How Big Data and Algorithms along with Platform Capitalism Rule Our World

The Elements of the Digital Economy

If you have ever transacted on an eCommerce site or have used your Smartphone or Mobile for commercial purposes as well as have taken a ride in the digital aggregator cab services such as Uber or have ever used Mobile Wallets and other forms of digital payments, chances are that Big Data would have governed your interactions and ordered by Algorithms. Indeed, even if you chose not to participate in the Digital Economy, your life would at some point be influenced by these manifestations of the New Economy where Platform Capitalism is the norm rather than an exception.

What is Big Data ?

We have used many terms in the previous paragraph. Defining and explaining each of them, Big Data refers to the collection, dissemination, use, and transactional exchange of data pertaining to consumer preferences and consumer profiles wherein the data collected by the websites and mobile aggregators is used from everything ranging from suggesting possible recommendations for consumers to buy goods and services and offering customize products.

In addition, the use of Big Data is also for including targeted offers and special discounts for consumers, and above all, use of sophisticated Data Analytics to prepare “Digital Maps” of consumers. This is similar to the manner in which earlier era marketers used the 4Ps (Product, Price, Place, and Promotion) of Marketing to prepare an ideal consumer profile for positioning and targeting.

What are Algorithms ?

Next, we can now turn to what are Algorithms and how they are used in the Digital Economy. Many people who trade in stocks and equities for a living or for part-time pursuits would invariably notice that most electronic trading is now driven by high-speed computers using sophisticated Algorithms whose capabilities far exceed that of the human traders and which can trade in time periods of less than a minute or even seconds.

Further, anybody who has transacted on the web or mobiles and Smartphones would not fail to notice how Algorithms and high speed servers ensure that their transactional experience is smooth and hitch free wherein these Algorithms do the jobs that earlier era cashiers, salespersons, and delivery and logistics providers used to do though in time lapses of hours and days.

Whereas Algorithmic software now does the work in hundredths of that time lapses in addition to transactions so complex and advanced and so fast that Bill Gates’ vision of “business at the speed of thought” is coming true. Indeed, we now live in a world where it is virtually (literally as well as metaphorically) impossible to not have come in contact with Big Data and Algorithms unless one is a hermit living in the Mountains and hence, does not need to have any contact with the external world.

Platform Capitalism

Apart from Big Data and Algorithmic transactions, the third aspect of the Digital Economy is characterized by Platform Capitalism which is the term used to refer to the provision of an interface that is digital and mobile based between the firms and the consumers. Indeed, anyone who has taken a ride in Uber would notice that he or she is essentially booking a cab on the “Platform” or the Aggregator wherein the consumer interacts with the App that is based on a Platform where riders and drivers come together to participate in the commercial exchange.

Indeed, even many of us who use Apps for shopping and where the vendors and the third party merchants advertise their offerings for consumers would notice that the aggregator is essentially a “platform” where the different stakeholders in the Digital Economy come together to participate in a “gigantic digital web of commerce”.

Understanding the Digital Economy

Thus, as can be seen from the discussion so far, it is indeed the case that Big Data, Algorithms, and Platform Capitalism rule our world. While such developments are inevitable when technological capabilities and advances interact and intersect with the age old Profit Motive and Capitalistic forms of economy, one must also be cognizant of the various risks as well as the ethical concerns that are being raised by activists and regulators worldwide about the impact of these elements on all stakeholders including consumers, employers, employees, and the wider society.

For instance, in earlier decades, when price gouging and price manipulation were alleged, it was easier to track down the company or the firm that was engaging in these practices. Anyone who has booked a flight at the last minute or has booked a cab or a similar service and have been hit by “surge pricing” wherein sudden increases in fares are the norm would know that it is the other side of computers ruling our lives and we living in a Digital Economy that is increasingly being taken over by Machines and Software. Thus, the point that we are making is that it is good to know both sides or the pros and cons of the emerging Digital Economy.

Lastly, to take a contemporary example, the worldwide push to “outlaw cash” and move to a “cashless” or a “Digital Economy” especially in India in recent months has once again shown us that we need to understand the elements of the Digital Economy if we are to thrive in this “Brave New World of Big Data, Algorithms, and Platform Capitalism”. Indeed, as the disputes over who (the payment providers, the consumers, the merchants, or the banks) bears the transactions costs for purchases such as Petrol and other items which were reported recently highlights the need for all of us to learn more and understand more about the Digital Economy.