Introduction: four aspects on the impact of platforms

Abstract

This introductory chapter aims to offer a general background to the chapters that follow. It covers four broad areas: the impact of platformisation on the economy, politics, society and culture, and the regulatory framework. From the economic point of view, the leading platform companies have gained monopolistic or near-monopolistic positions in their global market areas. This is reflected in their yearly profit rates: in 2020, Amazon’s annual revenue was USD 386 billion, from which the gross profit was USD 153 billion; Apple’s annual revenue in 2020 was USD 275 billion, from which the gross profit was USD 105 billion; and Facebook’s annual revenue in 2020 was USD 86 billion, from which the gross profit was USD 69 billion.7 These figures can be compared, for example, with the GDP of smaller European Union (EU) countries: Lithuania’s GDP was USD 42.50 billion in 2020; Slovenia’s was USD 49.50 billion; and Bulgaria’s was USD 69 billion.8 With the combined gross profits of the three platform companies, the national economies of Lithuania, Slovenia and Bulgaria could be financed for two years. The dominance that the platforms have in the online economy has major implications for news media and journalism (see chapters on Media business environment and The platforms of journalism). As a result of platformisation, advertising has increasingly moved from newspapers and television to the online media platforms. This means that the media landscape has been transformed in a fundamental fashion, especially in small countries where the media markets are limited in many ways. This has also created a vicious circle: as the audiences shrink, the advertising income shrinks too. In addition, the lost income is accumulated abroad – in the global tax havens – which means that it is not invested to develop domestic news media and contribute to its role in democracy.9 In Finland it is estimated that online advertising now accounts for 53% of all media advertising, and out of this, 60% goes to Facebook, Google and other big-platform companies.10 As a result, traditional news media organisations struggle for survival, and their domestic competition intensifies.[...]