Value movement of platform companies

By Wang Ting, Qiu Yaqi / 04-08-2024 / Chinese Social Sciences Today

Online shopping is extremely popular today. Photo: Idol Design/TUCHONG

The platform economy has emerged as an important support for the high-quality development of China’s digital economy, and its rapid growth has instigated transformative changes across various domains of production and social life. Novel forms of labor, such as platform-based technical labor and gig work, have proliferated. Online and offline goods, as well as digital and traditional goods, circulate simultaneously in the market. Platform companies accrue substantial profits, while labor disputes between platforms and gig workers are frequent. Analyzing the nature and forms of value creation, realization, and distribution processes within platform companies can enhance understanding of the laws governing value movement in the platform economy, thereby providing insights for its healthy development in China. 

In the platform economy, various economic entities and phenomena intertwine, presenting a more complex and diverse form of value movement. In the domain of production, the digital activities of internet users provide the necessary conditions for production by platform companies, which engage in digital labor by hiring digital workers and participate in the value creation of digital goods. In the domain of circulation, the process of value realization for virtual goods is intertwined with the process of value realization for real goods circulated via digital platforms.

In the domain of distribution, platform enterprises wield power in value distribution by participating in both production and circulation domains. They appropriate the surplus labor of both digital and non-digital workers and gradually accumulate platform capital. Concurrently, issues such as imperfect competition and inequitable distribution structures have emerged in the platform economy. In response, China should regulate the production and distribution processes of platform companies and unlock the potential of the platform economy to empower high-quality economic development.

The operation and management of platform companies should be regulated to promote the orderly and healthy development of the platform economy. Firstly, platform companies need to be guided to transform their monopolistic power into productive forces and contribute to commodity production and circulation at the societal level. Secondly, there is a need for greater oversight of platform companies. A fairer digital business environment should be created by taking strict punitive measures against acts of unfair competition, such as leveraging monopolistic power to crush competitors and realize massive profits. Lastly, the government can offer more high-quality digital public goods by enhancing the participation of state-owned capital in digital infrastructure such as base stations, telecommunication networks, and e-government.

A fair and reasonable distribution mechanism for platform revenue should be established to promote inclusive sharing of the “platform dividend.” Firstly, the major role of digital workers in the creation of digital products should be fully recognized, with their employment benefits being improved and reasonable work hours being implemented. Secondly, it is necessary to improve labor laws and social security policies in regard to flexible employment, clarify the rights and obligations of platform companies and gig workers, and improve the working environments and conditions of gig workers. Thirdly, more efforts need to be invested in data rights confirmation regarding the personal data of internet users in order to protect the legal rights of information producers by law.

The platform economy has tremendous potential to complement the real economy. Facilitated by advanced digital technology and strong network effects, digital platforms have innovatively optimized the mechanism for matching supply and demand, which allows traditional businesses to diversify their sales channels and meet the diverse, individual, and higher-level needs of consumers. Therefore, the integration of the platform economy and the real economy should be accelerated.

One one hand, industrial and consumption upgrading can be empowered through increased investment in digital technologies such as the internet, the Internet of Things, big data, and cloud computing, more extensive application of information technology in trading scenarios, and digital reconstruction of the circulation process. On the other hand, it is recommended to intensify the oversight of platform companies, impose harsher penalties for disseminating misleading trading information and manipulating user behavior, and prevent over-financialization of platform companies.

Wang Ting (associate professor) and Qiu Yaqi are from the School of Economics at Jilin University.