Assignment:
A1: Individual Assignment
Student:
Jonathan Steyn
Course :
Global Business Strategy - STR-5437 - DEM2B
Professor:
Dr. Yusaf H. Akbar
Date:
2 January 2025
Discussion:
The Pros and Cons of Platform Business Models for Society
1.
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Student ID:
Campus:
40197414
Dubai
Introduction
Pros of Platform Business Models within Society
Cons of Platform Business Models for Society
Balancing the Pros and Cons
Conclusion
References
Word count: 2200 (Excluding above and references)
Introduction
Platform business models have revolutionized entire sectors of business, transformed
society and the way it seeks out services, products and information (5 Benefits of Platform
Business Models | HBS Online, 2024). They connect both suppliers and consumers through
a shared ecosystem.
Examples of these platforms in the UAE are Careem, CAFU, and Tabby, while global
companies such as Amazon, eBay, and Facebook also serve as great examples (Ruchi
Codeflash, 2024; Press Release, 2024b; Asghar, 2024).
Below we will explore the pros & cons of these platform business models:
Pros of Platform Business Models within Society
1.
Increased Efficiency and Resource Utilization
The ability of platforms to match supply and demand dynamically, allows for
enhanced efficiency and optimized resource allocation, reducing waste of
materials and time.
Example: A comparison study between Uber drivers and regular taxis in urban
areas shows that Uber drivers carry 30% more passengers per mile than regular
taxis and have a 50% increase in utilized mileage. This shows us that higher
productivity is achieved, improved resource utilization and reduced waiting times
for consumers (Uber Is 50% More Productive Than Taxis, 2016).
2.
Global Markets Access
Businesses are now able to gain further reach, eliminating historical geographical
limitations. This global reach enhances benefits not only for businesses in terms
of economic equality but also for consumers who now have access to a wider
range of services.
Example: Since 2010, Fiverr has grown into a global marketplace for small
business services, disrupting the Value Chain by connecting freelancers’ services
directly to customers in over 700 categories and in over 160 countries globally
(How Fiverr’s Adaptability Powered Its Transformation Into a Global Marketplace,
2024).
3.
Job Creation and Economic Opportunities
Individuals are now able to monetize their skills and assets through these
platforms, supporting creation of a gig economy thereby creating additional and
flexible job opportunities, contributing to societal income.
Example: With Airbnb, Owners can rent out their properties on a flexible basis, to
travellers and monetizing their unused space while they are not home. Airbnb has
generated over $85 Billion in the past two decades, contributing significantly to
society (Shah, 2024).
4.
Convenience and Consumer Choice
By standardizing views, options, payment gateways these platforms are
simplifying the transactions for the consumers, leading to increased sales and
ease of use.
Example: With Booking.com, users enjoy the ability to review multiple hotel
options in one search, selecting the language, budget or location. Additionally,
users have multiple payment options through a single trusted intermediary,
reducing risks associated with paying on unknown websites. Airbnb is a one stop
solution for consumers, changing the way we make hotel bookings. (Patel, 2024).
5.
Innovation and Entrepreneurship
Platforms encourage entrepreneurship and creativity, with a device and limited
funding users can open a business and operate online reaching a global
audience. These platforms provide scalability through larger market access,
analytics and marketing ability which is essential for business.
Example: Sarah Ashcroft (Instagram/@sarahhashcroft) started a fashion blog
called “That Pommie Girl” back in 2013 with an initial income of £1500 when she
was 18 years old. Platforms like Instagram according to a Resource based view,
leverage intangible resources like algorithms and user data enabling businesses
to scale globally, growing her business into a multimillion-pound firm (Stringer,
2024).
6.
Environmental Benefits
The platforms utilize shared framework and have efficient use of assets or
materials which ultimately minimizes the impact on the environment.
Example: Careem bike Creates Shared Value, where users can book up to 1,800
rented bicycles through an application, resulting in eco-friendly commuting and a
reduction in gas emissions across Dubai. This aligns with the UN SDG goals, and
help larger cities achieve their specific carbon emissions goals (7 Million Shared
Bicycle Rides Reduce Carbon Emissions in Dubai, 2024).
Cons of Platform Business Models for Society
1.
Labor Exploitation and Precarious Work
Due to the flexible, low cost and informal nature of the gig economy,
inconsistencies exist regarding the working benefits, conditions and ambiguity
around the laws due to workforces over various countries.
Kessler (2018) shows us that gig services often have reduced protection, not
benefiting from minimum wage, or healthcare leaving workers vulnerable to be
exploited. This is exacerbated due to the nature of the online platforms, which
bypass local employment measures and controls.
Example: Uber has faced widespread critique and regulatory push back for
working conditions of their “contracted" drivers, often working overtime to earn
additional income but may lack adequate rest, creating safety concerns for both
drivers and riders. Drivers lack healthcare benefits due to their contractor status;
Uber exploit these gaps and other law variations between the countries. One
must wonder whether the flexibility of work, outweighs the social costs of this
enterprise (Chen, 2024; Helling, 2024).
2.
Market Concentration and Monopolistic Practices
Porter’s Five Forces framework shows us how larger platforms use network
effects to maintain dominance, reducing buying power by removing alternatives
and making it increasingly difficult for new entrants to the market.
Khan (2017) calls this principle the “Amazon antitrust Paradox” where these
platforms use their positions as marketplace and competition to sell their own
products, suppressing smaller vendors and ensuring their continued dominance.
Unfortunately, this also stifles innovation as smaller players battle to survive while
the global giants control the market.
Example: Amazon dominates the e-commerce space and has been under
scrutiny around its monopolistic practices, as well as punishing sellers using its
platform for selling below the price listed on Amazon, indirectly keeping all sales
on their platform. The Federal Trade Commission (FTC) is currently suing
Amazon on several monopolistic practices, as ultimately monopolistic practices
can stifle innovation and reduce consumer choice (Coconnor, 2024; FTC Sues
Amazon for Illegally Maintaining Monopoly Power, 2023).
3.
Data Privacy and Security Concerns
Large platforms gather huge amounts of user data, raising privacy concerns on
how user data is being used and their cybersecurity.
Example: Google has also been found guilty of tracking their users’ locations
without consent, even after users disabled location history on their devices. This
raised significant concerns about user privacy, consent and how this information
is being used. Google in 2019 generated approximately $120 billion in revenue
from targeted advertising, however in this scenario it bordered on the verge of
surveillance.
While Google has implemented other privacy features, around 80% of Google’s
income relies on its ability to sell targeted advertising space. This practice erodes
trust for the brand, raises ethical dilemmas around data usage and can lead to
societal concerns such as loss of autonomy at the extreme. To address these
challenges, the EU’s General Data Protection Regulation (GDPR) have been
introduced to protect users (Townsend, 2022).
4.
Disruption of Traditional Industries
Platform business models often disrupt well established industries, causing
location closures and job losses.
Example: Netflix and Blockbuster, when the latest movies became accessible
through online streaming, as opposed to renting physical cassettes or DVDs from
Blockbuster locations. In 2004, Blockbusters peaked at 9,100 stores and by
2019, all but one Blockbuster store had closed with 84,300 people losing their
jobs over the period. Blockbuster had multiple opportunities to sell, partner or
evolve but failed to adapt to new technologies (Lessons From the Rise of Netflix
and the Fall of Blockbuster, 2024; Olito & Bitter, 2023).
5.
Algorithmic Bias and Inequality
Bias and inequality can spread through algorithms that are driving the platforms,
which can then lead to discriminatory practices.
Example: The National Institute of Standards and Technology (NIST) identified
that more errors are exhibited for Asian and African American faces than for
Caucasian faces. Additionally, Men face fewer identification errors than women,
leading to unequal treatment which could spill over to areas such as law
enforcement, hiring or access to services, specifically in a world moving towards
AI technologies. In the long term, Algorithmic systems could perpetuate
significant biases, posing societal risks and even lead to reinforcing systematic
inequalities (Boutin, 2020; Workday Must Face Novel Bias Lawsuit Over AI
Screening Software, 2024).
6.
Misinformation and Content Moderation
Spreading damaging or untrue content is a significant concern for social media
platforms, caused by the sheer volume of information and posts to review.
Misinformation spreads easily throughout the society unsettling the public,
especially in cases of concern or fear mongering.
Gillespie (2018) says that platforms also face a dilemma in balancing moderation
of content versus freedom of speech. Tools such as X’s Community Notes are
moving in the right direction, however, platforms need to refine their approach to
meet both regulatory requirements and users’ needs.
Example: A report led by a non-profit group, Center for Countering Digital Hate,
found that false news or misleading claims have led to over 2 billion views on the
platform formerly known as Twitter platform in 2024 alone (Musk and X Are
Epicenter of US Election Misinformation, Experts Say, 2024).
Balancing the Pros and Cons
1. Regulatory Interventions
Government and regulatory bodies play important roles ensuring workers’ rights
are upkept, fair competition is maintained to ensure innovation, as well as
protecting the data privacy of society.
Example: The EU’s Digital Services Act in effect from February 2024, aims to
create a safer digital space for users by setting clear responsibilities for the online
platforms protecting the rights of the users. This includes swift action against
illegal content, goods, services and fosters transparency and accountability
(Europe Fit for the Digital Age: New Online Rules for Platforms, n.d.).
Recommendations: While there is a pressing need for the introduction of
regulations to platforms operating globally, the task of implementation is large
and regulating authorities should craft the laws carefully. The Dynamic
Capabilities framework is important in this case for Meta and Uber’s compliance
with regulatory changes, helping them remain agile in a changing environment.
2. Promoting Fair Labor Practices
Having more regulation for gig economy workers is essential to prevent the
exploitation of contracted workers. This will ensure fair compensation while
protecting the health and well-being of workers and the broader society. While
this would increase costs for low-cost platform models, it is required to manage
the wellbeing of society.
Example: A supreme court in the UK ruled that Uber drivers are treated as
employees, meaning that thousands of Uber drivers are entitled to minimum
wage, which manages exploitation of labour services by local society.
This creates additional costs for global giants however it will maintain a minimum
standard of income and ethical standards for the local labour force to live, as well
as support the local community in the long term (Russon, 2021).
Recommendations: Creating a mixed approach where “employees” are given the
choice of additional benefits in exchange for a change in their personal profit
rates is an option. They would essentially choose whether to be an employee
with benefits or contractor.
3. Fostering Competition and Innovation
Establishing policies preventing monopolistic behaviour while stimulating market
competition will ensure competitiveness and allow new entrants to the market. It
may still be difficult in a world with global technology giants, however the added
competition would stimulate additional growth and innovation for the tech market.
Example: An ongoing lawsuit between the Federal Trade Commission (FTC)
against Meta, alleges that Meta has acquired potential competitors, such as
WhatsApp (2014), Instagram (2012) to maintain its monopoly in social media
marketing. The FTC is requiring that Meta divest these acquisitions. (Facebook,
Inc., FTC V., 2024)
Recommendations: Mergers and Acquisitions are often used by larger platforms
to grow market share, however breaking up these companies may impact those
users who are benefitting from economies of scale, and reduced complexity as
they are dealing with one online vendor. Integrating the new company within the
existing ecosystem of the larger companies would foster innovation without
monopolistic controls, ensuring the continued progress of the sector.
4. Improving Transparency and Accountability
Transparency of data usage of users, how algorithms are being used and user
access to content moderation tools is sorely needed and several platforms are
introducing methods of creating transparency.
Example: X (formerly Twitter) has begun submitting bi-annual transparency
reports to governments, detailing the platform’s interventions, and how it uses the
data.
Content moderation tools and Ad transparency centre have been added to their
platform, empowering both users and regulators to manage the content posted.
These fast-checking methods help users modify their users posts and content, as
well as report the actions taken to the governing body. Ensuring alignment with
combatting misinformation and that the platforms are making the necessary
efforts to manage the content. (Community Notes, n.d.; Data Protection, n.d.).
Recommendations: Platforms can work towards more visual opt-in selections,
while these are available in many platforms they are not easy to find. Perhaps
introducing in app benefits program for opt-in would be a better solution without
pushback from authorities and users.
Conclusion
Since the rise of e-bay in 1994, platforms models have revolutionized e-commerce and
society by delivering efficient, low-cost services and entrepreneurial opportunities.
There are certainly challenges of labour exploitation, data privacy concerns and monopolistic
practices. We need to find a balanced approach to oversee platforms in terms of ethics and
relationships while allowing them to expand.
By carefully crafting the global policies like the EU’s Digital Services Act, we can create an
safe environment for users and vendors, while allows the platforms to continue flourishing
while managing negative impacts.
References:
1. Introduction
5 Benefits of Platform Business Models | HBS Online. (2024, May 30). Business Insights
Blog. https://online.hbs.edu/blog/post/platform-business
Ruchi_Codeflash. (2024, October 16). How Careem’s Business Model Drives Growth in the
Middle East. Codeflash Infotech. https://codeflashinfotech.com/how-careems-businessmodel-drives-growth-in-the-middle-east/
Press Release. (2024b, December 19). CAFU introduces priority fuel delivery service: 20
minutes or less. ACE Times. https://www.zawya.com/en/press-release/companiesnews/cafu-introduces-priority-fuel-delivery-service-20-minutes-or-less-bz0br9ik
Asghar, A. (2024, December 6). Tabby UAE: A Comprehensive Guide To The Tabby App Digital Gravity. Digital Gravity. https://www.digitalgravity.ae/blog/tabby-uae-comprehensiveguide-to-tabby-app/
2. Pros of Platform Business Models within Society
Uber Is 50% More Productive than Taxis. (2016, March 17). Foundation for Economic
Education. https://fee.org/articles/uber-is-50-more-efficient-than-taxis/
How Fiverr’s Adaptability Powered Its Transformation into a Global Marketplace. (2024,
September 10). Designrush. https://www.designrush.com/news/fiverrs-adaptability-poweredtransformation-global-marketplace
Shah, S. (2024, May 30). Airbnb. TIME. https://time.com/6979938/airbnb-marketplace
Patel, N. (2024, August 5). The head of Booking and Priceline wants you to yell at AI
chatbots, not humans. The Verge. https://www.theverge.com/24212137/booking-ceo-glennfogel-priceline-kayak-travel-ai-chatbots-decoder-podcast-interview
Stringer, O. (2024, May 30). I turned my teenage blog into a multimillion pound brand – I
never went to uni or worked a ‘proper job’. . . The Irish Sun.
https://www.thesun.ie/fabulous/13066716/sarah-ashcroft-sla-influencer-instagram-blog
7 million shared bicycle rides reduce carbon emissions in Dubai. (2024, October 29). Gulf
News. Retrieved October 29, 2024, from https://gulfnews.com/uae/transport/7-millionshared-bicycle-rides-reduce-carbon-emissions-in-dubai-1.104516999
3. Cons of Platform Business Models for Society
Chen, A. (2024, September 5). Employee or Independent Contractor? A Legal Analysis of
Uber’s Worker Misclassification — Columbia Undergraduate Law Review. Columbia
Undergraduate Law Review. https://www.culawreview.org/current-events-2/employee-orindependent-contractor-a-legal-analysis-of-ubers-worker-misclassification
Helling, B. (2024, February 21). Are Uber Drivers Independent Contractors or Employees?
Ridester. https://www.ridester.com/uber-drivers-independent-contractors-employees/
Coconnor. (2024, March 13). Understanding Amazon’s Alleged Anticompetitive Practices.
https://news.law.fordham.edu/jcfl/2024/03/13/understanding-amazons-allegedanticompetitive-practices/
FTC Sues Amazon for Illegally Maintaining Monopoly Power. (2023, December 5). Federal
Trade Commission. https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-suesamazon-illegally-maintaining-monopoly-power
Townsened, C. (2022, November 4). Data Privacy & Google: What Are the Security Risks?
United States Cybersecurity Magazine. https://www.uscybersecurity.net/data-privacy-google/
Lessons from the Rise of Netflix and the Fall of Blockbuster. (2024, October 26). Foundation
for Economic Education. https://fee.org/articles/lessons-from-the-rise-of-netflix-and-the-fallof-blockbuster/
Olito, F., & Bitter, A. (2023, April 24). Blockbuster: The rise and fall of the movie rental store,
and what happened to the brand. Business Insider. https://www.businessinsider.com/riseand-fall-of-blockbuster#today-the-blockbuster-franchise-has-dwindled-to-just-one-store-sowhere-is-the-last-blockbuster-its-in-bend-oregon-15
Workday must face novel bias lawsuit over AI screening software. (2024, July 16).
https://www.reuters.com/legal/litigation/workday-must-face-novel-bias-lawsuit-over-aiscreening-software-2024-07-15/
Boutin, C. (2020, May 18). NIST Study Evaluates Effects of Race, Age, Sex on Face
Recognition Software. NIST. https://www.nist.gov/news-events/news/2019/12/nist-studyevaluates-effects-race-age-sex-face-recognition-software
Musk and X are epicenter of US election misinformation, experts say. (2024, November 5).
Reuters. https://www.reuters.com/world/us/wrong-claims-by-musk-us-election-got-2-billionviews-x-2024-report-says-2024-11-04
4. Balancing the Pros and Cons
Europe fit for the Digital Age: new online rules for platforms. (n.d.). European Commission.
https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/europe-fit-digitalage/digital-services-act/europe-fit-digital-age-new-online-rules-platforms_en
Russon, B. M. (2021, February 19). Uber drivers are workers not self-employed, Supreme
Court rules. https://www.bbc.com/news/business-56123668
Facebook, Inc., FTC v. (2024, September 12). Federal Trade Commission.
https://www.ftc.gov/legal-library/browse/cases-proceedings/191-0134-facebook-inc-ftc-v
Data protection. (n.d.). European Commission. https://commission.europa.eu/law/lawtopic/data-protection_en
Community Notes. (n.d.). X (Twitter). https://help.x.com/en/using-x/community-notes
OpenAI. (2025). ChatGPT (January 2025 version) [AI language model]. Retrieved January 3,
2025, from https://chat.openai.com/
5. Academic references
Kessler, S. (2018). Gigged: The End of the Job and the Future of Work. St. Martin's Press.
Supporting Link:
https://www.researchgate.net/publication/341086251_Gigged_The_End_of_the_Job_and_th
e_Future_of_Work_by_Sarah_Kessler_Uberland_How_Algorithms_Are_Rewriting_the_Rule
s_of_Work_by_Alex_Rosenblat_Humans_as_Service_The_Promise_and_Perils_of_Work_i
n_the_Gig_
Khan, L. M. (2017). Amazon’s Antitrust Paradox. Yale Law Journal, 126(3), 564-907.
Supporting Link: https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.pdf
Noble, S. U. (2018). Algorithms of Oppression: How Search Engines Reinforce Racism.
NYU Press.
Supporting Link:
https://digitalcommons.du.edu/cgi/viewcontent.cgi?article=1031&context=theliminal
Gillespie, T. (2018). Custodians of the Internet: Platforms, Content Moderation, and the
Hidden Decisions That Shape Social Media. Yale University Press.
Supporting link:
https://www.researchgate.net/publication/327186182_Custodians_of_the_internet_Platforms
_content_moderation_and_the_hidden_decisions_that_shape_social_media
Hult course material references
Hult International Business School. (2025). Markets, industry rivalry, buyers, and sellers.
Hult International Business School. (2025). Strategic resources and capabilities.
Hult International Business School. (2025). Strategic innovation and dynamic capabilities.
Hult International Business School. (2025). Principles of corporate strategy.
Hult International Business School. (2025). Analysing the value chain.
Hult International Business School. (2025). The changing nature of strategy.
Hult International Business School. (2025). Mergers and acquisitions.