On 20 December 2017, the European Court of Justice (ECJ) ruled that Uber is a transport company (ECJ, Guardian, Verdict). This verdict has far-reaching consequences for similar companies like AirBnB, Amazon, eBay, Facebook and Google. These companies usually claim to provide nothing more than an IT platform while competing with businesses in the real economy.
Other examples of unfair competition are Amazon and eBay. Forbes, 22 November 2017: “It has been well documented that American e-commerce platforms such as Amazon and eBay have become cesspools of counterfeits and other illegal and potentially dangerous goods that are mostly coming in from China, but, impervious to the apparent irony, Beijing is upping the regulations on foreign e-commerce merchants selling goods the other way.”
Facebook claims that it’s an IT platform company rather than a media company. It denies any responsibility for the articles – or (Russian) advertisements – on its platform. Obviously, laws and regulations for IT platforms are much less strict than for media companies. The ECJ verdict will be welcomed by several European countries which are holding Facebook responsible and liable for its content, lack of data protection, and/or lack of privacy (eg, Guardian, NYT, Reuters).
The Apple App Store and the Google Play Store are further examples of IT platforms and 3rd party (app) suppliers. At times, the distinction between content and platform becomes opaque whenever certain content is banned from competing app stores, like Amazon, Apple or Google (eg, Bloomberg, BI). The reasons for banning are sometimes controversial (eg, CheatSheet, TechArrival, Telegraph).
The platform economy makes (perfect) sense, in and of itself (eg, HBR, Issues, WEF). It’s an internet based copy of markets in the real economy. However, supply and demand are global rather than local because internet hardly has any of the restrictions of the Space and Time dimensions. Often the internet creates a dominant global market player which either becomes a monopoly or part of an oligopoly. Other players can join – at a hefty (eg, 30%) commission.
The use of a dominant global IT platform and local vendors also makes (perfect) sense (eg, AirBnB, Facebook Marketplace, Uber). If and when these local vendors do not (need to) comply with local rules and regulations, their competition becomes unfair to local vendors who must comply (eg, hotels, taxis). The ECJ verdict will help to create a level playing field.
Banks also have a keen interest to join the platform economy (eg, ING-2017). Small and/or boutique fintech suppliers may wish to use a banking platform to have a wider audience for their services. Third parties may, however, create substantial reputation risk (eg, scamming).
In the simplest of words, the ECJ verdict is similar to the so-called Duck test: “If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.” It’s increasingly unlikely that the platform economy will become a high-flying ruddy shelduck.
Disco Duck (1976) by Rick Dees and His Cast of Idiots
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