A Legal Framework to Define Platform Companies
What is a platform company, and how can you determine one before it becomes a giant and destroys all the competition?
I’m not a lawyer, but I’ll try to answer this question practically based on my fifteen plus years-long journey of entrepreneurship.
1. It’s open to third parties, and there is a marketplace
First things first, it has to be accessible to third parties, to be a platform company. Netflix is not a platform YET, because you can’t simply upload your videos and earn revenue based on the viewership. But the Windows OS, Facebook, Youtube, iPhone, Playstation, LG TV, and many others are because one can deploy their apps on them.
2. There are games and security apps built on it
I’ve observed that two types of apps that indicate a clear platform trait, and these are games and security apps.
Games are an obvious one. From Facebook Platform to Apple TV you can see a myriad selection of games on all platforms. Platform companies usually tend to stay away from gaming because it’s a very creative and arbitrarily-selective space. There is no precise formula for winning, and the type of talent required is different (more scrappy) than your engineering-focused organization’s.
As for security, it is something you can never excel as a platform company. Sure, the latest MacOS is so much more secure than our good old Windows 95 and doesn’t really need an antivirus program to operate, but perceptions continue to shift, and today privacy has become the new “security” which you have to patch up your OS with.
3. Minimum revenue of 9-digits
Last but not least, and an obvious one, you cannot control a platform company just because it’s showing early signs described above, but it should also be “successful” enough to justify the costs associated to the regulation. So, in my opinion, in 2020 numbers, annual revenues north of nine digits (anything more than $100,000,00) must be the threshold to start regulating.
Conclusion
In an ideal world with a concrete anti-monopolistic framework, we would experience a healthier ecosystem where not only a single platform company flourishes, but multiple do, and the app-makers, consumers, employees are better off due to increased competition.
Of course, until then, only the monopolies themselves and the lenient politicians buoyed by the lobbyists will.
PS: This was originally published on my new blog dedicated to sharing venture ideas at https://ideasforfree.org
