dependent entrepreneur

The Perils of Platform Dependence: How Digital Platforms are Redefining Entrepreneurship

According to Cutolo and Kenney (2019) In the digital age, platforms have become the new power brokers, reshaping entire industries and redefining the very nature of entrepreneurship. While these platforms, such as Amazon, Google, and Apple, offer unprecedented opportunities for aspiring entrepreneurs to reach vast audiences and access valuable resources, they also come with a hidden cost: a profound loss of autonomy and control.

The rise of the "dependent entrepreneur" is a phenomenon that has largely flown under the radar, overshadowed by the dazzling success stories of unicorn startups and Silicon Valley disruptors. Yet, for the vast majority of entrepreneurs operating within the confines of these digital ecosystems, the reality is far less glamorous and far more precarious.

At first glance, the platform economy appears to be a boon for entrepreneurship. These digital spaces provide low barriers to entry, instant access to global markets, and a wealth of tools and resources to help entrepreneurs launch and grow their businesses. However, this apparent ease and accessibility conceal a darker truth: that the entrepreneurs who build their livelihoods on these platforms are not truly independent, but rather are beholden to the whims and dictates of the platform owners.

The power asymmetry between platforms and their entrepreneurial dependents is stark. Platform owners have a god-like view of all activity within their ecosystems, allowing them to monitor, control, and manipulate the actions of entrepreneurs at will. They can unilaterally change the rules of engagement, alter algorithms to favor certain products or sellers, or even expel entrepreneurs from the platform entirely, effectively wiping out their businesses with the click of a button.

This lack of agency and autonomy flies in the face of traditional notions of entrepreneurship, which celebrate the rugged individualism and self-determination of those who strike out on their own. In the platform economy, however, entrepreneurial success is less about grit, innovation, and perseverance, and more about navigating the capricious currents of platform politics and power dynamics.

The consequences of this dependence are far-reaching. For one, it creates a constant state of uncertainty and anxiety for entrepreneurs, who must live in fear of sudden changes or disruptions that could upend their carefully built businesses. It also stifles innovation and risk-taking, as entrepreneurs are incentivized to play it safe and conform to the dictates of the platform, rather than pushing boundaries or exploring new frontiers.

Moreover, the concentration of power in the hands of a few dominant platforms raises serious questions about the long-term viability and sustainability of entrepreneurship in the digital age. As platforms continue to expand their reach and influence, they threaten to swallow up entire industries and stifle competition, leaving entrepreneurs with few alternatives and even less leverage.

So, what can be done to address this imbalance of power and protect the autonomy and independence of entrepreneurs in the platform economy? Some have suggested that multi-homing, or offering products and services across multiple platforms, can help mitigate dependence on any single platform. Others have advocated for greater regulation and oversight of platform owners, to ensure fair play and prevent abuse of power.

Ultimately, however, the solution may lie in a fundamental reimagining of the relationship between platforms and entrepreneurs. Rather than viewing entrepreneurs as mere cogs in the platform machine, subject to the whims of algorithmic overlords, we must recognize their vital role as innovators, job creators, and drivers of economic growth. This means creating a more equitable and collaborative ecosystem, where entrepreneurs have a genuine seat at the table and a voice in shaping the rules of engagement.

The rise of the dependent entrepreneur is a wake-up call for anyone who cares about the future of innovation, competition, and economic opportunity. As we navigate the uncharted waters of the platform economy, it is imperative that we grapple with these thorny questions of power, autonomy, and control. Only by doing so can we ensure that entrepreneurship remains a viable and vibrant force for positive change in the digital age.

Cutolo, D., & Kenney, M. (2019). Dependent Entrepreneurs in the Platform Economy: Playing in the Gardens of the Gods. BERKELEY ROUNDTABLE ON THE INTERNATIONAL ECONOMY, BRIE Working Paper 2019-3.