Understanding Platform Capitalism: Data and Digital Business

Understanding Platform Capitalism by Nick Srnicek

This article examines Platform Capitalism by Nick Srnicek. This global business model defines the modern age of social media, big data analytics, and tech-centered venture capital investment. Major platform operators—including Google, Amazon, Facebook, Microsoft, and Apple—are now competing for business in sectors like education, where technology investment has boomed due to increased startup funding.

Defining the Digital Platform

The concept of the “platform” in platform capitalism is complex. Broadly, a platform refers to internet-based applications, such as social media sites, that process information, channel social traffic, and enable the creation and sharing of user-generated content. In his book, Platform Capitalism, Nick Srnicek defines platforms as digital systems that:

• Allow two or more groups to interact.
• Act as intermediaries between users.
• Provide the hardware and software foundation for others to operate.

The primary requirement for these platforms is the facilitation of digital interaction.

Data as the New Raw Material

Platform Capitalism analyzes how the economic landscape shifted following the financial crisis. The advanced capitalism of the 21st century focuses on the extraction and utilization of a vital raw material: data.

Types of Digital Platforms

Srnicek categorizes different types of platforms based on how they generate revenue through data. While companies often combine several models, these analytical distinctions remain essential:

Advertising Platforms

These platforms focus on advertising as their primary revenue source. They are currently the most successful type, generating high profits. Examples: Google, Facebook.

Cloud Platforms

These platforms create the basic infrastructure for the digital economy and electronic commerce. Example: Salesforce.