Battle of the platforms: What Alibaba does better than Amazon

20.02.2020

Who is allowed to use our data? And how? This question is becoming more frequent in a digital world increasingly characterized by platforms. In a study, GDI researchers show the possibilities and consequences of data use.

This text is based on an excerpt from the GDI study "The end of consumption: When data makes retail superfluous"

Google, Facebook or Amazon: platforms determine everyday life. Through them, everything is connected with everything else. Soon there will be no difference between the various platforms - at least from the users' point of view. It will all be automatic, fast, easy, smooth and optimized for every budget.

For society, however, there are serious differences between the platforms. This is because different platform designs lead to different consequences for the community. For example, a retail platform may be more likely to jeopardize the existence of independent retailers, such as Amazon. The company makes strategic purchases both online and offline hires its own staff,thus increasingly takes on a monopoly position. However, retail platforms can also do the opposite, as the example of Alibaba shows. In contrast to Amazon, Alibaba merely offers its providers an infrastructure to sell their products, but does not itself sell its own products.  

Platform design becomes particularly relevant when it comes to building super platforms such as WeChat, which integrate and control many different platforms. WeChat, for example, is a payment platform and a messenger service at the same time. The decisive factor here is primarily how the wealth of data, i.e. knowledge and power, is distributed among the participating sub-platforms. Who participates? And what is generated by our actions on a platform? How, for example, do the individual traders and platform operator share the collected data on platforms like Alibaba?

Konsum_Circles

Two different types can be distinguished: one is  a closed architecture, which aims to concentrate the data in one place and functions according to the principle "The winner takes it all". The other is open architecture, in which the data is accessible to several participants and "Swarm Learning" is favoured.

The current trend is towards concentration: Those who have more data have more knowledge, can produce better products and attract more customers, collect even more data, learn faster and attract more talent, develop even better products, and so on. 

But only an open platform, in which knowledge and power are fairly distributed and different actors learn and progress collectively, could, in the long term increase the prosperity and well-being of all of us. In this positive circle, people would become smarter through the analysis of their own data and thus more valuable for the job market. Companies would become more successful through the knowledge growth of their employees, earn more, and could invest in tools that make data analysis even better. In short: We would become better and better at getting better.

On the other hand, a platform in which only a few benefit and most users are exploited will likely be difficult to maintain in the long term.