Stop Calling Everything a 'Platform'

At some point in the past decade, the word 'platform' lost its meaning. It used to describe something specific and economically interesting: a product or service that enables third parties to build on top of it, creating value that the platform owner could not have produced alone. An operating system is a platform. A marketplace that connects buyers and sellers is a platform. These businesses exhibit network effects — they become more valuable as more people use them — and that characteristic is what makes them strategically distinctive and, in many cases, extraordinarily profitable.

Today, the word is applied to virtually everything. A restaurant group with four locations calls itself a 'hospitality platform.' A staffing agency describes its business as a 'talent platform.' A regional newspaper chain, struggling to hold its circulation, rebrands as a 'local information platform.' A company that sells mattresses online recently told investors it was building a 'sleep wellness platform.' None of these businesses exhibit network effects. None of them enable third-party development. None of them are platforms in any meaningful sense of the word. They are businesses — some good, some bad — that have adopted the vocabulary of technology because the vocabulary of technology is where the money is.

The incentive structure is transparent. Investors, particularly in venture capital and growth equity, assign higher valuation multiples to companies they classify as platforms than to companies they classify as services or products. A business that generates $50 million in revenue as a service company might be valued at five to seven times revenue. Relabel it a platform, add some software to the pitch deck, and the multiple can jump to twelve or fifteen times. The actual economics of the business may not have changed at all, but the framing has, and in capital markets, framing matters enormously. Founders and executives learned this lesson quickly, and the result is a corporate landscape in which every company with a website and an ambition claims platform status.

The corruption of the term would be merely annoying — one more piece of corporate jargon to roll one's eyes at — if it did not have real consequences for policy. Regulators around the world are currently engaged in serious, difficult work to address the market power of genuine platforms: the technology companies that control operating systems, search, social media, app distribution, and digital advertising. This work requires precise language, because the regulatory tools appropriate for a genuine platform — interoperability requirements, data portability mandates, restrictions on self-preferencing — are fundamentally different from those appropriate for an ordinary business with market power.

When every company calls itself a platform, the regulatory vocabulary becomes contaminated. Legislators drafting platform-regulation bills find themselves writing definitions so broad that they capture companies with no network effects and no gatekeeping power, or so narrow that they miss genuine platforms that have restructured themselves to avoid the label. Lobbyists for actual platforms exploit the confusion enthusiastically, arguing that if the corner restaurant chain is a platform, then platform regulation must be hopelessly overbroad. The dilution of the term serves, paradoxically, the interests of the very companies that most need to be regulated.

The same problem infects public discourse. Commentators who use 'platform' as a synonym for 'big technology company' obscure the specific features that make platforms powerful and that distinguish them from large companies in other industries. A car manufacturer with a dominant market share is not a platform. A retailer with thousands of stores is not a platform. These businesses may raise legitimate competition concerns, but the concerns are different in kind from those raised by platforms, and conflating them makes it harder to think clearly about either.

There is a simple test for whether a business is a platform: does it enable third parties to create value that the business itself could not have created? Does it become more valuable to each user as more users join? If the answer to both questions is no, the business is not a platform. It may be a perfectly good business — a fine product, a useful service, a growing company with strong margins — but calling it a platform does not make it one. It merely makes the word less useful for describing the things that actually are.

Language matters because it shapes how we think, and how we think shapes what we do. The inflation of 'platform' into a content-free honorific has made it harder to understand what platforms actually are, harder to regulate the ones that need regulation, and harder to evaluate the businesses that appropriate the label. The fix is simple, if unfashionable: insist on specificity. Ask what, precisely, makes a self-described platform a platform. If the answer is vague, the label is probably wrong.

Companies will not police their own language; the incentives point the wrong way. But investors, analysts, journalists, and regulators can refuse to accept the term at face value. A mattress company is a mattress company. A staffing agency is a staffing agency. A newspaper is a newspaper. Calling them platforms does not make them more valuable, more innovative, or more interesting. It just makes it harder to talk about the things that actually are.