Why does every company now want to be a platform?
nytimes.com
nytimes.com
In other words, rent-seeking behavior.
https://en.m.wikipedia.org/wiki/Rent-seeking
"Rent-seeking is the effort to increase one's share of existing wealth without creating new wealth."
In other words, money without effort.
I linked Wiki so that you could read about what it actually is. You’ve decided to cherry pick an excerpt that you think justifies your point, while completely misunderstanding what said excerpt actually says.
You’re arguing that platforms engage in rent-seeking behavior. Please point to a platform that has created wealth for itself, at the expense of others wealth (thus not creating new wealth).
Spoiler: there aren’t any. Now do you get why rent-seeking doesn’t mean what you think it does?
What you really mean is “platforms don’t work hard enough for the cut they take” which as I said above, is not what rent-seeming means.
Any multinational that's not trying to siphon profits to offshore is not going to last very long. All of them siphon wealth offshore, away from where it would be rightfully taxed.
Example: "In 2020, Amazon earned 44 billion euros in Europe, but reported paying no taxes in Luxembourg."
From your wiki article: >"Rent-seeking results in reduced economic efficiency through misallocation of resources, reduced wealth-creation, **lost government revenue**, heightened income inequality,[2] and potential national decline."
>"lost government revenue"
Big Tech doesn't simply capture some tiny regulator. They capture (jointly with other multinationals) entire countries, like Ireland and Luxembourg.
Just because rent seeking behavior can result in lost government revenue doesn’t mean that any loss of government revenue is rent seeking behavior. Tax evasion is not rent seeking.
But again, we are so far off the mark of what an actual economic rent is. It’s a topic that requires reading beyond a wiki article, and please stop trying to just find language that supports your existing, misinformed conclusion.
>platforms don’t work hard enough for the cut they take”
Surely these are indeed synonymous. There's a bit of linguistic subterfuge in using "wealth" to refer to both cash and services rendered. In order to determine if a company has "created new wealth" we must indeed balance the cut they have taken with the value of services rendered. And yeah, I would argue that most "platforms" do not render value equivalent to the cut they take, and instead are exploiting some sort of monopoly position obtained through network effects. You asked me to to name some, so I would place the mobile app stores and Facebook in this category.
Fine, I won’t even debate you on that. But that is not economic rents.
What you term “linguistic subterfuge” is anything but. My whole point is that economic rents are not something up for linguistic interpretation. It is a well defined and studied concept, and it doesn’t mean what you think it does.
What you really mean is that platforms are expensive, in that the fee they charge is for their services is exorbitant. But that’s entirely different from economic rents.
You can see this happening with food delivery apps. When you become the biggest in America or Europe everyone who wants a pizza delivered has to go through your system.
> The goal is growth and consolidation. [Governments] want every major industry to be completely dominated by a small handful of big players. This makes it much easier to regulate and implement policy.
This is why everybody wants to be a "platform". Platform is the polite way of saying "last man standing after the mandatory consolidation process". Unfortunately politicians like power, and biasing the field towards consolidation gives them more power; therefore they will continue to bias the field in this manner.
1. Being a platform means you can grow to face reduced competition and earn lots of income while those on the platform perpetuate your relevancy (and your income stream). For example the network effects of iPhone purchasers and app developers makes it very hard for new mobile ecosystems to challenge Apple (outside of Android anyways).
2. If a company doesn’t make a platform play, it may be displaced by someone who does. As an example, niche book retailers now mostly compete against each other as third party sellers on Amazon’s platform, where the shoppers are.
3. A platform is a way to diversify and make yourself less vulnerable to a single area or some external dependency. As an example, Walmart and many others have started offering “buy now pay later” plans that enable customers to buy on credit without relying on credit card companies and credit scoring limitations.
It is a problem, however. Large platforms inherently face reduced competition, disrupting healthy market dynamics. They gain influence and can participate in regulatory capture. They become powerful like pseudo governments, but yet aren’t treated like a public agency/service/utility. We need new legislative thinking and bold politics to rein in these massive institutions.
Yep.