Artificial intelligence (AI) has been a buzzword in the business world for some time now. From automation to chatbots and beyond, the impact of AI on the way we do business has been significant. But the true potential of AI lies in its ability to create platform economies that revolutionize the way we work, communicate, and live.
A platform economy is an economic system in which platforms, rather than individual firms, are the key drivers of economic activity. In such an economy, businesses and consumers connect with each other through digital platforms that provide goods, services, and information. Think of Amazon, Uber, and Airbnb, all of which have transformed their respective industries by creating digital platforms that enable businesses to connect with customers in new and innovative ways.
The launch of ChatGPT, a large language model trained by OpenAI, has further awakened the world to the revolutionary potential of AI to transform our world. We are now entering a future which may best be described as the Platform Economy. In this economy, essential services like health, education, legal services, news media, and entertainment are efficiently accessed digitally on dedicated platforms like GPT-4. Those who create or are able to take a significant stake in these platforms early on are going to command enormous value in the economy of the future.
The rise of the platform economy has already transformed the global economy. According to a report by the World Economic Forum, the top 10% of global companies by market capitalization are now platform companies, up from just 1% in 2000. In addition, the report found that platform companies are more profitable than traditional companies, with an average return on assets of 10.3% compared to 7.2% for traditional companies.
The success of platform companies can be attributed to several factors. Firstly, platforms benefit from network effects, which means that as more users join the platform, the value of the platform increases for all users. Secondly, platforms benefit from data-driven insights that enable them to better understand their customers’ needs and preferences. Finally, platforms benefit from economies of scale, which means that as the platform grows, it becomes more efficient and cost-effective to operate.
While forward-thinking economies such as Singapore, the UAE, South Korea, and Norway are capturing value in these emerging tech platforms through investments by their sovereign funds, the story is different in Africa. In particular, countries such as Ghana are failing to create these platforms and appear not to have seen the need to form dedicated funds to capture value in these platforms that will form the backbone of the economy of the future.
To address this, governments across Africa may consider the creation of three dedicated funds. Firstly, a disruptive innovation fund that invests in all potential emerging tech companies like OpenAI, Deepmind, and other startups outside the continent for an equity stake. Secondly, another dedicated fund to support startups and local companies working on emerging technologies in Africa to launch and scale globally. Finally, a third fund for research and development in African universities dedicated solely to emerging technologies such as AI, blockchain, metaverse, quantum computing, and genomics.
Individuals with lesser resources can also position themselves to capture some of the economic value in the coming emerging tech revolution. One way to do this is to invest in tech startups that are creating innovative platforms in emerging markets. Another way is to develop skills in emerging technologies such as AI, blockchain, and quantum computing, which will be in high demand in the platform economy.
The rise of the platform economy also raises several important issues that need to be addressed. Firstly, there is a need to ensure that platforms are regulated in a way that protects consumers and promotes fair competition. Secondly, there is a need to ensure that the benefits of the platform economy) are distributed fairly, and that no group is left behind. Thirdly, there is a need to address the potential impact of platform economies on employment, as automation and AI are likely to lead to job displacement.
Regulation is an essential aspect of ensuring that the platform economy operates in a way that benefits everyone. Platforms need to be held accountable for the content they host, and for protecting users’ data and privacy. They also need to be regulated to ensure that they do not become monopolies that dominate entire markets and stifle competition.
Furthermore, governments need to ensure that the benefits of the platform economy are distributed fairly. This means ensuring that all groups have access to the benefits of digital platforms, regardless of their socio-economic status or location. It also means ensuring that platform companies pay their fair share of taxes, and that this revenue is used to fund public services and social programs that benefit everyone.
Lastly, there is a need to address the potential impact of the platform economy on employment. Automation and AI are likely to lead to job displacement, especially in industries such as manufacturing, transportation, and retail. Governments need to invest in retraining and upskilling programs to ensure that workers can transition into new industries and roles. They also need to explore new forms of social safety nets, such as a universal basic income, to ensure that nobody is left behind.
In conclusion, the rise of the platform economy, fueled by the revolutionary potential of AI, has transformed the global economy and will continue to do so in the future. Governments and individuals need to position themselves to capture the economic value that these platforms will generate, while also addressing the important issues of regulation, fairness, and employment. By doing so, we can ensure that the platform economy benefits everyone and leads to a more prosperous and equitable future.
The writer is a business development consultant – Eli helps businesses out with business diagnostics, business plans and strategy, training and market entry services
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