Transcript Multi-sided platforms Russ Abbott Department of Computer Science, California State University, Los Angeles The USPS  “Open at the top; open at the bottom; and continually (but.

Multi-sided platforms
Russ Abbott
Department of Computer Science,
California State University, Los
Angeles
The USPS
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“Open at the top; open at the bottom; and continually
(but slowly) changing” — IEEE Conference on “Systems of systems.”
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Top: what we do with it. Open to new uses, e.g., the
flourishing world of mail-order catalogs; chain letters.
Bottom: how it is implemented. Open to new
implementations, e.g., with changing technologies from the
pony express to commercial jets
(Slowly) changing: the abstractions it defines. Change
slowly, e.g., zip codes, second class mail, express mail.
Something important. Not quite sure what it was. Not
necessarily technological. But a lot like the Internet
and Service Oriented Architectures (SOA).
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Multi-sided software platforms
Invisible Engines:
How Software Platforms Drive Innovation and
Transform Industries, MIT Press. (freely downloadable)
Evans, Hagiu, and Schmalensee (2006)
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Operating systems and game consoles.
More examples: shopping centers, dating
websites, TV channels, TV talk shows, Amazon
resellers, telephone & telegraph systems.
The web browser: web sites and surfers.
Google dynamically generates multi-sided
platforms of search result pages (sites and
searchers.
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Two- (and multi-) sided markets
Jean-Charles Rochet and Jean Tirole (2001) Institut d'Economie Industrielle (IDEI).
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Markets that connect disparate groups.
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Not your usual business model: buy; add value; sell.
The value to each group increases as the size of the
other group(s) grow. (Also known as network effect.)
By providing services to two groups of users one can
sell access to one group to the other.
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A stock exchange matches buyers and sellers.
A credit card system matches merchants and cardholders.
A TV station matches creators of programming and viewers,
access to which it then sells to advertisers. Google!
Sometimes both groups can be charged — some
credit cards, classified ads.
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Often the seller pays (eBay).
In The Recycler ads are free; the buyers pay.
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Multi-sided platforms as refactorings
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A multi-sided platform may be understood as
the standardization and factoring out
(refactoring) of a hard part of an interaction
and providing it as a service.
The hard
part done
by the
platform.
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 USPS: sending & receiving materials.
 Credit card: paying and being paid.
 Dating service: finding the other
party and making an initial contact.
 Robert’s Rules of Order : the
interaction protocol
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Platform operational structure
User
Robert’s Rules of Order
User
Presiding officer/parliamentarian
Implementation
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Also USPS, a database
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Software platforms as refactorings
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Think about the abstractions (data types and
operations on objects of those types)
platforms offer and what implements the
abstractions.
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Databases: store, modify, and retrieve
tabular data — or linked text as in Wikipedia.
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Recall from last year that emergence is a
level of abstraction.
Each platform is a single shared implementation.
File extensions for shared files, e.g., .doc, .xl.
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Each user has his/her own implementation.
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File extensions for shared files (.doc, .xl)
Each user has his/her own implementation.
User
Representation
of internal
state for this
transation
Requires
import/export
capability
User
Xyz.doc
E.g., MS Word
Implementation
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Implementation
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Infrastructure platforms
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The interests of platform owners (maximize profit)
are not always the same as those of platform users.
Some platforms are so important we don’t want the
owner’s interests to take priority.
Publicly owned and operated (or highly regulated)
multi-sided platforms:
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USPS. (So important it’s in the constitution.)
telephone system.
FDA — an artificial platform imposed between seller and
buyer.
Not every important platform is multi-sided: power
system, roads and highways, ... are single-sided.
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Standards as (ephemeral) platforms
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Since a platform is a level of abstraction, it
can be characterized by a specification.
The specification can then serve as the
definition of the platform, e.g., HTML.
Multiple vendors can be encouraged to
compete to implement it.
Defangs the platform owner
Favored by platform users.
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Open source platforms
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If your business depended on a platform,
would you want that platform owned (and
controlled) by some other business?
Open source software.
Two categories: money driven and other.
Iansiti and Richards, http://www.hbs.edu/research/pdf/07-028.pdf
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Money-driven tend to be multi-sided
platforms.
Top two in terms of corporate support:
Linux and Firefox.
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Platforms as environments
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Sometimes platforms define an environment.
The free market economic system is defined
primarily by two platforms.
The monetary and banking system.
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The legal and judicial system.
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Factors out the economic notion of value. Allows value to
be abstracted, stored, exchanged with minimal overhead.
Factors out agreements (contracts) and enforcement
mechanisms. Overhead not so minimal (lawyers) — but
better than hiring your own enforcers. Used to rely more
on reputation. Still do in eBay.
Much too important to be controlled privately.
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Natural language: the crown
jewel of multi-sided platforms.
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Open at the top: virtually unlimited creativity.
Open at the bottom: we each build our own
implementations.
Continually (but slowly) changing.
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It’s a standard. We have dictionaries and
grammar books for “standard English.”
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We all implement our versions of the standard.
It’s open source.
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It is continually undergoing modification — but slowly
enough so that most of us can keep up.
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