Difference Between Aggregators And Platforms
In the world of online business, aggregators and platforms are two terms that are often heard together. They are popular approaches mostly used by companies.
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Key takeaways
- In the world of online business, aggregators and platforms are two terms that are often heard together.
- It provides cloud services to many companies, and developers can create digital assets when deploying their codes on Amazon’s servers.
- The platforms enable suppliers to set up their businesses and increase the exposure while aggregators usually streamline information and drive traffic when maximizing the platforms’ efficiency.
In the world of online business, aggregators and platforms are two terms that are often heard together. They are popular approaches mostly used by companies that need to connect service providers and consumers. They tend to share similarities to some extent, but they are naturally different, considering their impact on the user.
What Are Aggregators? #
We can define aggregators as programs or websites that collect related content to display or link to it. Ben Thomson, a veteran teach analyst, claims aggregators collect a significant number of users and leverage access to them to benefit from suppliers.
Aggregators are entities that intermediate the transactions between the users and third party suppliers. They bring together demand and commoditize the suppliers hence controlling the transactions by establishing a direct relationship with them. When they intermediate, there’s always a fee that can be paid by either party, but in many cases, the supplier is charged.
What Are Platforms? #
These are the foundations where various ecosystems are developed. In today’s world, you may have a website, portal store, or seller and buyers on your website, but they are not all platforms unless they satisfy one rule. For anything to be termed as a platform, the economic value of everyone who uses it must exceed the value of the company that developed it.
So there is a basic structure that needs to be achieved by anything claiming to be a platform. A platform typically helps the entities transacting through it to gain value compared to when they don’t use it. This means the economic value of the transactions facilitated between the users and third-party suppliers should surpass that particular platform’s accumulated value.
Platforms enable suppliers to build their business and directly charge their customers. They don’t interfere with the platform when interacting, so the platform acts as the facilitator. Microsoft Windows and Apple’s app store are examples of platforms with tremendous control over the third parties. For instance, when you’re excluded from the apple app store, your services to iPhone users are terminated. This shows that Apple has a lot of rent-extraction opportunities from its software vendors, like forcing them to only use their payment processor. Platforms tend to ‘self-deal’ through prioritizing their services. Another good example is how Microsoft allows for real-time office doc coauthoring if only using their proprietary cloud services.
The Key Differences Between Platforms And Aggregators #
Platforms are foundations of many great innovations and create possibilities for products that formerly never existed. As technology advances, there should be larger platforms, not necessarily fewer ones. Despite having such an embraced importance, platforms are sometimes used for undesirable purposes, and that’s why regulators need to foster the development of new platforms while ensuring they aren’t misused.
Amazon Web Services (AWS) is one of the best platforms in the digital world today. It provides cloud services to many companies, and developers can create digital assets when deploying their codes on Amazon’s servers. They gain the money made by the developers because they take care of all hosting functionalities and storage. Companies such as Snapchat, Twitter, and Instagram hosted by AWS, create a greater value than the value of the AWS itself. These companies make a lot of money, and then they pay AWS for storage, hosting services, and all the computing charges needed to run their apes and websites.
On the other hand, aggregators can also be termed as network models that organize related unorganized service providers under one brand name in a large platform, e.g. User, redBus, ola, etc.
Google and Facebook are aggregators that help users locate third parties. They are also known to be capricious and can downrank or exclude anyone. If excluded, you can only connect to the users through the prevailing rival aggregators. They may offer top placements that are premium charged, but some may use rivals to evade top placements charges. Aggregators can benefit from third parties by using ’tying,’ for example, when travel agents are forced to pay for inclusions in Google travel products.
Although these two have many common aspects, they have differences in their operations. Here are some of the key differences between platforms and aggregators.
? Brand name
Generally, platforms are brands, but they have multiple suppliers selling their commodities under their brand name. For example, Amazon, as a platform, has many sellers selling their products with their name. On the side of Aggregators, every product or service is under one specific brand name.
? Price
Platforms have many vendors, each with a varying price for a particular product. The user is the one who decides and chooses the seller to buy from after comparing various products. In aggregators, the price is standardized since every product or service is under one brand name. The providers near the customers take the order.
? Quality
Aggregators have one common brand name and believe in producing a standard quality that satisfies the user. But platforms deal with various vendors with varying quality of products from seller to seller.
Despite the differences between aggregators and platforms, they all play a role in connecting the buyers and sellers.
How Are They Regulated? #
Understanding the variations between platforms and aggregators is important in the regulation of these two approaches. The regulators need a more flexible way of knowing when to step in if aggregators and platforms are treated as different entities. Regulators’ action is triggered by abuses between platforms and aggregators such as self-dealing, rent-seeking, vertical closure, and tying. Regulation needs to be done effectively with the right laws to eliminate undesirable and anticompetitive behaviors that don’t give rise to the value and innovation we need. Some of the policy recommendations include:
? Forcing platforms to be more transparent towards businesses and share relevant data — Businesses should be given tools for collective redress against platforms.
? Development of ethical algorithms and set up watchdog agencies.
? Competition tools should be updated to account for data.
? Enforce platform neutrality and enhance possibilities for interoperability
Rules are created as guidelines to ensure the integrity and functioning of the two approaches and increase their potential. The rules should be created for competition policies, platform-to-business relations, and algorithmic decision making.
Although the line between platforms and aggregators tend to blur, the two approaches are significant in the current business landscape. All have one primary goal of satisfying the users and service providers. The platforms enable suppliers to set up their businesses and increase the exposure while aggregators usually streamline information and drive traffic when maximizing the platforms’ efficiency.
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Questions and answers
What Are Aggregators? #
We can define aggregators as programs or websites that collect related content to display or link to it. Ben Thomson, a veteran teach analyst, claims aggregators collect a significant number of users and leverage access to them to benefit from suppliers.
What Are Platforms? #
These are the foundations where various ecosystems are developed. In today’s world, you may have a website, portal store, or seller and buyers on your website, but they are not all platforms unless they satisfy one rule.
How Are They Regulated? #
Understanding the variations between platforms and aggregators is important in the regulation of these two approaches. The regulators need a more flexible way of knowing when to step in if aggregators and platforms are treated as different entities.