Research - 20.10.2019 - 00:00 

Digital dominance: The future of mobility is decentralised

The platform economy is changing: Distributed Ledger Technologies (DLTs) such as Blockchain are altering incentives and shaking monopolies. To the advantage of mobility service providers, as can be seen from e-scooters and bicycle sharing in many cities. Decentralised mobility platforms are also the topic of the "St.Gallen Blockchain Roundtable" in Zurich on Tuesday, 5 November.
Source: HSG Newsroom

21 October 2019. Now that central transaction platforms have reshaped bilateral trade, decentralised platforms are softening the new trade structures and democratising the platform economy. Whether it is Facebook's currency Libra, the collaboration between IBM and Maersk to establish a decentralised logistics ecosystem, technology developments such as Ethereum, IOTA and Polkadot or the crypto currency Bitcoin: These developments are leading to the gradual erosion of monopolies.

High margins and rapid growth

Although bilateral trade is characterised by high transaction costs, centralised digital marketplaces, where supply and demand are linked, have been able to reduce transaction costs. This explains the success of the platform economy. The decisive factor for this was the Internet protocol, TCP/IP for short. Thanks to this development, transaction platforms such as Amazon Marketplace or can communicate information about supply and demand at zero cost.

The information asymmetry, which is in favour of the platform companies, can lead to competitive advantages. This advantage is often so great that monopolistic market structures emerge: Amazon's market share in Germany is 68%,'s 66%. High customer loyalty and a good network often lead to "Winner-Takes-It-All" platforms, which promise companies such as Google, Amazon, Facebook,, Uber, Airbnb and Netflix disproportionately high margins and rapid growth.

Decentralized platforms destroy the business models of platform companies. Distributed Ledger Technologies (DLTs) like Blockchain counterbalance the information asymmetry via direct monetization of the information flow on the data level. Data must now be acquired directly from the data creator together with their consent. This is particularly important for business models that base their success on artificial intelligence, as large amounts of data are required to train the algorithms.

E-scooter instead of taxi and bus: Mobility in upheaval

Mobility is also experiencing an upheaval: In the past, public transport companies, taxi companies and private vehicles dominated the mobility market. Today, more than 14 mobility providers are offering their services in Berlin. There are bicycle subscriptions such as Swapfiets, e-scooters (Tier, Circ, Lime, Voi, Emmy, COUP) and bike sharing (Uber JUMP). Furthermore, there are also mobility offers such as car sharing (WeShare, MILES, ShareNow), ride hailing (Uber, FreeNow), and ride sharing (Berlkönig, CleverShuttle), which complement the individual mobility offers of traditional bus and train services. Privatisation leads to competition between suppliers. The promising margins and rapid growth are driving each of these companies to offer their services through centralised transaction platforms.

Decentralised mobility platforms

Researchers at the Institute of Technology Management (ITEM-HSG) and the Institute for Customer Insight (ICI-HSG) at the University of St.Gallen are observing a trend towards "Mobility as a Service" (MaaS): All participating service providers are directly involved in the mobility process and communicate digitally on a marketplace. The decisive question is on what technical basis this MaaS concept will be based in the future:

One possibility will be the central platforms. Here a central platform company orchestrates the MaaS marketplace, similar to Amazon Marketplace - with the disadvantage of information asymmetry. Over the long term, this will lead to mobility providers becoming dependant on platform companies.   

The other possibility would be the implementation of a decentralised platform operated by a platform network. Here the mobility providers can participate on the one hand, as well as other partners providing complementary services, like the one HERE. The card provider - once a joint acquisition of Audi, Daimler and BMW - now includes other companies such as Tencent, Intel, Bosch and Continental under one roof. As a consortium, the various core competencies could then be combined and a decentralised platform operated, which would in turn avoid dependencies and strengthen the core business of each individual.

Sticking point for decentralised platform eco-systems

Currently, high customer loyalty and the associated networks are already leading to information asymmetries in the mobility market, and this involves the potential for creating monopolistic market structures. For example, Google or Uber maintain direct customer contact. The HSG research team recommends companies counteract monopolistic market structures preventively and establish democratic, i.e. generally accessible, structures on the mobility market via decentralised platforms.

Decentralised platforms involve a key challenge: The complexity and orientation of the platform network must be managed through an integral governance model that serves as a kind of constitution. The implementation of this model would then be the sticking point for decentralised platform eco-systems. Businesses and regulating authorities must communicate well with one another to ensure consensus. Should this succeed, industry and society will benefit from digital independence.

The St.Gallen Blockchain Roundtable

The Institute of Technology Management (ITEM-HSG) will discuss the opportunities, challenges and implications of decentralised platforms and the corresponding democratisation of the platform economy together with business, politics and science in Zurich on Tuesday, 5 November 2019.

Image: Fotolia / Sashkin