Center for Research on Science, Technology and Society

Tulio Chiarini[1], Victo Silva[2], Paulo Henrique Assis Feitosa[3] e Francisco Levy[1]

Since the 1990s, companies have turned to the Internet as a tool to expand their business. Back then, during the phase known as Web 1.0, online pages were static, offering information in a one-way fashion to users, who had limited interaction and were mainly passive consumers. E- commerce was focused on disseminating information about goods and services, processing orders and instructions for using products, as well as distributing them.

Since the 2000s, the transition to Web 2.0 has brought changes to the dynamics of virtual interactions. Users began to consume content and also to actively create, share and interact with it. In this context, social networks gained popularity, influencing the emergence of new business models based on digital platforms, especially since 2010.

The growing use of these platforms in various sectors is what characterizes the phenomenon of "platformania". In addition to the well-known social networks such as Facebook and TikTok, which are widely used by the general population, companies of all sizes have started to use this technological apparatus, adjusting their competitive strategies to establish connections in expanded networks of potential partners, suppliers and customers, with the aim of increasing their presence in the market.

A study focusing on 250 small and medium-sized enterprises in China highlighted that the adoption of foreign social networks had a positive impact on their strategies for exploring new business opportunities in international markets. Several other studies also highlight the growing use of social networks as competitive strategies in various regions, such as Italy, Ireland and India.

From a broader perspective, there are studies that analyze the adoption of digital platforms other than social networks. A study involving 318 companies in the UK found that large companies (with 250 employees or more) adopt digital platforms for efficiency and security in transactions. For small and medium-sized companies (with fewer than 250 employees), the adoption of platforms is related to the search for flexible and dynamic networks, highlighting their value in building solid relationships with suppliers.

But what is a digital platform?

Digital platforms

One of the key definitions of digital platform refers to the technological structures that, driven by advances in artificial intelligence (AI) systems and cloud computing, and the use of big data, have made a new organizational paradigm possible.

These structures, acting as strategically positioned virtual intermediaries, still lack a consensual definition, but one possible typology distinguishes them by the services they offer:

• Over-the-top (OTT) platforms: distribute content directly to devices, bypassing traditional networks such as telephony or broadcasting. They are divided into:
  • communication (such as WhatsApp and Telegram);
  • media (such as Netflix, YouTube and Spotify);
• Marketplace platforms: these allow multiple suppliers to offer products to potential buyers, who can compare different offers in a single place (such as Amazon, Alibaba, Magalu, eBay and Mercado Libre);
• Financial services platforms: facilitate financial transactions and electronic payments (such as PayPal and Pagseguro);
• Social media platforms: enable interactions based on sharing information (such as Facebook, Instagram, LinkedIn and X [formerly Twitter]);
• Diverse services platforms: provide a wide range of services in different sectors, such as:
  • Food delivery: iFood, Rappi, Aiqfome and Zé Delivery;
  • Deliveries in general: Loggi, Kangu and Motoboy.App;
  • Passenger transportation: Uber and 99;
  • Accommodation: Airbnb, Booking and Hotel Urbano;
  • Real estate services: Quinto Andar, Loft and EmCasa;
  • Well-being and beauty: Singu;
  • Health: ConexaSaude, among others.

These categories are not rigidly defined, as the same platform can be classified into more than one type - 99, for example, originally focused on passenger transportation, has expanded its scope to include financial services with 99Pay.

Another concept related to platforms refers to ecosystems, which bring together a variety of participants, from controllers of the technological architecture to end users, whether they are regular users or professionals.

What do we know about the adoption of platforms by Brazilian professional users?

Although the survey carried out by the Regional Center for Studies for the Development of the Information Society (Cetic) on the ownership and use of Information and Communication Technologies by Brazilian companies was not structured to capture the dissemination and adoption of digital platforms by professional users, it allows inferences to be drawn about the phenomenon of "platformania" in Brazil.

From a methodological point of view, the sample was randomly selected using data from the Central Registry of Companies (Cempre) of the Brazilian Institute of Geography and Statistics (IBGE), considering active companies with 10 or more employees. The sample is representative of the population, with a 95% confidence level.

The initial analysis of the dissemination and adoption of digital platforms by professional users (excluding companies with fewer than 10 employees) focuses on evaluating the use of social networks as platforms. Based on data from Cetic, there has been consistent growth in the adoption of these platforms in the period from 2017 to 2021 (see Figure 1).

In 2017, approximately 59% of companies had an active Facebook profile. In 2021, this figure rose to 65%. However, there has been an even more significant increase in the percentage of companies that have established a presence on Instagram, Snapchat, TikTok and Flickr. Between 2017 and 2021, this figure rose from 22% to 66%.

The use of LinkedIn by Brazilian companies is still relatively modest. In 2017, only 12% had a business profile registered on the platform. In 2021, that figure jumped to 23%.

Figure 1 — Companies that have their own profile or account on an online social network, %

Source: Cetic.br. Prepared by the authors

Cetic's data on the use of the Internet for commercial purposes also indicates that, in 2017, only 22% of companies, regardless of size, said they used this tool for sales (Figure 2). This figure jumped to 57% in 2019 and reached 73% in 2021, a movement that seems to have been driven by the pandemic unleashed by Sars-CoV-2. In 2021, 74% of small companies (10 to 49 employees) used the Internet as a sales strategy, while medium-sized companies (50 to 249 employees) recorded 66% and large companies (250 employees or more) 67%. In other words, more and more Brazilian companies are entering the digital world.

Figure 2 — Companies that sold online in the last 12 months, by size, %

Source: Cetic.br. Prepared by the authors. Note: sizes: small (10 to 49 people employed), medium (50 to 249) and large (250 people employed or more)

The data for 2019 and 2021 provides a detailed analysis of the online channels used for sales:

1. Company website;
2. E-mail;
3. Sales sites such as Mercado Livre, OLX, Submarino, Americanas, etc;
4. Social networks such as Facebook, Instagram and Snapchat;
5. Electronic data interchange (EDI);
6. Applications;
7. WhatsApp messages, Skype or Facebook chat;
8. Extranet.

Among these options, numbers 3, 4 and 7 indicate the adoption of platforms by companies. Although number 6 may refer to food delivery service platforms, Cetic's methodology does not detail this aspect, so we will not analyze it here.

"Sales sites" correspond to marketplaces, while "Social networks" represent platforms that facilitate interaction via information sharing. Finally, "WhatsApp messaging, Skype or Facebook chat" are OTT communication platforms, distributing content online without relying on traditional telephone services.

When analyzing the adoption of these three types of platforms by companies, there is a consistent increase in all of them between 2019 and 2021, regardless of size, as detailed in Figure 3.

Figure 3 — Companies that sold online in the last 12 months, by type of online channel where the sale took place, by size, %

Source: Cetic.br. Prepared by the authors. Note: sizes: small (10 to 49 people employed), medium (50 to 249) and large (250 people employed or more)

The significant use of OTT communication platforms by small businesses is striking. In 2021, 80% of those that made online sales used platforms such as WhatsApp, Skype or Facebook chat (Messenger). This rate, although also significant for medium-sized (67%) and large (54%) companies, is more prominent among small businesses.

With regard to social networks, the significant use by small businesses stands out. In 2021, 40% of those that made sales online used Facebook, Instagram or Snapchat as sales channels. Meanwhile, for medium and large companies, these platforms were used by 28% and 36% respectively in the same period.

It is therefore clear that marketplace platforms are increasingly being adopted as sales channels by large companies compared to small ones. The latter, in turn, in percentage terms, tend to use OTT platforms more for their operations.

Problems

Although the term "ecosystem" indicates a "natural" unit, whose parts interact and relate to each other to form a stable system, there are hierarchies in the digital platform ecosystem. This hierarchy gives the controlling company the power to regulate user access to a given digital platform.

An example of this is Meta, which controls several platforms, such as Facebook and Instagram (both social networks), and WhatsApp and Messenger (both OTT communications). All the Brazilian companies that adopt these platforms are, in a way, linked to Meta and depend on it to operate in these digital environments.

This brings challenges, as dependence on a single platform can be problematic, especially when platforms are considered infrastructures. Interruptions, such as the WhatsApp "blackouts" in 2021 and 2022, impact businesses. Unilateral changes to "Terms of Use" or algorithms also affect user companies, as presented in "Cloud Empires" by Vili Lehdonvirta, professor at Oxford University, in   the UK.

One solution for user companies is to practice multihoming, i.e. engaging with multiple digital platforms simultaneously. However, this can generate not only financial costs, but also transaction and operational learning costs.

In addition to these challenges, there are concerns about competition between the platforms themselves. Marketplaces were created for commercial transactions, but social networks are entering this space, taking advantage of their user base. This raises questions about anti- competitive conduct, especially when consolidated social networks such as Facebook expand their services under a single control, obtaining even more user data. One notorious case, which took place in 2022, was when the European Commission accused Meta of abusive practices for the benefit of Facebook Marketplace.

Is there room for public policy?

The concentration of power by companies controlling digital platforms has raised concerns, resulting in debates on how to shape efficient regulation of these markets, in terms of stimulating competition and innovation.

However, before implementing comprehensive regulatory measures, more information needs to be gathered on the impacts of the use of these platforms by Brazilian companies, especially small and medium-sized ones.

It is essential, for example, to carry out studies on the competition between the platforms controlled by the Big Techs and the marketplaces in order to bring to light evidence of anti- competitive conduct.

In this context, it is crucial to develop structured policies to prevent, on the one hand, anti- competitive conduct between Big Techs and Brazilian marketplaces and, on the other, to prevent the potential abuse of the use of personal data by digital platforms in general.

Faced with this situation, public policy options range from effective regulation, involving the application of fines and sanctions (as established by the European Community's Digital Markets Act), to the possible establishment of a public marketplace, similar to the Open Network for Digital Commerce, developed by the Indian government's Department of Promotion of Industries and Domestic Trade. Choosing between these options requires in-depth, evidence- based analysis of the needs and challenges specific to the Brazilian context. These analyses would provide insights for public managers and regulators, allowing them to choose the most appropriate actions in the face of this evolving reality.

[1] CTS/Ipea

[2] Interdisciplinary Research Hub on Digitalization and Society da Radboud University — This email address is being protected from spambots. You need JavaScript enabled to view it.

[3] School of Communication and Arts of the University of São Paulo (ECA/USP) and Visiting Researcher at DISET/Ipea — This email address is being protected from spambots. You need JavaScript enabled to view it.