The political economy of digital platforms: Key directions

Introduction

Some might lament ‘platform studies’ lack of internal coherence. However, the problem with platform studies is not that it is too fragmented or dispersed to be considered a field. On the contrary, the problem is that it is not varied enough: it remains heavily concentrated around a handful of themes. Given how recently both the phenomenon as we recognise it today and the scholarly field emerged, this is not surprising. Disciplines have approached the rise of digital platforms with their respective priorities and toolkits. For sociologists, the platform economy was seen as almost solely constituted by gig work platforms (Vallas and Schor, 2020). For media and communication studies, the focus was social media platforms and digital culture (Dijck, 2013). For management studies, new competitive dynamics and platform strategy was the main area of interest (Adner, 2023; Jacobides et al., 2018). Research on platforms has developed enough to warrant concerted efforts to take stock and make disciplinary priorities explicit, so that the field, instead of being restricted by these, further opens up in scope. Additionally, it is important to connect siloed debates, while at the same time extending the overall heterogeneity of the field (editorial statement).

Digital platforms operate squarely in the analytic terrain of political economy – that of capital, labour and the state – even if this framing is not always explicitly mobilised. Discussion about corporate monopolies, regulation and labour relations has exploded. While empirical developments such as the rise of massive technology firms and their disruptive effects have demanded enquiry, the scholarly traditions devoted to the study of corporate capitalism have atrophied over time. This then is the task: to simultaneously rediscover and reinvent the critical study of industrial structure and capitalist dynamics in the age of platforms. Without this, platform scholarship will be left without an anchor, lacking a rich theory-informed approach, not just to discrete empirical phenomena but to the more abstract and connective structures that shape these.

Recognising the full breadth and multi-layered nature of platformisation as a process is key. A digital platform is a collection of socio-technical assets that offer a stable, yet flexible interface, and therefore bring into its fold a range of user-actors (Plantin et al., 2018). This infrastructure is entangled with specific organisational forms, financial logics, regulatory practices and labour relations. Further, the ambit of platform economies is expansionary. It impinges on and transforms existing industrial and corporate practices. Evidence of platform-centric models altering realms as varied as ride-hailing, music, banking, film, advertising, retail, automotive and electronics is unmistakable. Importantly, the story far exceeds the direct arena of the tech giants (see editorial statement). In shaking up the terms of competition and reducing barriers to entry, platform-driven models put pressure on large incumbent firms that operate in their respective sectors. How more traditional (non-tech) firms adopt and devise digital platforms and data strategies is of increasing relevance. While some might critique the looseness of digital platforms as a concept, the elasticity of the concept mirrors the elasticity and portability of the platform model.

Platform studies needs more concerted theoretical and empirical exposition of the overlapping domains of digital technology, the capitalist firm and market dynamics. Retheorising the intersections between technologies, organisations and markets would not only better explain effects and discrete phenomena (datafication, surveillance, growth, monopolisation, etc) but also widen and deepen our understanding of ‘platform capitalism’ at large (Srnicek, 2017).

Theorising digital technology

The ‘digital platform’ is not a coherent technical artefact. Rather it represents a convergence of different socio-technical phenomena (Pon et al., 2015), including big data, cloud computing, APIs, internet ubiquity, smart devices and algorithms. Studying platformisation must involve the critical study of digital technology. Exposing the shifting form of the digital machine, the practices of technology creation, and the industry dynamics that shape technology sector are integral to understanding how platformisation as a process unfolds. Therefore, the firms, networks, communities, architectures and engineering practices involved require special study. In short platform studies must hone an interest in computing and computing industries (e.g., van der Vlist et al., 2024; Zhang and Chen, 2022; Narayan, 2022).

Careful historical analysis of the technology sector is one way to make explicit the relationship between platforms and industry. The modern computer has almost a 100-year history, but for the most part has supported ‘back office’ information processing (Head, 2003; Narayan, 2023a). Cascading, cross-sectoral shifts in business, organisational and labour models were not really within the realm of possibility until the rise of platforms that interrupted traditional industrial boundaries.

Here, there are two distinct lines of research to pursue: the production of platforms and platform-based technologies and then their adoption. If platforms are essentially glorified IT systems (Narayan, 2022), then how are they architected, produced and rendered portable? What are the practices of engineers, designers, financiers, managers, consultants and others in the business of platform-making and platform-selling? Interrogating software and hardware industries involves analysing the geographically variegated consulting practices, forecasting and other future-making techniques, sales strategies and the transnational politics of platform adoption. Platformisation is an active process, driven by actor-specific strategies. The study of platform-making should involve peering into its socio-technical infrastructure, engaging those who build it and the firms that produce it.

Platform studies, in centring ‘tech industries’ and their practices can also lead the critical study of software production, not for its own sake – as another labour process ‘setting’ – but in light of hardware and software's multifarious impact and mediation of social and economic life. While there is some work on the routinisation of software creation, a movement from a craft-based activity to a full-fledged profession and industry, this work could flourish and expand further (Ensmenger, 2010; Upadhya and Vasavi, 2012). Social scientific and humanist readings of various development environments, programs, languages, tools, resources and engineering practices would only enrich the understanding of digital machines and their powerful intersection with the domain of capital. Science and technology studies have shown the way as far as shedding light on socio-technical systems go, both generally (Bijker et al., 2012) and in the domain of platform technologies (Hansen and Thylstrup, 2023; Rella, 2024). Building on such traditions and connecting these with industrial and organisational political economy to map the process of (digital) machine making and platformisation is a meaningful direction to pursue.

Firms and markets

Platform studies is uniquely positioned to retheorise the structures of contemporary capitalism and in doing so make a tremendous contribution to a full range of disciplines. Much of the phenomena studied by critical social scientists in this area invoke the outcomes of corporate dynamics and organisational practices: labour exploitation, energy consumption, environmental damage, data extraction, automation and so on. Yet, the firm and other organisations remain opaque and under-theorised. ¹ Conglomerates, start-ups, consortiums, consultancies and state agencies are crucial (inter)organisational drivers of the phenomena we study and are still somehow absent from the forefront of theorising. Market actors for example are assumed to be profit-oriented agents, but the competing and at times contradictory methods, techniques and strategies – beyond that of labour utilisation – remain on the side-lines of scholarly enquiry (Vidal, 2022). It seems important to not only reflect on emergent logics of platform-driven dynamics but also to tie these back to more classic questions of monopoly, competition, scale, and industrial organisation.

Without a thorough reading of the changing organisational form of capitalist activity the danger is a silent implication that monopolies are somehow new and static. Nothing could be further from the truth (Baran and Sweezy, 1966). Shifting regulatory environments and competitive pressures mean that even the largest, seemingly invincible corporations are compelled to continually experiment with new techniques of growth. In what ways are platform monopolies unique from a theoretical and comparative-historical perspective? The fact that reigning mega-firms were able to scale and dominate in such compressed timescales alone tells us something. As does the fact that these firms are entwined with numerous economic sectors and are not restricted by existing industrial borders. Finally, cycles of monopolistic growth and hyper-competition seem to be accelerating, leading to all sorts of volatilities and uncertainties. The idea that monopolies are set in stone or sit comfortably in their dominance is overly simplistic (Narayan, 2023b). We need more analysis of decline, decay and devaluation and how this fuels new practices.

The firm as an organisational entity is a good place to start. Within platform studies, the multi-level intersection between critical organisational theory and capitalist political economy begs to be developed. For example, platforms allow for radical experiments in organisational form and competitive strategy. Take the example of platform-driven transformations in the entertainment industry, Amanda Lotz's recent book offers a clear-eyed view of the parameters along with which Netflix enacts a break from linear, ad-supported television (Lotz, 2022). The book enters the minutia of how platform competition works, drawing out the specific shifts it enacts in content strategy, library ownership strategy and global strategy. The parameters of strategy-making in this world are unique. In this case, it involves a delicate, always changing balance between licensed and owned IP (original commissions), the formation of ‘taste communities’ based on behavioural data analysis, and here we might add, hyper-scalable computing infrastructure (Narayan, 2022). In acting as a general library of video content, it collapses the existing boundary between industries (i.e., the television and film industry). As an organisational entity it looks quite different from the massive conglomerates that rose in the cable and satellite era in many countries. Moreover, it catalyses hyper-competition between incumbent conglomerates that are now compelled to introduce a platform strategy of their own, which only increases the pressure on Netflix to redefine itself.

Altogether the entertainment industry as a case demonstrates the many dimensions of platformisation and the need for theory that is dedicated to understanding the changing nature of the capitalist firm (e.g., Davis, 2016; Steinberg, 2022). This requires exploring long-standing theories of the firm and developing a reading of its changing historical form and its links to different financial logics (e.g., Shestakofsky, 2024; Rahman and Thelen, 2019; Elmer, 2017). The role of new kinds of speculative finance and financial relations is important and is increasingly recognised, but how precisely it alters organisational form and firm practices remains unclear.

Reviving the critical study of firms involves seeing them as complex, internally divided organisational entities; subject to contradictory priorities and agendas and deeply chaotic spaces. The simplified view of coherent, bounded, successful profit maximisers simply will not do (Vidal, 2022). The fact is platforms have simultaneously upended and altered work, organisational and market relations. Digital platforms impinges upon three different facets of firm activity. For sake of clarity, we might state that firms assemble a business model, an operational model and a labour model.

Business model: Structures/practices to generate profit. ²

When it comes to market structures, dynamics and competition, political economy's canon falls short. This is due to the overwhelming focus on the domain of production rather than circulation and exchange, which is explained by the political goal of centring labour (Christophers, 2016; Sayer and Walker, 1992). However, disengaging from market structures has always been unwise and is so more than ever. Platforms are powerful mediators of market exchange and platform owners possess the ability to create and capture new markets, inducing new modes of competition, and destabilising other markets in the process. Moreover, firms do not act in isolation but are always interpreting and responding to various pressures and signals. It is therefore not clear how we can study firms without understanding market dynamics. Here, critical platform scholarship might consider borrowing from management studies, STS, and the sociology of markets to incorporate useful meso-level ideas into its analysis and theory-building efforts.

Research and analysis of many of the themes discussed here are unfolding in various corners. I do not mean to suggest that these are radically new directions, rather that we highlight and emphasise these concerns. Without a more ambitious agenda that situates the platform problem in the structures of capitalism, the field risks falling into ahistorical platform exceptionalism or drifting towards ‘naïve empiricism’.