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Alibaba and Amazon create intelligence

Alibaba and Amazon create intelligence from the data they collect from their customers, highlights an analysis released by the Economic Commission for Latin America and the Caribbean (ECLAC).

In addition to offering a marketplace through network effects, platforms like Alibaba and Amazon actually offer intelligence from data.

Filipe Da Silva and Georgina Núñez, the authors, are struck by the fact that this data-driven model is one of the determinants of the success of platforms.

Their analysis is entitled: The era of digital platforms and the development of data markets in a context of free competition

Alibaba and Amazon operate as e-commerce companies and serve customers around the world.

In 2016, Alibaba was mapping the preferences of more than 630 million consumers and offered its users, in addition to an intelligent logistics space, a personalized package of services and a credit system.

In this sense, there is a monetization of the data for own use and for sale.

Alibaba and Amazon

According to Accenture (2016), 49% of Alibaba’s revenue comes from the sale of smart advertising.

The implementation of the platform model goes through the intensive use of data. To recognize the value of the data they own, these companies use it as an integral part of their processes.

Beyond the collection, use and reuse of data, these companies promote the production of data in their spaces of interaction (behavioral data, consumption, experience, productivity, among others).

In turn, the authors add, this creates a multiplier cycle, where the value of the data is multiplied by the number of users and partners in the ecosystem.

Data is so important to the business model of digital platforms that some countries have considered considering it as “essential facilities”, that is, having it under regulation.

In terms of regulation, network effects, abuse of dominant position, envelopment (expansion of relevant markets), alliances, predatory and data-driven acquisitions, and the imposition of data barriers are the trends that drive the study of competition policy in the context of digital platforms.

The adoption of the platform business model is a trend that can be clearly observed in start-ups.

Of the more than 13,000 start-ups in the AngelList database, 4,840 are from social media platforms (35%), 3,988 are from e-commerce (28%), 2,179 from applications (16%), 1,948 from platforms for developers (14%) and 978 from Blogs (7 percent).

 

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