“The reduction in inequality after the Second World was an exception to the general rule of capitalism” – Thomas Piketty 

The Book aims to supplement “Conventional” perspectives by giving an economic history of capitalism and digital technology while recognizing the diversity of economic forms and the competitive tensions inherent in the contemporary economy. The simple wager of the book is that we can learn a lot about major tech companies by taking them to be economic actors within a capitalist mode of production.

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These neo-digital giants reach out further and further into our digital infrastructure and as society becomes increasingly reliant upon them, it is crucial that we understand how they function and what can be done. Building a better future demands it. We continue to live in a capitalist society where competition and profit-seeking provide the general parameters of our world. On the other side of the class relation, some argue that the economy today is dominated by a new class, which does not own the means of production but rather has ownership over information.

Google has around 60,000 direct employees, Facebook has 12,000, while WhatsApp had 55 employees when it was sold to Facebook for $ 19 billion and Instagram had 13 when it was purchased for $ 1 billion. By comparison, in 1962 the most significant companies employed far larger numbers of workers: AT& T had 564,000 employees, Exxon had 150,000 workers, and GM had 605,000 employees.

What are platforms?

At the most general level, platforms are digital infrastructures that enable two or more groups to interact.

What Platforms do?

This is the key to its advantage over traditional business models when it comes to data, since a platform positions itself (1) between users, and (2) as the ground upon which their activities occur, which thus gives it privileged access to record them. In their position as an intermediary, platforms gain not only access to more data but also control and governance over the rules of the game.

If you want to join a platform for socializing, you join the platform where most of your friends and family already are (Like Facebook or Twitter). Likewise, the more numerous the users who search on Google, the better their search algorithms become, and the more useful Google becomes to users. But this generates a cycle whereby more users beget more users, which leads to platforms having a natural tendency towards monopolization.

How do Platforms work?

Platform ownership, in turn, is essentially ownership of software (the 2 billion lines of code for Google, or the 20 million lines of code for Facebook) 18 and hardware (servers, data centres, smartphones, etc.), built upon open-source material (e.g. Hadoop’s data management system is used by Facebook).

In spite of its numerous obituaries of Compact Discs and other physical forms of music in the early 2000s, the music industry has been revived in recent years by platforms (Spotify, Pandora) that syphon off fees from music listeners, record labels, and advertisers alike. Between 2010 and 2014 subscription services have seen user numbers rise up from 8 million to 41 million, and subscription revenues are set to overtake download revenues as the highest source of digital music. After years of decline, the music industry is poised to see its revenue growth once again in 2016. While subscription models have been around for centuries, for example in newspapers, what is novel today is their expansion to new realms: housing, cars, toothbrushes, razors, even private jets.

The challenge with maintenance is that it is quite easy for outside competitors to come into the market and take the profits away. This prompted Rolls Royce to introduce the ‘goods as a service’model, whereby airlines do not purchase the jet engine but pay a fee for every hour one is used. In turn, Rolls Royce provides maintenance and replacement parts. The raw material of data remains as central to this platform as to any other. Sensors are placed on all the engines and massive amounts of data are extracted from every flight, combined with weather data and information on air traffic control, and sent to a command centre in the United Kingdom

‘lean’ platforms like Uber, ‘the world’s largest taxi company, owns no vehicles’ and Airbnb, ‘the largest accommodation provider, owns no property’. It would seem that these are asset-less companies; we might call them virtual platforms. Yet the key is that they do own the most important asset: the platform of software and data analytics.

The most notorious part of these firms is their outsourcing of workers. In America, these platforms legally understand their workers as ‘independent contractors’rather than ‘employees’. This enables the companies to save around 30 percent on labour costs by cutting out benefits, overtime, sick days, and other costs. It also means outsourcing training costs, since training is only permitted for employees; and this process has led to alternatives forms of control via reputation systems, which often transmit the gendered and racist biases of society. Outsourcing once primarily took place in manufacturing, administration, and hospitality, today it is extending to a range of new jobs: cabs, haircuts, stylists, cleaning, plumbing, painting, moving, content moderation, and so on. It is even pushing into white-collar jobs – copy-editing, programming and management, for instance. The calculations of one class action lawsuit estimate that Uber would owe its drivers $ 852 million if they were employees (Uber claims it would only be $ 429 million). To fight off one competitor, for instance, Uber took to calling up and cancelling rides with its rival, in an effort to clog up that rival’s supply of drivers.

Will competition survive in the digital era, or are we headed for a new monopoly capitalism?

We give Google access to our email, our calendars, our video histories, our search histories, our locations – and, with each aspect provided to Google, we get better predictive services as a result. Likewise, platforms aim to facilitate complementary products: useful software built for Android leads more users to use Android, which leads more developers to develop for Android, and so on, in a virtuous circle. We can get a sense of how significant these monopolies already are by looking at how they consolidate ad revenue: in 2016 Facebook, Google, and Alibaba alone will take half of the world’s digital advertising.

Yet it is also true that capitalism develops not only greater means for the monopoly but also greater means for competition.

Despite their differences, companies like Facebook, Google, Microsoft, Amazon, Alibaba, Uber, and General Electric (GE) are also direct competitors. IBM, for instance, has moved into the platform business, purchasing Softlayer for cloud computing, and BlueMix for software development. The convergence thesis helps explain why Google is lobbying with Uber on self-driving cars and why Amazon and Microsoft have been discussing partnerships with German automakers on the cloud platform required by self-driving Ultimately, we see convergence – and therefore competition – across the field: smartphones, e-book readers, consumer IoT, cloud platforms, video-chat services, payment services, driverless cars, drones, virtual reality, social networking, interfaces, network provision, search, and probably much more in the future.

The expansion of smartphones has led to more and more users interacting with the internet through apps rather than by visiting websites, and this is a way in which companies can both expand and close off data collection. As more users head into an app, those data are extracted there, while other platforms lose out. Dropbox is spending large amounts of money to separate itself from Amazon Web Services, and Uber is seeking to untie itself from dependency on Google Maps. Even deeper down the stack, platforms are at work building their own network infrastructure. Google, for instance, has been building its own privatized internet –browsers, OSs, fibre networks, and data centres –where information may never have to journey across the public infrastructure. Likewise, Amazon’s cloud network is nothing if not a private internet, and Microsoft and Facebook are collaborating to build their own transatlantic fibre cable.

While most of the other platform types appear to be in a strong enough position to weather any economic crisis and any blow to their business model, advertising platforms remain precariously dependent on ad revenues (e.g. Google at 89.0 percent and Facebook at 96.6 percent). It is, though, unclear whether advertising can thrive in a world of ad blockers, bots causing fake ad views, and routine spam. Even Google’s chief economist, Hal Varian, expects that advertising will decline in importance and that Google will eventually move towards a pay-per-view model, and could be compelled to more into direct payment businesses. Meanwhile, lean platforms dependent on outsourcing costs and on venture capital largesse either go bankrupt or shift into product platforms (as Uber is attempting to do with driverless cars).

“Yet even limiting our attention to user-created data, it is right to call this activity labour?”

Rather than just regulating corporate platforms, efforts could be made to create public platforms – platforms owned and controlled by the people. (And, importantly, independent of the surveillance state apparatus) is all one could think of the better futuristic world. And all I could feel reading this work is, that at least I can reduce my time spending on these platforms. It’s better not to be too much reliant upon these uncertain Platform Capitalists.

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Nick Srnicek

 He’s an American writer and academic, currently a lecturer in Digital Economy at King’s College London. One of the very few intellectuals who think “Luxury Communism” will win.