Platforms as Markets, Architectures, and Ecosystems: A Review of the Dominant Approaches in the Platform Literature

Abstract

Online digital platforms are a new type of firm; they are data-driven, software-based companies established in the late 90s due to increased digitization and the extensive adoption of the Internet for economic and social activities. Platforms are market intermediaries as they mediate transactions between groups of users and benefit from network effects. Platforms disrupt the conventional organization of firms and industries and have become key players in capitalist economies. Platforms structure social interactions, transform employment and the labor market, and determine media consumption and cultural production practices. The paper offers a comprehensive theory review covering three approaches: the economic approach (industrial organization of network markets), the technology engineering approach, and the strategic management approach. The economic approach explains the nature of network effects and highlights the differences between network markets and traditional industries. The engineering technology approach demonstrates how platforms can achieve network effects through technological architecture. The strategic management approach explores platform growth strategies and highlights how a platform firm deals with the external environment that includes user preferences, national regulations, and technology convergence. The review focuses on the theoretical instruments most relevant for the sociological and political-economic analysis of platforms. The paper concludes with remarks on the uneven geographical distribution of platforms.