The term “online platform” has been used to describe a range of services available on the Internet including marketplaces, search engines, social media, creative content outlets, app stores, communications services, payment systems, services comprising the so-called “collaborative” or “gig” economy, and much more. Example: Amazon, flipkart etc.
How did the Platforms on the internet begin?
- Platforms are technology layers that leverage the internet to bring together producers, resellers and consumers.
- Platforms reduce transaction costs by cutting out intermediaries.
- Amazon started by selling books but became a profitable giant by creating the e-commerce platform called Amazon Marketplace.
- The most valuable companies today are platforms for search, social interaction, advertising, insurance, travel, real estate, etc.
Issues with the platforms
- The promise of the internet was disintermediation, but the process has hit a speed breaker with major platforms taking on the role of mediation.
- There may be multiple platforms in the game to start with, but due to network effects and the non-portability/lock-in, only a few monopolies space.
- Big platforms have tried to create a sort of cartel in which to trap the customers while fencing off the rest of the internet.
- The platforms amass data about users which is used to influence user behaviour, which is not limited to guiding the buying decisions.
UPI model as a solution:
- Unified Payment Interface (UPI) is a set of protocols that standardises the language of money transfer.
- It is an interface: a simple and structured protocol for instructions and a clearinghouse that relays well-formed requests to concerned parties for execution.
- Once the language is there, a user may choose any app to link their bank account to a UPI ID and make a pay or collect request involving any other bank account.
- UPI handled 1.3 billion transactions in June 2020, overtaking the aggregate number of transactions of all legacy “platforms”.
- UPI succeeded because it treated all players, big or small, equally.
- This allowed third-party innovators to drive adoption by creating solutions that addressed the need of the people.
Lessons from UPI for APIs:
- Application Programming Interfaces (or API) are protocols that define the meaning of data exchanged between two computers.
- Universally accepted API definitions could allow a cabbie to be discovered by any cab aggregator app the rider may choose.
- In healthcare, it could facilitate finding a doctor, booking an ambulance, taking out insurance, filing a claim, sharing a medical report or purchasing medicines from a pharmacy.
Advantages of open protocols
- Open protocols create ecosystems that are non-rivalrous and non-excludable by design.
- Even the smallest of application developers or start-ups can offer low-cost, locally relevant solutions using the protocol.
- We can address the needs of the diverse business community and achieve much greater penetration for e-commerce than the 10 percent of today.
- Open systems have the potential to transform education, food delivery, by enabling entrepreneurs to compete on their quality and reputation alone.
- Portability from one application to another, privacy and data empowerment will be some of the issues taken care of.
- We can reduce our dependence on foreign platforms