miércoles, 17 de enero de 2018

Digital breathing air is diminishing

According with the available data, in 2017 among the top 6 companies by market capitalisation 5 are ICT companies, 4 of them close to the concept of "digital platform". These companies are Amazon, Alphabet (Google), Facebook and Apple, the GAFA. Only Google was among the top 20 companies in 2009, Apple was below the 30th post in the 2009 ranking, neither Amazon nor Facebook were in the top 100 companies.

The phenomenal growth of the GAFA is not completely understood yet today. However, it is sure is that working for more thatn a decade in an innovative and not tightly regulated sector has had a big influence in the current situation. The bigger the space you have to breath free of any other living being in the surroundings the more you can expand yourself. But suddenly, the space has started to decrease.

The breathing air for digital platforms is composed by two main elements: the usage of connectivity infrastructure deployed by other companies and contents created by third parties. The connectivity is used in the same conditions as other users without taking into consideration its role as producers and the content is exploited in an indirect manner without any charge for its intermediary role. Both of these elements are on the road of getting more expensive for platforms, and therefore, diminish the space for the benefit obtain from its usage for business purposes.

Starting with connectivity, US Government repealed Net Nutrality regulation. From now on, telcom operators can negotiate paid deals with websites for so-called fast lanes to consumers  as long as they disclose those practices to the public. This could mean in the future higher prices for those (as digital platforms) which are traffic sumps on the Internet, that could be forcedto pay more to have better access to consumers.

On the content side, there are two pressures towards more expensive contents. Firstly, the governments are looking for a bigger control of contents by the digital platforms in order to suppress extremist messages as soon as possible. More control means more humans analysing each piece of content, and, therefore, the need to pay more salaries. Secondly, some content producers are asking for tools to obtain a bigger piece of cake of money obtained for services by platforms built around their news, videos and so on.

So platforms are facing a new challenge: showing that the business model is healthy in spite of the diminution of benefits and the increase in expenses. A change on the landscape that could change the balance of forces in the digital ecosystem.

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