Between aggregators and platforms
Recently, I came across Aggregation Theory, popularized by Ben Thompson.
With the internet, aggregators have become very powerful by controlling demand rather than supply. This reverses the classic monopoly, where one company controls all the supply and demand is constrained by it.
Facebook and Google do not control the entire supply of social networks and search engines. There are Twitter, TikTok, Bing, DuckDuckGo, and others. But these competitors struggle to compete in social media and search because demand is concentrated in the hands of these large companies.
Demand is us, the users, who do not want to use 20 services for the same purpose. I create a Gmail account, and just like that I get a better experience on YouTube, Maps, Google Search, Play Store, Drive, and more.
This gives aggregators more power. For example, a monopoly in the search market lets them start setting the rules for other companies. They offer tips on how to get your company to the top of their search results, and, of course, they start charging for it. Without competition in this private space, they set the price.
Platforms are similar, but different.
Platforms let other companies build their businesses on top of them. Microsoft created Windows, which holds a large share of the desktop operating-system market. Windows made it possible for other companies to emerge and create value for people and businesses.
Shopify and Loja Integrada are examples of platforms that help people and businesses create their own online stores. Platforms are more of a win-win arrangement, while aggregators tend to keep all the profit for themselves, forcing suppliers to lower their margins because of the large volume of aggregated demand they control. Amazon is one example.
Anyway, this is worth looking into further. Even as consumers, we can choose aggregators in our day-to-day lives that are more humane and foster a healthy environment for suppliers and consumers.
To learn more, search for it on your favorite search aggregator. Just kidding. Here are a few references in English:
What is the difference between an aggregator and a platform?
Three’s company: Shopify, Amazon, and Etsy
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