Use of Advanced Robotics Technologies - 59% of manufacturers are either using (18%), piloting

(16%) or planning to invest in (25%) advanced robotics over the next 3 years. Manufacturers are
prioritizing their technology investments in mobile systems (31%), Big Data and the Internet of
Things (both at 30%).Advanced robotics can be defined as a sub-field of traditional robotics,
characterised by the use and development of ‘smarter’ robots which are able to operate in tougher and
less structured environments, rely less on human intervention, and can interact with the outside world.
The ‘advanced’ dimension of this strand of robotics is linked to the existence of enhanced problem-
solving, mobility, resistance, sensorial, intelligence and adaptability capacities which are not generally
found in mainstream robotics. Advanced industrial robotics (AIR) basically means the application of
advanced robotics in industry settings. Despite the existence of a formal definition of what the term
‘advanced’ refers to in the context of industrial robotics, in practical terms the notion appears to be
considerably more nuanced. Some robots for instance may include certain ‘advanced’ functionalities
without meeting all the criteria which would qualify them as advanced in absolute terms. In addition to
this, the notion of whether a robot is advanced or not often depends on the particular industry, value
chain or company in which it is being deployed. As such, experts also use a context-specific definition of
Advanced industrial robotics

Additive manufacturing, also known as 3D

printing, is a transformative approach to
industrial production that enables the creation
of lighter, stronger parts and systems.

It is yet another technological advancement made possible by the transition

from analog to digital processes. In recent decades, communications,
imaging, architecture and engineering have all undergone their own digital
revolutions. Now, AM can bring digital flexibility and efficiency to
manufacturing operations.

Additive manufacturing uses data computer-aided-design (CAD) software or

3D object scanners to direct hardware to deposit material, layer upon layer,
in precise geometric shapes. As its name implies, additive manufacturing
adds material to create an object. By contrast, when you create an object by
traditional means, it is often necessary to remove material through milling,
machining, carving, shaping or other means.

Although the terms "3D printing" and "rapid prototyping" are casually used
to discuss additive manufacturing, each process is actually a subset of
additive manufacturing.
While additive manufacturing seems new to many, it has actually been
around for several decades. In the right applications, additive manufacturing
delivers a perfect trifecta of improved performance, complex geometries and
simplified fabrication. As a result, opportunities abound for those who
actively embrace additive manufacturing.

How does
additive
manufacturing
work?
The term “additive manufacturing” references technologies that grow three-
dimensional objects one superfine layer at a time. Each successive layer
bonds to the preceding layer of melted or partially melted material. It is
possible to use different substances for layering material, including metal
powder, thermoplastics, ceramics, composites, glass and even edibles like
chocolate.

Objects are digitally defined by computer-aided-design (CAD) software that is

used to create .stl files that essentially "slice" the object into ultra-thin
layers. This information guides the path of a nozzle or print head as it
precisely deposits material upon the preceding layer. Or, a laser or electron
beam selectively melts or partially melts in a bed of powdered material. As
materials cool or are cured, they fuse together to form a three-dimensional
object.

The journey from .stl file to 3D object is revolutionizing manufacturing. Gone

are the intermediary steps, like the creation of molds or dies, that cost time
and money.
What is the Industrial internet of things? Essentials of IIoT
The Industrial Internet of Things connects machines and devices in
industries such as transportation, power generation, and healthcare.
The potential is high and so are the risks.

What is IIoT?
The term IIoT refers to the Industrial Internet of Things. In broad
strokes, it’s the application of instrumentation and connected sensors
and other devices to machinery and vehicles in the transport, energy
and industrial sectors.

What that means in practice varies widely. One IIoT system could be
as simple as a connected rat trap that texts home to say that it’s been
activated, while another might be as complicated as a fully automated
mass production line that tracks maintenance, productivity and even
ordering and shipping information across a huge, multi-layered
network.

Industrial IoT vs. IoT

The industrial internet of things is also referred to as the industrial
internet (a term coined by GE) and Internet of Industrial Things.
Whatever you call it, the IIoT is different from other IoT applications in
that it focuses on connecting machines and devices in industries such
as oil and gas, power utilities and healthcare.

IoT includes consumer-level devices such as fitness bands or smart

appliances and other applications that don’t typically create
emergency situations if something goes wrong.

Simply stated, there is more at stake with IIoT deployments where

system failures and downtime can result in life-threatening or high-risk
situations.

The IIoT brings computers from IT to operational technology, opening

up vast possibilities for instrumentation, leading to major efficiency
and productivity gains for almost any industrial operation.
 What makes IIoT unique?
Technologically, IIoT works on similar principals to any other piece of
IoT tech – automated instrumentation and reporting being applied to
stuff that didn’t have those capabilities before. That said, the scale of
it is much different than a simple system that lets you mess with your
thermostat on your phone – hundreds, perhaps thousands or even tens
and hundreds of thousands of individual endpoints can be present in an
IIoT deployment.

IIoT applications
Instrumentation for production lines can let companies track and
analyze their processes on an enormously granular level, asset
tracking can give a quick, accessible overview of a huge amounts of
material, and predictive maintenance can save companies big money
by addressing problems before they have a chance to become serious –
the number of potential use cases is vast, and growing by the day.

The Industrial IoT Consortium lists these 15 possible uses of IIoT:

1. Smart factory warehousing applications

2. Predictive and remote maintenance.

3. Freight, goods and transportation monitoring.

4. Connected logistics.

5. Smart metering and smart grid.

6. Smart city applications.

7. Smart farming and livestock monitoring.

8. Industrial security systems

9. Energy consumption optimization

10. Industrial heating, ventilation and air conditioning

11. Manufacturing equipment monitoring.

12. Asset tracking and smart logistics.

13. Ozone, gas and temperature monitoring in industrial environments.

14. Safety and health (conditions) monitoring of workers.

15. Asset performance management

Plug-in electric vehicles (also known as electric cars or EVs) are

connected, fun, and practical. They can reduce emissions and
even save you money.

Fueling with electricity offers some advantages not available in

conventional internal combustion engine vehicles. Because electric
motors react quickly, EVs are very responsive and have very good
torque. EVs are often more digitally connected than conventional
vehicles, with many EV charging stations providing the option to
control charging from a smartphone app.

Just like a smartphone, you can plug in your EV when you get home
and have it ready for you to use the next morning. Since the
electric grid is available almost anywhere, there are a variety of
options for charging: at home, at work or on the road. By charging
often, you may never need to go to a gas station again!

But EVs provide more than just individual benefits. EVs can help
the United States have a greater diversity of fuel choices available
for transportation. The U.S. used nearly nine billion barrels of
petroleum last year, two-thirds of which went towards
transportation. Our reliance on petroleum makes us vulnerable to
price spikes and supply disruptions. EVs help reduce this threat
because almost all U.S. electricity is produced from domestic
sources, including coal, nuclear, natural gas, and renewable
sources.

EVs can also reduce the emissions that contribute to climate change
and smog, improving public health and reducing ecological damage.
Charging your EV on renewable energy such as solar or wind
minimizes these emissions even more. See the difference in
emissions between a conventional vehicle and an EV using the
calculator on the right. Learn more about how EVs reduce pollution
and their lifecycle emissions.

Industrial biotechnology – biological

resources for industrial processes
Industrial or white biotechnology uses microorganisms and enzymes to
produce goods for industry, including chemicals, plastics, food, agricultural
and pharmaceutical products and energy carriers. Renewable raw materials
and increasingly also waste from agriculture and forestry are used for the
manufacture of industrial goods.

Microorganisms and their enzymes are the

major drivers of industrial biotechnology. © BIOPRO/Bächtle

Countless metabolic processes take place in a single cell. These processes

break down and convert nutrients that have been taken up into new
products. Enzymes are involved in controlling and coordinating reactions that
happen simultaneously or consecutively. Humans have been making use of
microbial and enzymatic processes for a long time. Everyday examples
include the production of bread, yoghurt and vinegar using microorganisms
and the use of enzymes in detergents.

Biotechnology is also used in many other industrial areas. Microorganisms

and enzymes can be used for the production of food supplements such as
vitamin B2, biobased plastics such as polylactic acid and energy carriers
such as biogas and bioethanol.

And yet another example of how biotechnology can be used: Lamy, a well-
known German company that produces writing instruments, has been
polishing the nibs of fountain pens with walnut shells and polishing paste in
place of organic solvents for around eight years now. However, the company
had to find a solution to the problem that the tiny particles of walnut shell
got jammed in the hollow spaces of the nibs. Initially, the particles were
removed manually, which was rather a cumbersome process. Nowadays,
Lamy uses an enzyme cocktail developed by researchers from Mannheim
University of Applied Sciences. The enzyme cocktail makes the walnut
granules smaller. Ultrasound is subsequently used to wash the remaining
walnut shell pieces from the nib slits.

CBP Leuna: The new fermentation plant will be

used to transfer enzyme production processes to the industrial
scale. © Fraunhofer

A common problem associated with the use of renewable resources on an

industrial scale relates to the huge financial and technological cost. Many
companies have developed attractive products in the laboratory, but fail to
turn them into technical applications. Institutions like the Fraunhofer Centre
for Chemical-Biotechnological Processes (CBP) in Leuna support partners
from research and industry in their efforts to transfer new technologies to an
industrial scale. The CBP provides infrastructure and pilot plants that enable
its partners to develop biotechnological processes that utilise renewable
resources on an industrial scale. The CBP is run by scientists from the
Fraunhofer Institute for Interfacial Engineering and Biotechnology (IGB) in
Stuttgart and the Fraunhofer Institute for Chemical Technology (ICT) in
Pfinztal.

The CBP is currently transferring a chemical-enzymatic process for the

production of epoxides from plant oils to industrial scale. Epoxides are used
for the production of grease and emulsifiers for washing agents and
detergents.

The Rise of the Platform Economy

BY M ARTIN KENNEY , JOHN ZYSMAN
The application of big data, new algorithms, and cloud computing will change the nature
of work and the structure of the economy. But the exact nature of that change will be
determined by the social, political, and business choices we make.

A digital platform economy is emerging. Companies such as Amazon, Etsy, Facebook,

Google, Salesforce, and Uber are creating online structures that enable a wide range of
human activities. This opens the way for radical changes in how we work, socialize,
create value in the economy, and compete for the resulting profits. Their effects are
distinct and identifiable, though certainly not the only part of the rapidly reorganizing
global economy. As the work by Michael Cusumano, Annabelle Gawer, and Peter Evans
has shown, these digital platforms are multisided digital frameworks that shape the terms
on which participants interact with one another. The initial powerful information
technology (IT) transformation of services emerged with the Internet and was, in part, a
strategy response to intense price-based competition among producers of relatively
similar products. IT-enabled services transformation, as our colleagues Stuart Feldman,
Kenji Kushida, Jonathan Murray, and Niels Christian Nielsen have argued in other
venues, was based on the application of an array of computable algorithms to myriad
activities, from consumption and leisure to services and manufacturing. The movement of
these algorithms to the cloud, where they can be easily accessed, created the
infrastructure on which, and out of which, entire platform-based markets and ecosystems
operate. Platforms and the cloud, an essential part of what has been called the “third
globalization,” reconfigure globalization itself.

These digital platforms are diverse in function and structure. Google and Facebook are
digital platforms that offer search and social media, but they also provide an
infrastructure on which other platforms are built. Amazon is a marketplace, as are Etsy
and eBay. Amazon Web Services provides infrastructure and tools with which others can
build yet more platforms. Airbnb and Uber use these newly available cloud tools to force
deep changes in a variety of incumbent businesses. Together they are provoking
reorganization of a wide variety of markets, work arrangements, and ultimately value
creation and capture.

This digitally based new economy has been given a variety of names derived from some
of its perceived attributes. How we label this transformation matters because the labels
influence how we study, use, and regulate these digital platforms. Its boosters have called
it the Creative Economy or the Sharing Economy, whereas those less convinced of its
beneficence have dubbed it the Gig Economy, the Precariat, or the 1099 Economy,
focusing on its impact on workers and how they are compensated. And there are wide
variations within these labels. Consider the Shared Economy. Examples include Uber and
Airbnb, which are very distant from the visions of Wikipedia, with its communal
construction of knowledge; from Napster, which shared music regardless of whether it
was legal; or from open source software creations such as Linux and Apache. Despite the
attractive label and the entrepreneurial successes, Uber, Airbnb, and Facebook are not
based on “sharing”; rather, they monetize human effort and consumer assets. Indeed, the
advantage of platform-based companies often rests on an arbitrage between the practices
adopted by platform firms and the rules by which established companies operate, which
are intended to protect customers, communities, workers, and markets. Lyft and Airbnb
are entrepreneurial initiatives that facilitate the conversion of consumption goods such as
automobiles and apartments into goods that are monetized. This “sharing” has a more
than passing resemblance to the putting-out economy that existed before factories, when
companies would ship materials to people to assemble items such as shoes, clothing, or
firearms in their homes. In the current manifestation of putting out, the platform operator
has unprecedented control over the compensation for and organization of work, while still
claiming to be only an intermediary. On the other hand, the rapidly growing mobile phone
app stores and user-generated content platforms such as YouTube and Instagram are
structured as digital consignment industries, borrowing from the way artists sell their
work through galleries.

We are in the midst of a reorganization of our economy in which the platform owners are
seemingly developing power that may be even more formidable than was that of the
factory owners in the early industrial revolution.

We prefer the term “platform economy,” or “digital platform economy,” a more neutral
term that encompasses a growing number of digitally enabled activities in business,
politics, and social interaction. If the industrial revolution was organized around the
factory, today’s changes are organized around these digital platforms, loosely defined.
Indeed, we are in the midst of a reorganization of our economy in which the platform
owners are seemingly developing power that may be even more formidable than was that
of the factory owners in the early industrial revolution. The proliferation of labels is
simply a reflection of the recognition that platforms are already having powerful
consequences for society, markets, and firms, and that we are unclear about their
dynamics and directions. Whatever we call the transformation, the consequences are
dramatic.

U TOPI A O R DYSTOP I A
The debate about the impact of the platform economy is an extension of a discussion that
began in the early days of the IT revolution, when figures such as Robert Noyce, Bill
Gates, and Steve Jobs claimed that they were creating a future that would open the world
to new possibilities and prospects. Optimists still abound, and San Francisco is now
experiencing what may be its biggest gold rush yet, with investors, entrepreneurs, and
data scientists working furiously to create “disruptive” new businesses. For investors,
inherently optimists, the question is how to build platforms, attract users, and then
capture the value that is generated from the emerging ecosystem. Regardless of the
platform, all of them are based on mobilizing human beings to contribute. Whether it is
Google monetizing our searches, Facebook monetizing our social networks, LinkedIn
monetizing our professional networks, or Uber monetizing our cars, they all depend on
the digitization of value-creating human activities.

The optimistic version of the emerging techno-economic system suggests that society can
be reconstituted with producers becoming proto-entrepreneurs able to work on flexible
schedules and benefit from these platforms. And this certainly will be the case for many.
Similarly, the utopians argue that platforms, such as the car-sharing services Uber and
Lyft, can unlock the commercial value in underused personal assets; other platforms, such
as Airbnb, promote the notion that vacant rooms in one’s house or apartment can become
sources of income whether technically hotel rooms or not. Advocates believe that all of
this can occur for the greater social good without negative consequences. But can we
really foresee all the repercussions of these new economic arrangements? For example,
platform businesses matching workers and tasks may make labor markets more efficient,
but if they become pervasive and organize a significant portion of the work, they are at
the same time likely to generate fragmented work schedules and increasing levels of part-
time work without the employment-related benefits that previously characterized much
employer-based full-time work. For now, it is not clear whether these digital platforms
are simply introducing digital intermediaries or actually increasing the extent of gig or
contract work.

Even as the digital era unfolded in its utopian phase in the 1970s, there were skeptics who
feared that the new technologies would result in unanticipated and undesirable
consequences. Perhaps most prescient was Kurt Vonnegut’s 1952 novel Player Piano ,
which even gave a bit part to the great mathematician Norbert Weiner. Vonnegut
envisioned a digital future of material abundance—albeit a digital future of machines
built with tubes, not semiconductors—with a radical social division between a highly
credentialed and creatively employed elite and an underclass. His dystopian vision is now
finding full expression in the fear that digital machines, artificial intelligence, robots, and
the like will displace work for a vast swath of the population. Bill Davidow, once at Intel
and then at his own Silicon Valley venture capital firm, expressed this in his Harvard
Business Review article “What Happens to Society When Robots Replace Workers?”
The MIT economists Erik Brynjolfsson and Andrew McAfee explore this trend in more
detail in their book The Second Machine Age .
The impact on employment and the character of work is certainly one element in
assessing whether we will have a utopia or dystopia. In our view, that outcome is yet to
be determined. As a society we will have to make choices about how to deploy new
technologies, choices that will be critical in shaping the ultimate impact. The questions
are really: what balance will there be among jobs created as the digital wave flows
through our economy and society, and which workers will be displaced? Certainly it is
feasible to catalogue existing work, particularly work that is routine, as likely to be
replaced or reconfigured by digital tools, and perhaps, as some have tried, to estimate the
numbers of such existing jobs that will be digitized away. By contrast, the new kinds of
work that are now being created and the existing jobs that will be redefined and
reorganized in the future are more difficult to forecast, so we can only speculate.
Algorithms and databases are automating some kinds of work, but even as this occurs
other value-creating opportunities are appearing. There will be new products and services
as well as new production and service processes, which are likely to be design and
creativity intensive, as well as algorithm-enabled. Some of the early indicators of the new
or transformed work can be enumerated, but certainly not exhaustively counted.

Moreover, existing jobs will be redefined and reorganized in the future. The character of
some existing work—how much or how little, we cannot know—will be reframed but not
eliminated by digital technology. Uber, Airbnb, TaskRabbit, Handy, and other platform
firms are transforming industries by connecting “producers” with customers in new ways.
In some cases, this is displacing or threatening existing, often regulated, service
providers, such as taxis and hotels. In other cases, it is formalizing previously less
organized or locally organized work. Still other platforms, such as app stores and
YouTube, are creating entirely new value-creating activities that are formalizing into
what can be seen as precarious careers, such as a YouTube producer or smartphone app
developer. Finally, existing organizations are creating new digital and social media
marketing departments and jobs. The question in these cases is what system of control
and value capture will be in place. Our sense is not necessarily that there will be less
work, but that for a growing number of jobs, the relationship with an employer will be
more tenuous than ever. These changes are not likely to result in the workerless society.
One possibility is a society in which the preponderance of the work and value creation is
more dispersed than ever before, even as the platform owners centralize the transactions
and capture their value.

Indeed, we may, unless policy rules lock in the position of the emerging incumbent, see
another round of innovation and job creation. The use of digital automation presents a
classic dilemma: anything that can be characterized sufficiently to become computable
can be copied, as our colleague Niels Christian Nielsen has argued elsewhere. At that
point, another round of innovation and imagination will be required. Can automation
innovate itself? More likely, teams of people and digital tools working together will be
required to be competitive. The Turing test might be able to establish that a digital
machine can imitate intelligence, but the test does not establish consciousness or consider
whether human consciousness in all its diversity differs in fundamental ways from current
algorithmic tools.

The debate over jobs created or destroyed is useful and worth continuing, but we should
be clear that it has no end, and there will be no definitive answer. For now, there are only
indicators and traces to suggest an outcome. And that outcome, we emphasize and repeat,
will be shaped by choices about technology deployment that turn on entrepreneurial
initiative, corporate strategies, and public policies. As in the discussion of what is being
called the Internet of Things or the digitally based reorganization of manufacturing, in
our research with colleagues at the Research Institute for the Finnish Economy, we find
significant differences among national emphasis and investments. German policy is
directed toward maintaining its competitive position in manufacturing built on a base of
skills and with a fabric of small and mid-sized companies even as the foundations of
production evolve. The U.S. emphasis seems to be on developing and applying high-end
sophisticated tooling for aerospace and military applications. On the consumer side, some
communities have simply banned Uber and Lyft, whereas others welcomed it. Which
communities, this leads us to ask, are most likely to be the sources and beneficiaries of
the emerging platform economy? Which are most likely to be discomfited?

Although technologies may not dictate our future, they frame the choices to be made and
the questions to be answered. Will the platform economy, and the reorganization it
portends, catalyze economic growth and a surge in productivity driven by a new
generation of entrepreneurs? Or will the algorithmically driven reorganization
concentrate substantially all of the gains in the hands of those who build the platforms?
Will it spark a wave of entrepreneurial possibilities, unleash unimagined creativity, free
workers from oppressive work schedules, or unleash an avalanche of dispossessed
workers who are trying to make a living with gigs and temporary contracts? If we do not
interrogate these technological trajectories, we risk becoming unwitting victims of their
outcomes. What questions should we be asking?

THE K E Y TE C H N OL O G I E S
The algorithmic revolution and cloud computing are the foundations of the platform
economy. But computing power is only the beginning of the story. That computing power
is converted into economic tools using algorithms operating on the raw material of data.
The software layer that stretches across and is interwoven with the economy is a fabric of
algorithms. That software layer, that algorithmic fabric, is being extended to cover
manufacturing, giving birth to the Internet of Things, the Internet of Everything, or the
Industrial Internet, with its implied webs of sensor networks. It is no exaggeration to say
that software was formerly embedded in things, but now things—services as well as
physical objects—are woven into software-based network fabrics. This software layer
extends the availability and lowers the cost of access to digital tools and traditional tools
accessed by and controlled by digital processes. Moreover, costs drop through the use of
open-source software, cloud storage and computing, and physical spaces such as those
provided by TechShops that enable individuals to work with advanced industrial-scale
equipment. Among other consequences, this certainly lowers the cost of entry for
newcomers.

Cloud computing rests on the virtualization and abstraction of computing processes. One
of us (Zysman) has examined the character, emergence, and deployment of cloud
computing in work with Jonathan Murray, Kenji Kushida, Patrick Scaglia, and Rick
McGeer. Although the details of how it works do not matter for this essay, the
consequences do. For the providers of cloud services, scale matters enormously. For users
—individuals, small- and mid-size enterprises, startups, and corporations—the
consequence is a radical reduction in the cost of computing resources and information
and communication technology tools, a radical reduction in barriers to usage. Users can
rent resources as they require them rather than having to own or build entire computing
systems. Computing and the applications and platforms it facilitates are now available as
an operating expense rather than a capital expense.

Digital platforms are complicated mixtures of software, hardware, operations, and

networks. The key aspect is that they provide a set of shared techniques, technologies,
and interfaces to a broad set of users who can build what they want on a stable substrate.
Android and IOS are platforms. Although they somewhat restrict the applications that one
can build or sell, they are, in general, open to app builders. Android is also a platform for
hardware (handset and other device makers) because the code is open, not just the
interfaces. Indeed, platforms can grow on platforms. Many of the current Internet
platform firms use Amazon Web Services. Many of these platforms attract a myriad of
other contributors that, when sufficiently rich, can result in the formation of an
ecosystem. For example, in the case of the apps stores, complementary businesses are
emerging. AppAnnie is a firm that ranks the revenue generated by apps; there are
advertising agencies that analyze YouTube ad buying; TubeMogul classifies YouTube
“stars” and measures their reach; and there has been a proliferation of agencies that
cultivate new YouTubers. These “complementors” are powerful allies in building and
maintaining the lock-in for the master platform. Of course, building a platform is work,
but platforms themselves then generate or organize the work of others by providing the
digital locations for the connections that organize work and other activities.

A looser definition of a platform, as noted previously, is one in which social and

economic interactions are mediated online, often by apps. For example, Uber, so far as we
know, does not yet provide a platform upon which others can establish businesses, such
as organizing a pizza delivery fleet. Nevertheless, as an algorithmic structure providing a
digital market and potentially an ecosystem, albeit one it controls, Uber should be
considered as a firm operating a platform.

Digital platforms facilitated by key technologies such as the cloud, including digital
marketplaces such as Amazon and Internet firms such as Google and Facebook, are
restructuring ever more parts of the economy. The discussion is complicated because, as
noted, there is not yet a clear definition of digital platforms that allows us to specify
precisely what is in and out of the category. The term “platform” simply points to a set of
online digital arrangements whose algorithms serve to organize and structure economic
and social activity. In the IT world, the term means a set of shared techniques,
technologies, and interfaces that are open to a broad set of users who can build what they
want on a stable substrate. As used more widely, and by us in this essay, the term also
points to a set of digital frameworks for social and marketplace interactions.

Speculations aside, while there is a rich and emerging literature, at the moment there is
no real theory of the effect of these diverse platforms on the overall economy. To sense
the scope of the market and regulatory impact of the loosely labeled platform economy,
let us consider some of the most salient types of digital platforms.

• Platforms for platforms. In a sense, the Internet itself is the foundational platform,
with Google as its cataloger. As we have shown with Bryan Pon and Timo Seppala,
Apple’s iOS and Google’s Android are smartphone operating system platforms on which
massive ecosystems have been built. In addition, there are businesses that provide
infrastructure and tools for the rest. For example, Amazon Web Services, Microsoft ’s
Azure, and Google Cloud Platform facilitate the construction of cloud services, the tools
with which other platforms are built. In a sense, as Stuart Feldman remarks, “it is
platforms all the way down.”

• Platforms that make digital tools available online and support the creation of other
platforms and market places. GitHub, for example, is becoming the repository of open
source software programs of all kinds. This dramatically reduces the cost of software
tools and building blocks. Moreover, tools and software, such as sales support, human
resources, and accounting, which previously were sold or leased by companies such as
Oracle and ADP, are now available in the cloud from companies such as Zenefits, Job
Rooster, and Wonolo. Zenefits offers an online marketplace of human resource tools free
to small businesses and is thus disintermediating the local benefits insurance broker.
Zenefits makes its money from commissions from the firms seeking to provide insurance
to the small businesses using its service. Were Zenefits to become the dominant
platform in the field of providing professional-grade, back-offi ce tools to small
 businesses, the sheer amount of business data it would have to analyze would allow it to
create yet other services. As a side effect, Zenefits, as it now acknowledges and is taking
steps to correct, threatened the regulatory role of state insurance commissions. Finally,
with the lock-in it could achieve, it will be able to alter the terms of service provision
through its code, thereby providing it with enormous potential power.

• Platforms mediating work. Platforms mediate work in a variety of ways. Some

platforms transform the work of previously independent professionals. For example,
LinkedIn treads on the domain of headhunters and empowers the human resources
department by selling access to the information freely provided by members. Other
platforms such as Amazon Mechanical Turk, which enables companies to crowdsource
the performance of specific tasks that require human judgment, is a modern form of the
putti ng-out system. Other websites such as UpWork and Innocentives have created
similar global virtual-labor exchanges. Importantly, it is uncertain whether these
platforms will change the number of contract or gig workers; or only change the
mechanisms of intermediation and the operation of the labor market.

• Retail platforms. Certainly, the most widely recognized online platforms—ones that
have made the notion of a platform economy widely discussed—are Amazon, eBay, and
Etsy, along with a host of others.

• Service-providing platforms. Airbnb and Lyft are the classic examples. There is also an
endless array of financial platforms, from sites for project funding, such as Kickstarter or
Indiegogo, to platforms that intend to displace traditional financial institutions, such as
AngelsList for venture capital and Zopa and Rate Setter for peer-to-peer lending.
Transfergo and Transferwise are building platforms to simplify global money transfers.

In all these examples, across all the categories, the algorithmic underpinnings of the
online activity are most evident. For example, Lyft connects drivers with customers
algorithmically. The algorithms integrate mapping software, real-time road conditions,
and the availability of drivers to provide a price estimate. Drivers are vetted through
online checks, which, of course, work only as well as the data they have. Payment is
made by credit card information that is on file.

E C O NOM I C C O N S E Q U E N C E S
What we do know is that these platforms are in many cases disrupting the existing
organization of economic activity by resetting entry barriers, changing the logic of value
creation and value capture, playing regulatory arbitrage, repackaging work, or
repositioning power in the economic system. As a starting place for discussion, we might
ask the following questions about each platform or type of platform.

How is value created? The platform economy comprises a distinctly new set of economic
relations that depend on the Internet, computation, and data. The ecosystem created by
each platform is a source of value and sets the terms by which users can participate.

Who captures the value? Indeed, what is the distribution of risks and rewards for the
platform users? There are a variety of mechanisms with various implications for gains
distribution. Some platforms allow the owner to “tax” all transactions, whereas others
monetize their services through advertising. Platforms can transform work previously
done by traditional employees into tasks performed by contractors, consigners, or quid
pro quo workers—or create entirely new categories of work. There are also what Gina
Neff calls “venture laborers,” that is, the people who work at the platform firms. They
receive high wages, and if the firm is successful, the value of the platform is capitalized
in the stock market, resulting in remarkable amounts of wealth for the firm’s direct
employees and entrepreneurs. If the firm falters or fails, these individuals must find new
employment.

There is also a growing cohort of what some call “mini-entrepreneurs” and others call
“consignment workers,” who provide goods—usually but not necessarily “virtually”—for
platforms such as app stores, YouTube, or Amazon Self-Publishing. Although the vast
majority of them are unsuccessful or marginally profitable, some can be enormously
successful, and despite the fact that this phenomenon is as yet unmeasured, it is clearly
creating many new opportunities for entrepreneurship. In certain cases, particularly in
apps, those in the consignment economy sometimes grow so large that venture capitalists
will invest in the entrepreneur/firm, and the employees become venture labor. Some of
these apps can become platforms themselves. Put differently, the consignment model has
significant upside for participants, but it is accompanied by high risk.

Who owns or controls the platform? The answer varies by platform, and the differences
are important. The distribution of benefits differs considerably, for example, at these
platforms: Wikipedia, where the network is managed by a consensus set of rules; the
Danish Agricultural Cooperative platform, in which participant owners know one another
and there are clear boundaries between inside owners and others; and Uber, in which the
platform is owned by a small group of entrepreneurs and their venture capitalists and
where the value will eventually be capitalized by the sale of a controlling interest through
either acquisition or a stock offering.

How is work packaged and value created, and what percentage of work is now organized
in these radically new ways? What happens to the organizational forms of work?
Certainly, some workers, such as those employed by Microsoft, Google, LinkedIn, and
Facebook, retain traditional employment relationships. Although these firms expect long
working hours, they also provide considerable scheduling flexibility as well as a variety
of free food, drinks, transportation, and other benefits that can make them appear to be
corporate paradises. By comparison, those who obtain work as gigs, consignments, or
contracts through digital platforms have radically different experiences. Although they
have control of their work hours, they rarely receive any other employee benefits.
Conceptually, if not literally, Uber converts taxi company employees or former medallion
owners into contractors, whose access to income is through the Uber platform, while
removing government from the rate-setting equation. Are these contractors mini-
entrepreneurs, employees in all but name, or yet something else? Further, what is the
proper employment category for individuals who hope to be one of the winners by
producing apps, YouTube videos, or self-published books on Amazon? In these activities,
there is a power law of returns by which a few big winners are remunerated by
advertising, product placement payments, personal appearance fees, and even crowd-
funding campaigns, while a very long tail of producers are creating the vast bulk of
consigned content without monetary return.

Many are now concerned that rather than creating a new source of productivity we are
legitimating a new form of putting out. Can Uber drivers be self-supporting contractors in
a 1099 economy rather than stable workers in an employment economy, or are they just
extremely vulnerable gig workers? And, more broadly, as Ruth Collier asks, what will be
the consequences for mass politics and political structures? Are we generating labor
market flexibility, or a precariat that resembles a cyberized Downton Abbey replete with a
small elite composed of the platform owners and a new and sizable underclass?

M A K I N G C H OI C E S
What sort of an economy and society will we create in the transition to digital platforms
and the accompanying reorganization of significant portions of the global economy? And
importantly, what choices will we have?

Before we turn to the long list of issues, with each issue opening an array of questions
and debates, two points need to be made. First, Larry Lessig famously claimed that code
is law; that is, code represents binding restrictions on behavior. Algorithms and platforms
structure and constrain behavior; the law in the books is often difficult to apply or
enforce in the digital world where action is possible only if it conforms to frameworks
expressed in the code that shapes and directs behavior. Consider the fight between the
Justice Department and Apple; the warrant has no meaning if it cannot be executed in
code; for the warrant to be implemented, the code would have to be modified.

Platform entrepreneurs increasingly believe that if they possess a first-mover advantage,

they can, in fact, remake existing law by creating new practices on their platforms that
essentially establish new norms of behavior. It is often said in Silicon Valley, “Don’t ask
permission; ask forgiveness,” as, perhaps, was the case with Volkswagen’s “fix” for
“clean” diesel engines. Of course, this forces two sets of questions. First, who writes the
code, and whose values are expressed in code? The code writers, taking Uber as an
example, have already reshaped social behavior. Government rules will influence how the
new technologies are deployed and their consequences, but in a platform economy,
government decisions may be constrained by the “facts” in the software.

Second, although public policies are obviously important, corporate strategies also have
far-reaching effects. Do companies view workers only as costs to be contained or as
assets—even in an era of algorithms, data, and robots—to be developed and promoted?
And equally important, are those assets directly tied to the firm? Who should bear the
costs of their retention and upgrading?

Acknowledging the constraints of code and the centrality of company choice in shaping
outcomes, our platform future, the character of market, and the social logic established
will depend on an array of policy choices. What market and social rules are appropriate
for a platform economy and society?
Our old labels and categories, not just old rules, are being thrown into disarray. To begin
sorting this out, let us start with the firm. In the late nineteenth century, the corporation
emerged as a means of orchestrating economic activity and organizing markets. In the
twenty-first century, we speculate that these functions will be taken on by the platform in
the cloud. Take Google, the platform economy giant, which, despite its 2014 revenues of
$66 billion, has only 50,000 employees. Uber has only about 1,500 employees and is
already a global business. What policy and political issues arise when the orchestrators of
economic activity are relatively small firms, rather than organizations as large as Ford
Motor Company, General Electric, or General Motors—all of whom also require
sophisticated supplier and distribution networks?

It is evident that platforms open up many entrepreneurial opportunities. Some

entrepreneurs, such as Robin Chase at Zipcar, envisioned an alternative social, not just
economic, model because digitally enabled car sharing could dramatically reduce the
incentive to own a car. If that model spread widely, it might result in a drop in overall
demand for auto production. This may or may not disrupt Hertz (Zipcar was sold to Avis),
but it might dramatically affect automakers. Indeed, automakers responded by developing
partnerships with Uber and Lyft. In other words, such “sharing” solutions could have
unforeseen ripple effects on entire market ecosystems, as encyclopedia and book
publishers are discovering to their dismay.

But many platforms by their very nature prove to be winner-take-all markets, in which
only one or two companies survive, and the platform owner is able to appropriate a
generous portion of the entire value created by all the users on the platform. More
important, however, is that as the power is centralized, the platform owner can become a
virtual monopolist. In that case, the platform owner can squeeze the platform community
—the drivers or customers on Lyft or Uber, the content providers, the consigners, the
customers, essentially any of the participants in the ecosystem who are instrumental in
creating the value in the first place. Perhaps competition among platforms in a similar
domain, Uber and Lyft for example, might mute the consequences of the power inside the
platform. In any case, a monopoly position or even a strong oligopoly might inhibit, or
sharply constrain, further entrepreneurial efforts.

Indeed, the appropriate market rules for competition/antitrust, labor market, and
intellectual property among many others are becoming increasingly difficult to specify
and legislate. Policy and political interests among the players, even among the winners,
are far from uniform. Consider such domains as antitrust policy, where the European
Commission has done battle with U.S. tech companies; intellectual property, where the
interests among information and communications technology firms and platform firms are
less consistent than it might seem at first glance; network policy, where carriers such as
AT&T have radically different interests from Netflix or Google; and labor market
policies. Indeed, the wireless carriers have announced they will start blocking
advertisements on smartphones, thereby directly attacking the Google and Facebook
business models. As we have shown with Bryan Pon, the turbulent environment in the
smartphone ecosystem is leading to complex competitive strategies that have technical,
social, and political ramifications.
The question of outcomes goes beyond the question of whether digital platforms spawn
entrepreneurs or monopolists. We need to ask whether a society organized around
platform owners servicing mini-entrepreneurs, contractors, and gig workers portends an
even more unequal society. Does the answer depend on the character of platforms or on
the policies and politics of the platform economy?

The issues of entrepreneurship and those of work organization that we discussed earlier
are tightly interwoven. The policies that we adopt now might determine the balances
achieved later. If we want an entrepreneurial spirit to infuse the platform world, then we
want risk-taking entrepreneurs, whether they are forming the platforms or seeking
advantage as contractors or consigners within it. But what encourages risk? Fear, or a
safety-net certainty that if a gamble fails, one can always play again? Similarly, if we
want workers to accept the new arrangements, how do we assure them that if they accept
the flexibility, they will not be the victims but rather the beneficiaries of the ever-greater
social value and wealth that is being created? All studies of technology adoption have
shown that those who believe they will be victims will resist; if they believe they will be
beneficiaries, they may help facilitate the shift. Of course, the largest group consists of
those in the middle who are joining the platform economy because they have no choice
and do not feel empowered to resist.

Balancing the need to sustain initiative while cushioning the consequences of significant
socioeconomic transformation leads us to a focus on social policy, not just market policy.
Social policy, sometimes called welfare, shapes the risks that workers and entrepreneurs
take and their evaluation of whether to support or resist change. In the United States,
benefits such as pensions and health-care coverage (the latter, until the passage of the
Affordable Care Act) have been tightly tied to employment. Lose your employment, lose
the protections. The U.S. debate often assumes that expanded welfare protections dampen
initiative, pointing to Europe as an example of how investing in social protections limits
economic dynamism. Aside from whether this was, in fact, ever the case in Europe, the
question is whether social protection will inherently discourage initiative now. In our
view, the real issue is never the fact of protections themselves—and indeed we believe
that facilitating social and economic adjustment by easing the burdens of those dislocated
is both a social obligation and an economic necessity—but how social policy is paid for
and organized.

The emerging platform economy, with expanding contract work and gig employment, has
encouraged many to look at the Nordic social policy model. The Danish flexible security
model suggests that social protections can lubricate the engines of change. Simply put,
many social benefits in that model are associated with citizenship, and the notion of
flexible security gives employers extensive rights to adjust their workforce as needed
while still providing workers with social protections in the form of training, job
placement, and basic income. Certainly, this is no panacea, and indeed the Nordics are
themselves reopening and intensely debating the character of their social policies. But we
must consider whether addressing the downside risks of entrepreneurial efforts while
providing worker flexibility with broader social safety nets as social rights can make the
platform economy a source of sustainable growth. What assurances of social safety do we
want to give to risk takers?
The debate over policy will not be straightforward or simple. As with all economic
transformations, the disruptions will create winners and losers. Who will decide how the
results of increased productivity are distributed? The reality is that the winners and losers
in markets depend on who can participate and on what terms. There are no markets, and
no market platforms, without rules, but what happens to the politics if important market
rules are made unchallenged by the platform owners? Many political struggles will be
waged over these rules, and those fights will be part of defining the market and society in
a platform era. Political fights will break out over protections for communities, clients,
and workers as markets are disrupted. Some of those fights will be about business models
that are playing a game of policy arbitrage, whereas others may be about rules for the
consignment platforms. In any case, how many instances of disruption will there be?
Should we view these disruptions as creating a flood of viable entrepreneurial
possibilities or as destroying the security of employment relations for many? Can they
create new sources of income and reasonably compensated work? Can policy encourage
labor market arrangements that facilitate innovation, provide protection for workers, are
efficient, and promote decent, sustainable lives for citizens? In the platform world, is
there a Henry Ford who recognizes that everyone in the ecosystem requires a reasonable
income in order to buy his products? This will not be a straightforward process. The
reorganization of the economy around platforms will inevitably change the very
configuration of the interest groups that influence how the law tries to shape the code. In
sum, these battles, often engaged in isolation from each other, will interweave to reshape
our communities and social life, as José van Djick has shown, as well as the character of
markets and market competition.

In the era of the platform, the future remains open. Answers to crucial questions are for
the moment unknowable. The answers depend on our choices, not just on the technology.
For example, will cloud technologies and the platform-driven economic reorganization
they cause drive the productivity growth on which sustained real income improvement
occurs? Will these reorganizations destroy jobs or reduce the required skill levels?

The technologies—the cloud, big data, algorithms, and platforms—will not dictate our
future. How we deploy and use these technologies will. When we look at the history of
innovations such as electric utility grids, call centers, and the adoption of technology
standards, we find that the market and social outcomes of using new technologies vary
across countries. Once we start on a technology path, it frames our choices, but the
technology does not determine in the first place exactly which trajectory we will follow.

We will be making choices in an inherently fluid and ever-changing environment shaped

to some degree by unpredictable technical change and social reactions to these changes.
Ultimately, the results will depend on how we believe markets should be structured—who
gains and who can compete; how we innovate; what we value in society; how we protect
our communities, our workers, and the clients and users of these technologies; and how
we channel the enormous opportunities created by these sociotechnical changes. It is up
to us to sidestep a dystopia and to create, if not a utopia, at least a world of ever greater
benefit for communities and citizens.