding and IT expertise.

Researching the future

Digital platforms are helping medical researchers manage the complexity, data, and collaboration associated with research while reducing the time it takes to bring new discoveries into clinical practice. Most medical research begins by searching for clues in large datasets from patients with a particular illness, or by analysing genetic data, or by looking for patterns in previous research, or by doing numerous experiments to identify chemicals (or combinations) that are effective. Using AI, Machine Learning, and data analytics, researchers are able to rely on platforms to do a lot of the initial work efficiently and quickly.

UK start-up, Exscientia was able to complete its research and begin human trials of a new drug in 12 months instead of the typical 5 years with traditional research methods. Researchers are hoping for an even shorter timeline to develop a Covid-19 vaccine. Apple is partnering with research institutions and using the ubiquity of its platform and the new Research app to enrol and track thousands, or even hundreds of thousands of people in broad research studies.

Once a treatment is in clinical trials, platforms like OpenClinica can manage participants and their data. Given the number of stakeholders involved in the clinical trial process and the sensitive nature of the data, Blockchain-enabled platforms are being considered to ensure the integrity of the trials.

Taking medical research to a more granular level using digital platforms is driving the emergence of personalised medicine. By sequencing an individual’s genome, analysing biomarkers, and considering other medications being taken, researchers can use CRISPR and other techniques to develop treatments tailored to that individual, that also avoid harmful drug interactions.

Selected Articles and Websites

The world of cloud-based services: storing health data in the cloud
Healthcare has many use cases for 5G and IoT but no infrastructure to support it
Finding the future of care provision: The role of smart hospitals
Personalized Medicine Is About to Go Mainstream With Big Implications for Health Care
AI Can Help Scientists Find a Covid-19 Vaccine
Apple launches three innovative studies in the new Research app

Phill White

Research Scientist Global X-Network
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How digital platforms are helping us manage through the coronavirus

In our past signal posts, we’ve highlighted many ways that digital platforms are growing and impacting our everyday lives. In this signal post, we’re highlighting how those same platforms have increased our resilience and ability to adapt to these extraordinary times of the novel coronavirus Covid-19 outbreak. Although our world is currently being turned upside down, in the age of the internet and the platform economy we have many options available.

Early detection and tracking

One of the key aspects to control a virus outbreak is to discover and track it as early as possible. Artificial Intelligence-based (AI) platforms are capable of seeing patterns in large volumes of data and raising early warning flags. China informed the World Health Organization (WHO) about the Covid-19 outbreak on January 9th. However, BlueDot’s AI-driven platform analysed foreign-language news, animal and plant disease networks, and official announcements and notified its customers of the outbreak on December 31st. Other AI platforms have been developed to predict outbreaks of viruses like Ebola and Dengue fever and suggest ways to contain the outbreaks quickly.

A fast-spreading virus with a long contagious period means people may be spreading the virus across a large network of contacts, who in turn unknowingly spread it to their networks. Several mobile phone-based contact tracking apps have been developed to help health authorities isolate an infected person’s network of contacts. Singapore’s TraceTogether app uses Bluetooth to allow a user to store identifiers from other mobile phones they’ve been in close proximity with. The data is encrypted and stored locally for 21 days. If a user becomes a suspected Covid-19 case, they can release their contact data to health authorities.

Dissemination of information and misinformation

Social media platforms and online news sites are common places where people look to find out what’s happening in their network of friends, their city and country, or the world. Trusted news outlets, governments, international agencies, and local businesses have used online platforms to communicate information quickly to many people. This “rapid and broad” communication has kept people informed about the spread of the virus, steps they can take to slow the spread, and where they can turn if they need assistance.

While they are sources for valuable information about Covid-19, they can also be a source of misinformation. In some cases, the 24/7 news cycle is constantly looking for headlines that will make people “click” and they emphasize sensational new content. This was also an issue in the era of non-digital news, but there is a risk that the never-ending online news cycle contributes to people’s sense of panic. Misinformation and “Fake News” can also be rapidly propagated through social media networks. People witness panic buying in Hong Kong or Australia and within 24 hours there is a global shortage of supplies like toilet paper!

Distant socialising, working and learning

In these days of “distancing” and “shelter in place” orders affecting about half of the world’s population, platforms are now essential for daily life. Physical distancing does not have to mean social distancing since social media and free video chat services allow people to maintain contact with friends and family. They also allow local groups to organize and provide support to the most vulnerable and at-risk people in their area.

With many people remaining in their homes as much as possible to help slow the spread of the virus, e-commerce platforms, as well as food and grocery delivery platforms, are invaluable lifelines. These platforms are also helping businesses generate some revenue while their “bricks and mortar” locations have been ordered to close.

With gyms, fitness classes, swimming pools, and tennis courts closed, people are turning to exercise platforms like Tonal, FightCamp, Mirror, Peloton, Fressi, and Elixia. They offer fitness routines or live-streamed fitness classes to keep healthy and fit while staying in your home. Usage of streaming audio, video and online multi-player games is surging. Some platforms have offered new services to help housebound people simulate familiar group activities like getting together to watch a movie. Netflix Party allows friends to get together virtually to watch the same show with an online chat stream scrolling beside the video so friends can interact with each other.

As companies were told to close their physical locations and workers were told to remain in their homes, many companies accelerated their rollout of cloud-based platforms and virtual workplace platforms like Slack, Microsoft Teams, and Zoom. While not every job can be done remotely, these platforms are allowing many companies to keep operating during these unprecedented times.

While e-learning platforms have been changing the way education is delivered over the past decade, change has been slow and eLearning tools have typically augmented traditional approaches to education at most schools rather than replacing them. With schools from kindergarten to university closed in many countries, e-learning is quickly becoming the primary means of education.

The race for treatment and prevention

While the treatment of the virus and the development of a vaccine require a lot of hands-on work, AI and crowd-sourcing platforms are supporting the effort. Because every country on the planet requires large amounts of masks, gloves and other personal protective equipment there are widespread shortages. Crowd-sourcing platforms are being used to organize donation drives from businesses and individuals to quickly gather much-needed supplies.

Maker platforms, like Thingiverse, are encouraging makers to “Hack The Pandemic” and come up with ideas to help manage during the crisis. NordicBaltic.Tech is a new platform created by the Nordic Council of Ministers and GovTech venture company PUBLIC to showcase organisations and entrepreneurs that are developing technology responses to COVID-19.

Crowdsourcing is also being used to support the development of treatments and vaccines. Individuals are donating their home computer’s idle time to platforms like Folding@Home so they can perform complex analysis on the proteins in the Covid-19 virus in the search for better treatment options.

The ability of AI to make sense of large amounts of data is being used in several ways. Researchers are using AI to analyse protein structures, develop 3D models, and look for areas of weakness so new treatments can be developed. The effort to fast-track the development of a vaccine is using AI to determine the best way to safely trigger an immune response and build immunity to future infection. Finally, AI is being used to sort through the thousands of Covid-19 research papers that have been published since January. The Covid-19 Open Research Dataset (CORD-19) has over 44,000 articles and papers in machine-readable format so natural language processing AI platforms can connect the dots between studies to suggest hypotheses and areas for future research that might otherwise have been missed.

What does the future look like?

The platform economy and digitalisation have been growing so rapidly and changed how we live our lives in fundamental ways that it’s easy to take it for granted. Imagine if the Covid-19 crisis happened only 25 years ago. In 1995, there were less than 50 million internet users in the world, Amazon was barely getting started, Google was still several years away, and smartphones and social media platforms like Facebook and Twitter were about 10 years away.

The impact of the Covid-19 crisis will be severe, but digital platforms have introduced enough resiliency into our economy that large portions of it are continuing to function.

Past Signals

Below is a selection of past signal posts that highlight digital platforms helping us deal with the Coronavirus pandemic:

Deep learning and neural networks (2016-11-30)
Platforms for education and learning (2017-12-08)
Food in the platform economy: Consumer apps, production chain management and visionary ideas (2018-06-07)
Tackling fake news and misinformation in platforms (2018-04-04)
Platforms for active transport, fitness and exercise (2019-06-11)

Selected articles and websites

An AI epidemiologist sent the first warnings of the Wuhan virus
AI joins the fight against diseases like coronavirus
Singapore says it will make its contact tracing tech freely available to developers
Online learning gets its moment due to COVID-19 pandemic
Can The U.S. Crowdsource Its Way Out Of A Mask Shortage?
Folding@Home – Coronavirus – What we’re doing and how you can help
AI can help scientists find a Covid-19 vaccine

Phill White

Research Scientist Global X-Network
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GDP and the platform economy

This signal post gives a short summary of a literature review on GDP and it’s usability as a measure in the increasingly digitalised economy. For more details, download the full report.

A measure for the manufacturing age

Gross Domestic Product was adopted in the 1940s, the age of manufacturing, to measure the strength of a country’s economy and it also became a proxy for well-being. It’s a measure of the monetary value of all goods and services produced by a country. A rapidly increasing portion of today’s economy is technology services, including platforms that offer “free/add-supported” products or act as international online intermediaries to facilitate the exchange of goods, services or information. By definition, the GDP doesn’t measure “free” products. In economic terms, the value a consumer gets from the “free”, and potentially higher quality products is measured by utility or consumer surplus, which is also not captured in GDP.

The slowing of GDP growth

While the GDP of most of the world’s economies has been increasing since its inception, the rate of GDP growth has slowed recently.  More importantly, the growth rates of GDP per capita and GDP per hour worked (labour productivity) have also slowed.  While the root cause of the slowdown in GDP growth has been debated for several decades, most economists agree that a portion of the slowdown is real and not solely an issue with capturing the growth of the platform and technology sector.  Structural issues like demographics as well as the fact that past innovations like the electric motor likely had a larger impact on productivity than recent innovations are all contributing factors.

The uniqueness of the platform economy and the technology sector

While the reasons above partially explain the slowdown in GDP growth, many agree there is a growing proportion of the economy that isn’t being captured as part of GDP.  There are a number of unique aspects of the platform economy and the technology sector that make it challenging to measure, manage, and ensure fair taxation. These include: ability to scale at low cost; “free/ad-supported” pricing models; borderless reach; blurred lines between consumers and producers; venture funding that encourages long-term market capitalisation over short-term profitability; digital services that replace physical products; and there’s a decreasing marginal contribution to GDP as the technology sector grows.

Uncaptured GDP

Given the unique aspects of the platform economy and the technology sector described above, it is possible that some aspects are having a negative influence on GDP growth while other aspects are having a positive influence that is difficult to capture using the current definition of GDP. The growth of the platform economy has been partially based on a culture of “free/low cost” products and services that provide utility and happiness to people beyond their economic value. This consumer surplus adds up to substantial uncaptured GDP.

This additional utility and happiness create a positive feedback loop that drives growth in the technology sector and the platform economy. As people seek to increase utility and happiness, they consume more in the platform economy which leads to its continued expansion as well as growth in uncaptured GDP.

Soft Innovation Resources

Understanding how to encourage the expansion of the platform economy may be key to increasing the rate of GDP growth. Watanabe, et al., postulate that countries (and companies) can increase their rate of growth by diverting a portion of their resources away from R&D and towards enabling Soft Innovation Resources (SIRs) as a complement to traditional R&D. These are soft resources that can be harnessed to drive innovation and growth at individual companies, which rolls up to growth at the country level.

Enablers of Soft Innovation Resources are listed below:

  • Supra-Functionality: People seek out products and services where they experience satisfaction beyond utilitarian functional needs. They desire social, cultural, aspirational, tribal, and emotional benefits.
  • Sleeping or Untapped Resources: These are existing resources that are under-utilized resulting in an unused capacity that may be spread sparsely and difficult to access without technology.
  • Trust: People’s level of trust in various aspects of their lives, society, and the economy can affect their participation and contribution to innovation and the creation of economic value.
  • Maximizing Gratification: Seeking gratification of needs is a key pillar of Maslow’s theories about motivation and human behaviour. As increasingly sophisticated needs are gratified, there is a desire to maintain and build upon the increased level of gratification.
  • Assimilation and Self-Propagation: Sustainable growth can be obtained when past innovations are assimilated into future innovations, effectively creating a self-propagating cycle of innovation.
  • Co-Evolution: The coupling of two or more items which then innovate and evolve along a common path.

The future of GDP measurement

Although the GDP measure has been revised over time, there is widespread recognition that more changes are needed if it’s to remain relevant as the digital economy grows. There is debate about how platforms and the digital economy are contributing to GDP and the amount of uncaptured GDP. For example, the US Bureau of Economic Analysis (BEA) concluded uncaptured GDP would increase the rate of GDP growth by less than 0.01% per year. On the other hand, Brynjolfsson, et al. developed a measure they call GDP-B and they concluded that the consumer surplus from Facebook alone would increase the rate of US GDP growth by 0.1% per year and platforms such as internet search, e-mail, and maps would contribute significantly more. And somewhere in between, an independent study commissioned by the UK government concluded that annual GDP growth is understated by 0.3% to 0.6%, largely due to the platform economy.

It’s clear there are wide-ranging opinions on the magnitude of uncaptured GDP. International organisations such as the OECD and World Economic Forum are also trying to bring clarity to the situation. Additionally, a number of measures are being developed such as the Human Development Index (United Nations) and the Better Life Index (OECD) with a focus on well-being to augment GDP.

Strategies for future growth

The slowdown in GDP growth is complicated and multi-faceted.  Perhaps some of the structural impediments to growth can’t be mitigated. Perhaps because digital platforms and their ecosystems function as highly efficient intermediaries that increase the flow of goods and services at substantially lower costs, we’re experiencing a temporary downward adjustment and growth will resume from a new baseline. As a result of this complexity, strategies to encourage future growth are challenging and diverse.

At the country level, the literature suggests strategies such as: developing economic measures to supplement GDP and better inform public policy in the digital age; create policies to increase skills training and corporate technology purchases to increase adoption of new technologies; develop policies to encourage experimentation in new technologies and business models; focus on improving the quality and lowering the cost of healthcare and education; increase immigration; enable Soft Innovation Resources; and refine international taxation and shipping practices to increase fairness in the shipping and taxation of digital goods and services.

At the company level, the literature suggests strategies such as: lagging firms should invest in skills training and increase the adoption of new technologies; leading firms should include the enablement of Soft Innovation Resources into their R&D and product development activities; and expand current products and services into platforms and expand platforms into platform ecosystems.

Selected articles and websites

The Economist – Measuring Economies – The trouble with GDP
Harvard Business Review – How Should We Measure the Digital Economy?
OECD – Are GDP and Productivity Measures Up to the Challenges of the Digital Economy?
Robert Gordon – Declining American Economic Growth Despite Ongoing Innovation
Watanabe, et al. – Measuring GDP in the digital economy: Increasing dependence on uncaptured GDP
Tou, et al. – Soft Innovation Resources: Enabler for Reversal in GDP Growth in the Digital Economy

Additional references

MIT – GDP-B: Accounting for the Value of New and Free Goods in the Digital Economy
British Government – Independent Review of UK Economic Statistics: Final Report (2016)
US Bureau of Economics Analysis – Valuing ‘Free’ Media in GDP: An Experimental Approach
Investopedia – Definition of consumer surplus
OECD – Measuring the Digital transformation
World Economic Forum – Welcome to the age of the platform nation
Forbes – Uber will lower GDP
United Nations – Human Development Index
OECD – Better Life Index
OECD – Unified Approach to taxation in the digital economy

Phill White

Research Scientist Global X-Network
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Gaming industry meets the platform economy

In this signal post we discuss the opportunities and threats in how the platform economy is changing the gaming industry. While digitalisation and the internet have already transformed the sector in many ways, technical and business models innovations are continuously giving new shape to the market. Legislative and regulatory approaches are also changing, with a strong need to address the risks and negative impacts involved. Consumer protection and money laundering are just two examples of the societally and economically important challenges in the core of gaming.

In simplified terms, gambling means wagering of money on an uncertain event and uncertain outcome, with the aim of winning more money. Gambling entails consideration and risk-taking as well as the promise of a prize. The word ‘gaming’ is typically, and in this signal post, used in reference to legal gambling, i.e. gambling services (not computer, video and mobile games, although connections to those will be discussed in the last paragraph) offered by companies in compliance with the law. These laws do, however, differ greatly between countries and regions, ranging from total bans to strategic gambling tourism as in Monaco or Macau.

Good (and not so good) use of platform strategies

Online gambling providers employ the same strategies found in other areas of the platform economy. Their systems are based on an eCommerce platform upon which various games and offerings are built. While many operate in a business to consumer (B2C) model, others also offer products and services in a business to business (B2B) model. By gathering feedback from their user base and testing new products and services, the online gambling providers create an ecosystem around their platform to drive innovation and build their customer base.

Providers that are licensed through countries with strict regulatory frameworks, such as in Europe and North America, are obligated to operate in a transparent and responsible manner. There are other countries with less robust regulations and in some cases, online gambling providers operating there use platform technologies such as blockchain, cryptocurrencies, and smart contracts to both build trust with their customers and to operate without complying with regulatory and tax laws.

European context

A recent study prepared for the European Commission paints a picture of the European regulatory landscape for online gambling. Taking into account the growing consumption of online gaming, the report addresses the many challenges that urgently require a stronger regulatory response, such as gambling addiction, protection of minors, consumer protection, integrity of sports, money laundering and crime. What makes regulating and enforcing regulations extremely complex in the online environment is that gambling services are offered across borders, often by virtual gambling facilities that may consist of layered eco-systems of service providers. Services are also available 24/7, their use is made extremely convenient, transactions take place immediately and the user may perceive the game experience as being anonymous.

The study emphasizes the importance of European level action. However, specific European Union (EU) level regulation is not suggested, which is in alignment with previous communications by the European Commission. National policies, and therefore national regulations, share a lot of objectives but have also major ideological differences. Harmonisation would, therefore, be a step too far at this point, but joint efforts in effective enforcement, for example, is in the interest of all parties.

The online gaming and betting operators established, licensed and regulated within the EU have organised themselves as the European Gaming and Betting Association (EGBA). The aim of EGBA is to ensure a safe and reliable European digital environment for online gaming by working together with national authorities, EU authorities as well as other stakeholders. The association is committed to a high level of consumer protection while developing regulated services with the goal to be attractive enough to channel users away from unregulated offers.

According to EGBA, the online gambling market in Europe has an annual growth of around 10% and the gross profits of the sector are expected to grow to €24.7 billion in 2020. Comparing online and land-based gambling, in 2017 the ratio between the two was 21:79. The top three most popular online offers are sports betting (40%), casino games (32%) and lotteries (13%). Interestingly, Europe is the leader, with the share of European services accounting for 49% of the global online gambling market in 2017. The international business opportunities for European gaming services is expected to grow further, especially in several US states where sports betting was recently legalised.

Case of Finland

In Finland, the gaming system is based on the exclusive right principle, and since the merger in 2017, all gambling games are being offered by one single operator Veikkaus Oy. The company is owned by the Finnish State, and the offering covers lucky games, slot machines, instant games and skill games, with one-third of its activity taking place online. Veikkaus has a strong obligation and commitment to operate games responsibly and mitigate risks, and the revenue generated is used for societal causes in its entirety. This means that roughly one billion euros per year is distributed, via the relevant ministries, to beneficiaries in culture, sports, science, youth work, etc.

Even with the long tradition and strong value basis, debates about Veikkaus and the Finnish gaming system in general get heated from time to time. For example, last autumn Veikkaus’ new strategy aimed to address the public discussions about whether the fact that revenues benefit the common good justifies the problems caused, and typically these problems are being borne by those in the weakest position. Building a safe and more responsible gaming environment is one of the big strategic goals of Veikkaus, and the decision to speed up the adoption of compulsory identification on slot machines is one practical step. This means that starting in January 2021 Veikkaus will introduce new technology that will better prevent underage gaming as well as enable players to set a ban on their own gaming.

When it comes to the digital and online world, Veikkaus is a pioneer in esports solutions, and it was among the first companies in the world to offer legal esports betting in 2014. Service development in the esports domain is continuous, and products, services and platforms around esports have been developed in collaboration with Veikkaus and others using a unique concept, the Innovation Challenge Week. The winner last year was German GameBuddy, with their innovation of a social community platform for gamers.

Interesting insights into the Finnish case are also found in the survey commissioned by Kasino Curt in 2019 that gathered citizens’ views on the monopoly, political decision making and negative impacts around gaming. One clear finding is that Finns are not fully content with the current mitigation actions to fix problem gaming: 27% of respondents said enough was done, whereas 44% disagreed. 58% went so far as to agree that gambling machines should be removed from everyday environments such as grocery stores, but 29% would not make such changes. A majority of respondents also thought Finland should break away from the monopoly and introduce a licensing system instead, totalling 40%, whereas 29% disagreed on this. The gaming market and industry implications of such a change would be significant. Public discussions comparing future alternatives are active, and the pros and cons of the licensing system option should be studied carefully in order to see if licensing could be a viable approach in the increasingly global gaming environment expressed in the platform economy.

Connections to computer, video and mobile games

Millennials and Generation Z have grown up in a digital world with easy access to computer, video and mobile games. They have a preference for entertainment where there is skill involved and there is the option to play against other players. Not only are online gambling providers catering to this preference, but physical casinos are starting to replace traditional slot machines with games that resemble video games in an effort to attract younger customers. Additionally, these younger generations grew up playing on multi-player game platforms like Fortnite, CS:GO, and Defence Of The Ancients (DOTA) and are now driving the demand for professional esports tournaments and esports betting.

The near-ubiquitous presence of tablets and mobile device platforms means young people have unprecedented access to mobile games. In many cases, these are simple entertainment.  However, there is a growing segment social casino games that are introducing young people to virtual gambling. Social casino games simulate typical card and table games but players wager virtual credits and no money changes hands. The games are often integrated into social media platforms and the outcomes are not always random. Instead, they are based on psychological theories that increase engagement and player satisfaction. In some cases, online gaming providers also produce social casino games and there is growing concern that the use of social casino games amongst young people is a “gateway” to money gambling in adulthood that may contribute to gambling addiction.

Selected articles and websites

Alison Drain: White Paper, The Converging of the Gaming and Gambling Ecosystems
Esportsearning: Top Games Awarding Prize Money
European Gaming and Betting Association (EGBA)
Hackernoon: What is the Future of Gambling Industry?
Hyoun S. Kim: Social Casino Games: Current Evidence and Future Directions
Kasino Curtin tilaama tutkimus osoittaa: suomalaiset eivät luota kansanedustajiin rahapeliasioissa
MintDice: How Cryptocurrency is Changing Online Gambling in Europe
NewsBTC: MECA Coin – Creating a Democratized Online Gambling Ecosystem on Blockchain
Publications Office of the European Union, 2018: Evaluation of regulatory tools for enforcing online gambling rules and channelling demand towards controlled offers
Veikkaus: German GameBuddy wins Veikkaus Innovation Challenge Week
Veikkaus: Responsibility for the individual in focus in Veikkaus’ new strategy – compulsory identification on slot machines brought forward by a year
Veikkaus: Veikkaus – a Finnish gaming company with a special mission
Veikkaus: Veikkaus to hold an Innovation Challenge Week to find startups and begin collaboration – focus on esports
Wikipedia: Gambling

Heidi Auvinen

Senior Scientist VTT Technical Research Centre of Finland Ltd

Phill White

Research Scientist Global X-Network
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Is cyber security next to be disrupted by digital platforms?

In this signal, we will examine the driving forces, pressures and trends of digitization in the platform economy that are affecting the security of governments, corporations, and individuals. As digitization becomes more pervasive, we are at the stage where we can no longer afford even a brief outage without significant consequences. IBM in a research study interviewed 500 companies around the world who had experienced a data breach between July 2018 and April 2019. The study reported that the total average cost of a  data breach totals to 3.92 M$ and that it takes as long as 279 days to identify and contain it.

At the same time as security threats are increasing, businesses are going through other digital transformations and expanding their digital ecosystems, shifting to cloud services and adding more devices to their networks (IoT, Internet of Things). All of these put tremendous pressure on IT infrastructure and required expertise of the staff. These challenges are discussed among different stakeholders in cyber security conferences like GCCS (Global Conference on CyberSpace) aiming to discuss the development of an international strategic cyber security framework. This is an indication of how complex and important an issue security has become and the need for international collaboration to aid in solving the problem.

Are there clear leaders leading the cyber security solutions?

Security has many aspects, such as physical security, identity management, authentication, access control, confidentiality, data integrity, and physical security to name a few. There is no one solution to meet all protection needs.

For example, take a look at Gartner’s August 2019 magic Quadrant for endpoint protection platforms, where companies are mapped in terms of completeness of their vision and their ability to execute. It seems that there is no particularly strong leader or challenger with a supreme ability to execute.

There is no one size fits all security product.  Companies must knit together their own solutions. The problem is also compounded by manufacturers and vendors reluctance to share data. Even more concerning is the fact that raw data related to parts of critical infrastructure may be in the hands of private industry (for example power generation and distribution facilities, water, and wastewater treatment plants, transportation systems, oil and gas pipelines, and telecommunications infrastructure). This may prevent  the countries national security teams from analyzing such data to aid in protecting this critical infrastructure and causing cyber blind spots.

Who owns cyber security in the enterprise?

Cyber security touches so many assets within an organization that it needs to definitely have  oversight by the companies board of directors. At the same time, IT management and chief security officers need to learn how to communicate risks to CEO’s and boards. Given what assets need protecting is different for each company, it becomes a risk conversation and often needs to also involve the legal department.

Can blockchain help to increase the security of platforms?

A core feature of blockchain technology is encryption and decentralized data storage which can provide increased security for cloud platform infrastructures. Blockchain is being explored in the cyber security space to assist companies to maintain data integrity and to manage digital identities. PWC’s 2018 Global Blockchain Survey showed that 84% of the 600 executives surveyed across 15 territories indicated they were actively looking at blockchain. Blockchain could be a promising solution for security, but it is not yet applied widely.

What role will AI play in preventing cyber security breaches?

AI tools are being used to identify attempted, successful and failed cybersecurity attacks, learn from these attacks and update algorithms to detect these types of attacks in the future. AI may be used in endpoint protection software and vulnerability management software solutions in the future. Examples of some companies working on these types of solutions are  IBM,  Cylance, and Darktrace.

Examples of Security Platforms

Security is an actively developing field. In Finland alone, we can identify 375 companies dealing with security. F-Secure is one of the leading companies offering cybersecurity and privacy detection and response solutions. Given Finland’s reputation of being reliable, they have an opportunity to offer trustworthy solutions to the world.

Although we mentioned about not having a one size fits all integrated security platform there are companies with platform business models addressing pieces of the problems. Anomali Threat Platform integrates seamlessly with many security and IT systems to operationalize threat intelligence and their Developer SDK allows organizations to build custom integrations as well. GRF (Global Resilience Federation) builds, develops and connects security information-sharing communities. GRF is a provider and hub for cyber, supply chain, physical and geopolitical threat intelligence exchange between information sharing and analysis centers (ISACs), organizations (ISAOs) and computer emergency readiness/response teams (CERTs) from many different sectors and regions around the world. ILOQ advances in physical security with self-powered digital locking and mobile access management solutions that are revolutionizing the locking industry. Security Now RiskSense Solution is a vulnerability management and cyber risk platform, which helps companies manage their cyber risks through their vulnerabilities.

Selected Articles and Additional Websites

IBM Security (2019): Cost of a Data Breach Report
Internet Society (2017) GCCS – Global Conference on Cyber Space
Gartner (2019) GCCS – Global Conference on Cyber Space
The Hill – Dave Weinstein (2019): Cyber Blind Spots
PWC (2018): Blockchain in Business
IBM: Artificial intelligence for a smarter kind of cybersecurity
Cylance. AI Driven Threat Protection
Darktrace. Cyber AI Platform
Security Informed. Security Companies in Finland
Anomali. Secure Platform for trusted collaboration
F-secure
Global Resilience Federation. Multi Sector Security
Ilog. Self-powereed digital locking system
Security Now (2018). RiskSense Platform Demonstration
Cyber Balance Sheet (2018) Report Sponsored by Focal Point Data Risk
Wedge Networks (2016) Orestrated threat management
Gartner (2019). Top 7 Security and Risk Trends for 2019
Gartner 2019). 5 security questions boards will definitely ask

Brenda Fox

Founder, CEO Global X-Network
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Insights to platforms from Silicon Valley

This signal post discusses the experiences gained by interviewing different platform experts in Silicon Valley and the San Francisco Bay Area, California, in April 2019.

What is different in Silicon Valley?

Silicon Valley and the Bay Area are known as the birthplace of many technological achievements and innovations, including the platform economy. The biggest platform companies – Facebook, Apple, Microsoft, Airbnb, Uber and Slack, for example – have their origins and headquarters in the region. There are clear reasons for this development: investment funds, expertise and networks are available all in the same place. It is possible to get the attention in the start-up phase, get funding and support and build networks to grow the company. The good reputation of Silicon Valley certainly also contributes to its importance.

Even though Silicon Valley is known for its B2C (business to consumer) platform giants, other types of platforms also flourish there. One could say that the innovation and business networks are also organized like platforms. For example, the start-up incubator SVAdvantage connects innovators and companies that need solutions. They also offer facilities to develop and test technologies. Suchlike B2B (business to business) platforms are not as well-known as the B2C platforms.

The other difference between Silicon Valley and Finland is the mindset. In the Bay Area, trust is born from success and from sharing it. This in turn creates a positive feedback loop resulting in even more success. It is pure business even though there is often an element of tribal – referring to fostering of loyalty between employer and employee – culture in technology companies too. In Finland, emotions – reflecting traditional responsibility culture – are important also in creating business. In the US, to set up a company with the intent to quickly sell it to a larger company interested in their technology versus grow the business themselves, is a popular strategy, whereas in Finland we may regard such exit strategies even as treachery or failure. The same difference appears in the attitude to going bankrupt: in Finland, it is a shame, but in the US, learning from ones failures can be viewed as a precondition for success and people are encouraged to try again. The cultural differences appear also in the attitude toward copying or emulating business ideas and strategies from others in the US, whereas it is not at all a popular ideology in Finland.

Security, privacy and ethics

Freedom is a distinctive feature in the US, and it applies especially to business. Data – the essence of a platform – is a free resource to be exploited. However, security is an important issue for a company as well as for the whole nation. One of the crucial preconditions for safety and security is situational awareness, which can be the essence of a security platform. The fast grown platform company Slack is a good example of a platform that has developed new security related solutions. They are using their own product in-house, “drinking the company Kool-Aid”, and pioneering in showing how Slack can be used in security.

The traditional physical security business, on the other hand, is heavy with old risk averse thinking and legacy. Culture change is needed, and platforms can offer a solution. The physical environment is being digitalized. For example, ID batches or keys are disappearing and replaced by biosensors and the need for human physical presence in a space for surveillance and monitoring purposes is being replaced by robots. Integrating security data on a platform, will allow for any situation to be shown, monitored and controlled on a single pane of glass. On the regulatory level, the role of government is to provide safety and security for the citizens participating in the platform economy.

Due to some local privacy and ethical cases (e.g. Facebook and Uber) and due to the developments in Europe, the privacy and ethics discussion has started also in US.

What next? Future of platform economy

The typical thinking of rapid and continuous growth seems to dominate the platforms economy discussion. New technologies enable capacity to integrate more and more functions and operations at lower cost and thereby advance integration. Platforms can also be integrators forming “platforms of platforms” or “meta platforms”. For example, traditional safety and security services may be disrupted by new platforms, which offer the situational awareness in the digital form on a single pane of glass.

The giant US based platforms have lately got negative publicity for privacy and ethical reasons. A new attitude in platform development seems to, however, be about to emerge, aiming to offer trust, ethics and empowerment.

References and links

Slack
SVAdvantage

Raija Koivisto

Principle Scientist VTT Technical Research Centre of Finland Ltd
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Components of trust in the platform economy: Ability, integrity and benevolence

Trust has always been a cornerstone to business success, and it has typically been developed through a personal contact with another person, organisation or brand. In this signal post we explore the importance of trust in the platform economy, where digitalisation provides a very different setting with new opportunities and threats. We use the well-established frame pieced together by Mayer et al. that views trust through its three components: ability, integrity and benevolence.

In the next sections we explain the three in the context of platforms and present some topical examples of trust problems and solutions. We focus on the viewpoint, where the user is the trustor and the platform is the trustee. However, it should be noted that these roles can also be studied in reverse, the user being the trustee and the platform the trustor. Furthermore, in platforms the trustor-trustee relationship is, additionally, often formed among two or more users or producers, or between users and producers.

Component 1: Ability

When we talk about trust, ability is the component which explains to what extent we believe that a platform embodies the competences needed to perform its tasks. Ability covers, for example, the technological skills and solutions to deliver the core service as well as preparedness regarding privacy, safety, data protection, etc.

Example: Review and rating systems are a well-established way in the platform economy to check the trustworthiness of platforms as well as their users and producers. Quality of services of all and any parties on supply or demand side can be evaluated, and reports of top performance and misbehaviour spread fast. Of course, even rating systems can be abused, but in practice they have proven very efficient.

Example: Blockchain has been envisioned to improve trust in terms of providing technological means to, for example, validate data integrity. In fact, it can be employed to promote the three factors of digital trust: security, identifiability and traceability.

Example: An important lesson the big platform giants have learnt is that when cyber-attacks happen, it is important to be open about it and inform the users of what happened and how the problem will be fixed. Preventive measures are naturally the top priority, but the user also needs to be able to trust a platform’s ability to react when hackers succeed.

Component 2: Integrity

Using integrity or honesty we assess whether a platform adheres to acceptable principles and keeps the promises it makes. The starting point for integrity is compliance with laws and transparent consistency in following service promises, delivery times, pricing, etc. Extended further, integrity measures how the values of the trustor and trustee (the user and the platform) meet.

Example: Trust can be compromised, when platforms (such as social media companies) collect and sell user data or allow fake news and fake identities in their systems. Even if such activities are legal, the essence of the issue is whether the platform is transparent and informs its users of what goes on and whether it takes an active or passive role in fixing possible problems.

Example: Trust and transparency can be fostered in platforms by engaging the user in the supply chain or sourcing process. For example, it is possible for the user in some platforms to follow their order in real-time and even take part in the decision-making (ingredients used, packaging materials, delivery times, etc.). Again, blockchain technology can be useful in these applications.

Component 3: Benevolence

Benevolence captures the intentions and motivations of a platform and whether these go beyond egocentric profit making. This component of trust blossoms when the user feels appreciated in a win-win relationship, where the value is created and distributed in a fair manner. Benevolence is all about caring, and it is the foundation for customer loyalty.

Example: A pattern we have seen with some of the current platform giants is how they grow from benevolent to predatory. At first such platforms emerge with a low-cost high-value offering, but trust may be compromised as personalised services become a trap, user policies and pricing are changed and the profit-seeking monopoly tightens its grip on both the producers and users.

Selected articles and websites

Afshar Vala, HuffPost Contributor platform: Blockchain: Every Company is at Risk of Being Disrupted by a Trusted Version of Itself.
Baldi Stefan, Munich Business School: Regulation in the Platform Economy: Do We Need a Third Path?
Frier Sarah, Bloomberg: Facebook Says Hackers Stole Detailed Personal Data From 14 Million People.
IBM: IBM Food Trust: trust and transparency in our food.
Kellogg Insight (The Trust Project): Cultivating Trust Is Critical—and Surprisingly Complex.
Mattila, Juri & Seppälä, Timo (7.1.2016). Digital Trust, Platforms, and Policy. ETLA Brief No 42.
Mayer, R., Davis, J., & Schoorman, F. (1995). An Integrative Model of Organizational Trust. The Academy of Management Review, 20(3), 709-734.
Möhlmann Mareike and Geissinger Andrea (2018). Trust in the Sharing Economy: Platform-Mediated Peer Trust. In book: The Cambridge Handbook on Law and Regulation of the Sharing Economy.
Murray Iain: The Platform Economy Can Change the World.
Sangeet Paul Choudary, INSEAD Knowledge: The Dangers of Platform Monopolies.
Sitel Group: No Trust, No Business: Hub Forum 2018 Makes the Future of Commerce Clear.
The Conversation: Social media companies should ditch clickbait, and compete over trustworthiness.

Heidi Auvinen

Senior Scientist VTT Technical Research Centre of Finland Ltd
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Platforms are the new reality in transport

The transport and mobility sector is one area of the economy already benefitting in a big way from platform innovations. Megatrends of digitalization and servitization are having a major impact on transport systems around the world, and as a result the transport sector already functions, to a great extent, according to the principles of the platform economy. For example, we see app-based innovations in ride-sourcing (e.g. Uber) and in mobility as a service (MaaS) packaging (e.g. Whim).  The pioneering platform companies in transport are becoming mainstream alternatives to traditional models that typically involve car ownership. User interest in access-focussed platform services such as these is growing. To support these developments, and to manage unintended negative impacts, new regulations have also been introduced (e.g. the Finnish Act on Transport Services).

The platform economy meets the current transport discourse

In recent years, the transport sector has eagerly adopted the terminology, business models and ecosystem approaches that characterize the platform economy. This is not only seen in entrepreneurial initiatives and business innovations but also in the public sector sphere. Decision-makers and policy planners have acknowledged the great potential of platforms to promote more sustainable mobility in terms of accessibility, flexibility, affordability, environmental performance, etc. Steering measures and regulations can help platform-based transport and mobility market grow in a sustainable manner, i.e. building on public transport services and with preference to environmentally and socially sound solutions.

In the current transport discourse, the term platform economy is already well established. Service providers identify themselves as platform owners, and politicians alike have grasped the opportunities involved with platform-based value creation (see, e.g. Anne Berner, the Minister of Transport and Communications of Finland). It has even been suggested, that the platform economy is the currently reigning ideology in transport policy.

Recent and expected developments in the field

Recent examples of new platform-based transport services in Finland can be found under Traffic Lab, an initiative by Finnish Transport Safety Agency that brings together innovators to collaborate, share and learn.  These and many others were presented at the Transport and Infrastructure 2018 seminar this autumn.

In turn, the public sector ambitions to incorporate digitalization and servitization into the transport sector were recently highlighted in the scenarios for carbon-free transport by 2045. From the follow-up work on these scenarios, we expect to see concrete action plans that embrace the full business and societal potential of platform innovations.

Selected articles and websites

Anne Berner, Minister of Transport and Communications of Finland: Alustatalous liikuttaa myös Suomea, Impulssi-blogi
Anne Berner, Minister of Transport and Communications of Finland: Opening markets in the digital era, New Europe
Carbon-free transport by 2045 – Paths to an emission-free future. Interim report by the Transport Climate Policy working group
Heikki Metsäranta: Ideologiat liikennepolitiikassa, Tie & Liikenne 4, 2018
The Ministry of Transport and Communications: Act on Transport Services
Traffic Lab website, Finnish Transport Safety Agency
Väylät & Liikenne 2018 esitelmät (Transport and Infrastructure 2018 Seminar proceeding summaries)

Heidi Auvinen

Senior Scientist VTT Technical Research Centre of Finland Ltd
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Turning common pessimistic beliefs of platforms into positive narratives

In this signal post we tackle four commonly stated beliefs that suggest the platform economy is but a game of global giants and Finland has very little chance to benefit or take part. These critical messages heard over and over again are: 

  • “We cannot compete with giants.” 
  • “It is already too late.” 
  • “Finland is too small.” 
  • “The US or China is going to take it all.” 

While all the above four statements are valid concerns, we will explore them one by one with the aim to extend the discussion from pessimistic caution towards narratives of encouragement. In fact, we’d rather suggest using these statements to challenge practitioners to think of ways to get involved in the value creation networks that indeed are characterised by giant platform companies steering fast-paced developments in a global context. Positive messages have also been emphasised in the national strategy work and ministerial future reviews. Our recommendations for surviving and excelling in this game include the following:  

  1. Join and contribute in an ecosystem. 
  2. Use your unique strengths and find your niche. 
  3. Think digital and global but do not forget about tangible and local. 

“We cannot compete with giants” 

When looking at the successful platform giants, such as AmazonAlibabaSpotifyYouTubeBaiduAppleUber or Airbnb, you may wonder whether there is any room for new entrants. These giants have grown relatively fast and assumed leading or even monopolistic standing in regional and global markets. They are not only dominating the digitally powered business but often disrupting the traditional trade and industries too. 

The point is, however, not to pick a fight and compete with one of these forerunner giants enjoying their monopoly position. Although you could do that too, if you come up with a more efficient, attractive or innovative service than what they offer. In fact, the monopoly status of many of these platforms could start to crumble as soon as strong new competitors with fresh ideas get their act together. An alternative newcomer strategy would be to explore interconnected business openings complementary to those of the giants. After all, the platform economy is the perfect environment to make use of business models based on multi-stakeholder value networks and ecosystems, layered services and synergetic alliances. 

One should also acknowledge the longer-term fluctuations in economic success. Even giants fall, and monopolies may need to make room for a more diverse market situation. Social media platforms are a good example of an “industry”, where we have already seen pioneers and former market leaders such as MySpace and IRC-Galleria to lose their standing to a multitude of new, specialised platforms for private, professional and other purposes. 

“It is already too late” 

Again, if focusing on the incumbent giants, one might think it’s all been done already, and that it is too late to start from scratch. But the fact is that many business sectors are only beginning to warm up to the idea of the platform economy. Futures enabled by digitalisation remain in many business areas just visionary talk, as companies and other practitioners still rely on traditional business models, pipe-like supply chains and one-sided market logics. Innovative thinking and openness to apply the principles of the platform economy will provide countless new business opportunities in sectors like real estate, construction, waste management, manufacturing and agriculture.  

New opportunities are also to be discovered with applying emerging technologies, such as artificial intelligence, blockchain, robotics and virtual reality. It is definitely not too late to contribute to the development of these technologies and the yet undiscovered potential they have when applied into digital platforms. New services, business models and delivery channels in sight! 

“Finland is too small” 

As a small, remote country it is easy to think we cannot make a big difference in the global game. Our domestic market is not big enough and we are but a population of some five million. The platform economy, however, is the perfect arena for even a small actor to grow and achieve international success. The European Single Market is our extended home ground, and there are no barriers that couldn’t be overcome in terms of global growth either. And again, platform strategies are all about alliances and partnerships, and the Finnish can surely find their niche as a part of these platform ecosystems. 

The high level of education, expertise and skills in Finland is an important asset in the platform economy. ICT skills, databanks as well as knowledgeable citizens are a key resource in developing platforms as well as in introducing them in the consumer market. The compact domestic market can also be taken as an advantage, if used as a test-bed and proof-of-case to explore and market forerunner services. Well-connected stakeholder ecosystems can collaborate on domestic applications and then expand internationally, as we have seen with the example of mobility as a service business. 

“The US or China is going to take it all” 

The US and Chinese platform ecosystems are undoubtedly dominating the platform business for now, and for the time being Europe is largely dependent on the US-driven ecosystem. Finland and Europe among other countries and regions can nevertheless contribute to the development of these agglomerates. For example, it has been suggested that European public values could be employed to bring important value-centric platform policies into the big picture. The EU General Data Protection Regulation (GDPR) is already one major step forward, and besides privacy, values such as accountability, fairness and democratic control could be similarly promoted. The European strength in the traditional markets to balance power relationships and support stakeholder collaboration among (1) the market, (2) state and (3) civil society makes a strong case in the platform economy too. It could indeed provide a more acceptable alternative to the current focus of the US ecosystem on the market or that of the Chinese ecosystem on the state. 

Another counter-argument to the dominance of the US, China or any other superpower is that even if the platform economy strives on digital solutions on the global level, many practical applications have roots in the tangible, physical world too. These types of local aspects are manifested in e.g. services and products being produced and consumed, which means business opportunities can be found both near and far. 

Selected articles and websites 

Valtioneuvoston kanslia, Työ- ja elinkeinoministeriö, Innovaatiorahoituskeskus Tekes: Digitaalisen alustatalouden tiekartasto 
Finnish Government, Ministry of Economic Affairs and Employment: From transformation to new growth, Futures Review of the Ministry of Economic Affairs and Employment 
Ailisto, et al. 2016: Onko Suomi jäämässä alustatalouden junasta? Valtioneuvoston selvitys- ja tutkimustoiminnan julkaisusarja 19/2016 
van Dijck (2018): European public values in a global online society, Keynote at the workshop: “Platform Economy: Innovation, Entrepreneurship and Public Policy Perspectives”  

Heidi Auvinen

Senior Scientist VTT Technical Research Centre of Finland Ltd
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