The End of 'Corporate' Governance: Hello 'Platform' Governance

Abstract

In a technology-driven, digital world, many of the largest and most successful businesses now operate as “platforms.” Such firms leverage networked technologies to facilitate economic exchange, transfer information, connect people, and make predictions. Platform companies are already disrupting multiple industries, including retail, hotels, taxis, etc., and are aggressively moving into new sectors, such as financial services. This paper examines the distinctive features of this new business model and its implications for regulation, notably corporate governance. In particular, the paper suggests that a tension exists between the incentives created by modern corporate governance and the business needs of today’s platforms. The current regulatory framework promotes an unhealthy “corporate” attitude that is failing platforms, and a new direction (what we term “platform governance”) is urgently required. In identifying this new regulatory direction, the paper considers how firms might develop as successful platforms. Although there is no “one-size-fits-all” solution, the paper describes three interconnected strategies: (i) leveraging current and near-future digital technologies to create more “community-driven” forms of organization; (ii) building an “open and accessible platform culture,” and (iii) facilitating the creation, curation, and consumption of meaningful “content.” The paper concludes that jurisdictions that are most successful in designing new style “platform governance” based on the promotion of these strategies will be the primary beneficiaries of the digital transformation.