Platforms to Protocols
Why do we need open networks?
Consider this - Buber is the leading ride-hailing app in country A. Buber takes a huge commission from the drivers and also charges the passenger unfairly. Still, both parties are left with no choice but to use Buber due to strong network effects from the aggregation of a large number of drivers and passengers - creating a virtual monopoly. Sounds familar? Read on!
With every passing day, more and more services are becoming digital, often powered by private platforms that have disrupted traditional service providers. Strong network effects and hence concentration of data with these few large players is a pattern we see. Closed-loop marketplaces are the norm. Apps are not interoperable and all the individual businesses have to solve all parts of the transaction cycle, i.e. - discovery, ordering, fulfillment & post fulfillment.
While an aggregator-led model (where both service providers and end users are onboarded to the same platform) seems to work, it does not scale beyond a point. Besides, large aggregators often adopt business policies that are advantageous to neither the service provider nor the end user.
Data in siloes, predatory monopolistic practices, lack of scale, and exclusion of certain population segments - all indicate a need to shift the approach from “platform” to “networks”. Imagine trusted, low-cost, decentralized transactions at scale - this is what open networks aim to achieve!
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