Business model i

The Challenges of Platform Capitalism: Understanding the Cultural and Economic Impact of
Apple’s Business Model
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 Business model ii

Table of Contents
Introduction......................................................................................................................................1
Conceptualising Platforms...............................................................................................................1
Expansion, monopolisation, invulnerability....................................................................................2
Apple’s Organizational Culture.......................................................................................................4
Apple’s Business Model..................................................................................................................4
Geographical Segments of Apple Inc..............................................................................................5
America........................................................................................................................................6
Europe..........................................................................................................................................6
Rest of Asia Pacific.....................................................................................................................6
Apple’s Business Model Characteristics.........................................................................................7
Top-notch excellence...................................................................................................................7
Creativity.....................................................................................................................................7
Innovation....................................................................................................................................7
Secrecy.........................................................................................................................................8
Apple’s focus...................................................................................................................................8
References......................................................................................................................................10
 Business model 1

The Challenges of Platform Capitalism: Understanding the Cultural and Economic Impact of
Apple’s Business Model

Introduction

The platform-based business model is based on a greedy desire for data, disregarding only
privacy (usually workers’ rights) and outward expansion to meet data requirements. These
platform-based software companies are becoming more and more in the centre of the global
economy. As per the study by Pasquale (2016), a group of mysterious entities called “the
platform” increasingly appear to be shaping this globalised world. On one hand, where these
platforms are of benefits to the world, these platforms are also a threat. For instance, Facebook
has been accused of fake news and changes that permanently preserve US presidential election
results. Amazon is fundamentally changing logistics, but on the same hand, its automation will
create unemployment in the future. Google is rapidly developing new artificial intelligence
technologies that are changing the way people interact with surrounding technology. Similarly,
Apple is on the same bandwagon and is one of the leading tech industries in the world. Apple is a
trendsetter and has created a unique place in this market. This focuses on the platform capitalism
of Apple by focusing on its business model.

Conceptualising Platforms

In essence, these platforms present a dominant new business model that assumes that the
different groups of people are brought together. Platforms like Facebook and Google connect
advertisers, companies, and regular users. In addition, Uber connects drivers and riders, while
Amazon and Siemens build and lease the platform’s infrastructure as the basis for a modern
economy (Gillespie, 2010). All of these business platforms are indispensable and demonstrate
that the vast change of capitalism is data-centered.

Pasquale (2016) has indicated that data is the primary resource driving these companies and it is
the data that gives them an edge over their competitors. The platform is designed as a mechanism
for extracting and using this data. By providing the infrastructure and mediators between the
different groups, a platform can be established so that all interactions between these groups can
be monitored and extracted. This is the source of their economic strength. This feature of this
platform-based software also helps analysts to understand the question: “why companies outside
the technology sector have adopted the platform elements?”
 Business model 2

It is an evident fact that data has now become a central resource in the economic, technical, and
non-technical sectors. In this concern, companies must develop fast ways to ingest and collect
this information (Langley and Leyshon, 2017). The platform provides a turnkey solution to this
problem. As a result, firms like “John Deere”, also referred to as the world’s largest agricultural
machinery company, have also jumped into the business of building platforms making
connections between farmers, seed producers, chemical manufacturers, equipment sensors,
tractors, etc.

The company mines data on its own and uses it to improve customer service (for example,
predict with more accuracy when and where a specific crop will be sown) and improve products
(for example, eliminating wear and tear on machinery); eventually, with the demands of
capitalism, gaining an advantage and defeating competitors. However, this drive to collect more
and more data could lead to disastrous consequences. For instance, platforms like Google and
Facebook are continuously spying and collecting data of their participants; hence, breaching the
privacy of its customers (Gillespie, 2010).

The impact on privacy is a necessary feature of platform capitalism and the same is being by
these platforms. As Srnicek (2017) has stated, the platforms are asking for more and more data,
like a monopolistic entity that consumes power. This concept of power is completely different
from what people originally think of private industry on the contrary. A company has the
primary impetus to further its development. When Google Streetview cars passed by, Google
was accused of collecting home Wi-Fi data. Facebook has been criticized for putting too much
pressure on personal life. Similarly, Vizio has been accused of spying through Smart TVs. These
events should not be seen as accidental pacing behaviour but as an inevitable consequence of a
capitalist platform. When data becomes a dominant resource and capitalist competition
emphasizes access to data, then this age is unavoidably occupied with privacy scandals.

Expansion, monopolisation, invulnerability

The desire to have data on the platform means that these companies are expanding as well. Not
only does this lead to privacy concerns, but it also means that these shapes will grow and expand
according to the data-centric logic of capitalist centralisation. The wave of mergers and
acquisitions from companies such as Google, Facebook, Apple, and Amazon illustrates how data
mining can pose a new set of regulatory demands for these companies (Fumagalli et al., 2018).
 Business model 3

They cannot be satisfied with their core business. Instead, data miners must continue to expand
into new territories. These companies quickly acquired innovative startups that demonstrated the
potential for data mining. Level 2 platforms like LinkedIn and Twitter also meet the major
platforms’ growing data needs (Fumagalli et al., 2018). All this helps to understand why search
engine companies like Google are investing in companies that have nothing to do with self-
driving vehicles and the Internet of FMCG. These are just new ways to extract data. Unlike
Fordist’s classic vertical integration, the platform adopts a rhizomatic-style integration.

The scalability of these platforms means that companies operating in completely different
disciplines now face the consolidation of competitive data mining pressures (Gillespie, 2010).
Google started as a search engine company and is currently competing with social media sites
Facebook and the e-commerce giant Amazon. The apparent hostility between these major
platforms is currently diminishing, but as they expand into new territories, they will enter more
direct competition than ever before (Langley and Leyshon, 2017). Amazon and Google play an
important role in controlling this part of the data mining empire. Internet commerce is another
point of contention. Facebook aims to pose a fairly direct threat to Google and Amazon and
bring more and more business transactions to the platform. As these activities expand and the
competitive obligations of the capitalists gradually build-up, we should expect them to become
more active with one another.

However, this dynamic between platforms is well-adjusted by the reverse trend of monopoly. A
key feature of the platform is its dependence on network impacts (and generation capacity)
(McIntyre and Srinivasan, 2017). The more users use the platform, the greater its value for
everyone. The result is a virtuous circle that leads to a marketplace dominated by winners. For
example, a person joined Facebook because many of his/her friends and family are already on
Facebook. But at the same time, it strengthened Facebook’s central position and its monopoly in
the field of social networks. It can easily be seen that this monopoly trend is emerging on various
major platforms like Google, Facebook, and Amazon and not to mention the non-Western
competitors Alibaba and Tencent (Dolata, 2017). Each platform’s goal is full control of the
primary field of work. In this position, from state-sponsored platforms to worker-owned platform
cooperatives, the competitors are nearly flawless and unimpeachable.
 Business model 4

Apple’s Organizational Culture

Apple is one of the key platforms that is dominating the mobile phone and computer sector
around the globe. Apple’s organizational culture is key to continued business success (Gillespie,
2010). The core thing is its business model which is the source of its monopolistic appearance
(Eaton et al., 2015). It establishes the organization or company culture and maintains the
business philosophy, values, beliefs, and related behaviours among the employees. The Business
Analysis Case shows that Apple has a corporate culture that allows HR to support various
strategic goals (Schein and Schein, 2019; Goriunova, 2011). For example, a company’s cultural
characteristics coincide with a craving for novelty, which was a core factor in defining the
competitive nature of corporations in IT, and similar fields. Under the leadership of Steve Jobs,
and now Tim Cook, the company has continued its legacy to enhance its cultural heritage and
provide maximum HR support and commercialisation in various markets around the world.

Apple has shaped a corporate culture for itself and used it as a tool for its strategic management
success. Through the culture adopted by Apple Inc., it has competitive advantages over other
companies in various industries (Purkayastha and Sharma, 2016). The company competes with
IT companies such as Samsung, Intel, Google, Amazon, and IBM. These competitors exert
powerful external forces and influence the strategic management of companies in the industry.
As a result, cultural characteristics should increase the competitive advantage that the workforce
demands (Albrecht et al., 2015). The company achieved this strategic goal through part of the
organizational culture. This corporate culture by Apple has allowed the company to become a
monopolistic force that can transform the world (Goriunova, 2011). Apple has created such value
for its products that even if the features are already present in the market, Apple’s features are
still praised and valued.

Apple’s Business Model

Under the leadership of Steve Jobs, with Apple, it is difficult to forget a modern American
company dominated by personal ideas and personalities. Jobs’ extraordinary innovation pushed
Apple to unprecedented levels until his death from cancer in 2011 (Amin, and Munsi, 2020).
During Steve Jobs’ second term (dissolved in 1985 and back in 1997), Apple returned to reality
 Business model 5

and revolutionized many subsectors (Amin, and Munsi, 2020). At the launch of the iPhone in
2007, it took over “Sony’s Walkman” business and completely changed the mobile phone.

Apple effortlessly outperformed its competitors in sales of high-end devices and products. Credit
goes to the company’s reputation for not being compatible with Microsoft in the early 2000s
(Amin, and Munsi, 2020). Many millennials grew with the growth of many Macs and this has
supported the company’s excellent insistence on product integration, making it easier for the
customers to continue using new Apple products and difficult to switch to a competitor’s
interface. It is sometimes called the “Apple ecosystem lock” (Amin, and Munsi, 2020). It has
often been heard that once a consumer has switched to Apple, it does not go back to android.
This is the magic of Apple’s monopoly.

The strength of Apple’s business model lies in its remarkable accomplishment: the iPhone. The
advent of the iPhone had revolutionised the mobile phone sector. Nobody has ever imagined
before, that a phone can do this much (Amin, and Munsi, 2020). That was the moment, Apple
created a separate market for itself. Nearly “three-quarters of Apple’s total revenue comes from
selling iPhones,” and no equivalent invention has begun since the death of the former CEO and
Tim Cook took over (Amin, and Munsi, 2020). However, Cook did a good job preserving Jobs’
legacy, causing Apple’s stock price to skyrocket to a record high.

Apple’s Geographical Sectors.

Apple primarily looks over the operations by region to region. Apple has expanded its operations
all over the world. Although it does not have a data centre or a store in every country, it has
succeeded in creating an eco-system that almost every person on the planet not only is aware of
Apple but admire it too (Marrero, 2018). The company’s reporting divisions include regions like
America, Europe, China, and other “Asia-Pacific” regions. The products/services that Apple sells
are fairly similar across all geographies, but the corporation can manage the topographical
regions distinctly. This is to ensure that the business’ approach and procedures align more with
regional business environment/regulations and to better meet its customers’ needs and suppliers
(Marrero, 2018). Additionally, market subtleties vary by region, so there is a distinct advantage
in doing business geographically.
 Business model 6

America

This segment is Apple Inc.’s largest geographic segment, based on net income achieved in 2019.
The American region includes North and South America. In addition, “Apple’s” net sales from
the US increased in the past year from $112 billion in 2018 to $116.9 billion (Garcia Marrero,
2019). The main drivers of net sales growth from the US region containing the development in
net trades of services, wearables, and other accessories. However, the increase in net trades in
American in 2019 was partly offset by lower iPhone sales (Garcia Marrero, 2019). Moreover,
against the US dollar, the strong US dollar negatively affects Apple’s 2019 net sales from the US
market.

Europe

Apple’s European region includes not only European countries, but also “India, the Middle East,
and Africa.” Except for the US region and the “Asia-Pacific” region, Apple’s net sales were
affected in all regions, with an annual decline in 2019 (Garcia Marrero, 2019). Apple’s total net
trades in Europe in 2019 decreased by about 3%. The deterioration in trades in European nations
is mainly owed to the decrease in iPhone sales year on year (Garcia Marrero, 2019). However,
the drop because of the net sales of iPhones dropping and was partly offset by growth in sales of
services, wearables, accessories, and cases. In Europe, net trades in 2019 were $60.3 billion, up
from $62.4 billion in 2018 (Garcia Marrero, 2019). The tougher US dollar had an adverse
influence on Apple’s net sales in Europe.

Rest of Asia Pacific

Other geographic regions of Asia and the Pacific include the regions that are excluded in
Australia and other geographic regions of “Apple Inc.” “Apple’s net sales” in this district
increased slightly in 2019, mainly due to increased sales; not only for services but also for
wearable devices, home accessories, etc (Garcia Marrero, 2019). However, the drop in iPhone
sales in the region partially offset the increase in net sales. Apple’s net sales were increased by
2% in 2019 (Garcia Marrero, 2019). Net sales of Apple in the “Asia-Pacific” region increased
from “$17.4 billion” in 2018 to “$17.8 billion” in 2019 (Garcia Marrero, 2019). The global rise
in the dollar also negatively affected Apple’s net sales in other countries and some parts of the
Asia Pacific region.
 Business model 7

Apple’s Business Model Characteristics

Apple Inc. has always maintained its organizational culture as a piece of inspired novelty. Ethnic
features of the corporation focus on upholding novelty, including ingenuity and the idea of
challenging customs and standards (Goriunova, 2011). Most corporations do not look towards
“cultural support and consistency,” two factors that are noted to be quite impactful
ineffectiveness and business management, in particular when it comes to product development
and active and swift improvement. However, there are few characteristics of Apple’s business
model which tells about its approach towards excellence:

Top-notch excellence

Apple’s organizational culture only considers the best in the job market. As defined by
Goriunova (2011), Steve Jobs was notorious for dismissing workers who did not live up to his
prospects and Tim Cook inherited this tradition. These traditions promote first-class excellence
among employees and maintain and foster a company culture that they value, expect, and do.
This cultural feature was institutionalized at the Apple Foundation (Goriunova, 2011). For
example, the company has a program to recognize and reward outstanding employees. Apple
understood at the very beginning that excellence is an important factor for a company’s success,
especially when it comes to product design and development. It can also be used as a major
growth strategy.

Originality

This traditional attribute is associated with unique concepts that advance the business and its
merchandises. “Apple” is already famous for its out-of-the-box ideas and philosophies. Apple
management puts creativity into the knowledge, skills, and capabilities of its employees. Thus,
this distinguishing of “corporate culture” lets the corporation guarantee especially and creativity
within the products involved in the items proposed and expansion procedure (Goriunova, 2011).
This originality can be found in the design and functionality of the iPhone, Mac, and iPad
devices. In this respect, a firm’s ability to meet customer expectations and preferences is often
assisted by organisational culture.
 Business model 8

Innovation

Similar to creativity, innovation is at the core of Apple’s business model. The company is
generally ranked as one of the most innovative in the world. Based on its cultural trait, the
company motivates and trains its employees to innovate in terms of personal performance. This
motivation and a push from the company sometimes contribute to the product development
process. Fostering rapid innovation is the core of Apple’s business. Rapid innovation allows the
company to continue offering profitable and attractive new products to target customers.

Secrecy

Steve Jobs always respected privacy due to the innovative ideas he has. He always feared that
someone could steal his ideas and after a few years, Microsoft copied its GUI. Jobs was very
strict and focused and want Apple to have a secret organizational culture (Goriunova, 2011).
This cultural feature or aspect continues to determine the evolution of the company’s talents. A
company’s strategy usually consists of privacy matters reducing chances of data or information
leaks. This is also a “strategic management” method that allowed “Apple” to maintain a
leadership position among competitors. Throughout the company’s culture, employees are
encouraged and required to keep business information within the company (Goriunova, 2011).
Through company policies, rules, and employment contracts, this cultural identity can be
strengthened. In this case, “Apple’s” organisational culture aids defend the company from the
adverse influence of company spies and worker theft.

“Apple’s focus”

Critics have publicly stopped pinpointing or passing any criticism on iPhones and MacBooks
because they know the industry is at a turning point for smartphones and laptops. The innovation
of smartphones and laptops is gradually becoming more and more difficult (Kim, et al. 2017).
Technical analysts used to think that what could more be innovative in a cell phone or a laptop.
But Apple proves them wrong after every launch.

The biggest turning point for Apple’s business model is, its software or any code is not open
source. It means, what runs on Apple will only run on Apple, except the apps which are
developed for multiple platforms (Gillespie, 2010). Moreover, unlike Android which can be
 Business model 9

found on multiple phones like Pixel, OnePlus, Motorola, Huawei, etc. iOS can only run on
Apple.

Another interesting thing about Apple is, they are not afraid to innovate, nor they are afraid to
adopt any marketing tactic. For instance, when Apple launched the iPhone, they voluntarily
cancelled iPod sales to increase the iPhone’s sales. It was considered as a false move by many
technology analysts as iPod was bringing huge profit numbers (Kim, et al. 2017). But Apple had
a long-term vision.

The company has learned that a single product will not be popular forever. They know that if
they do not come up with something to attract customers, another company will (Kim, et al.
2017). At the moment, they might change the direction and assume smartphones would not be
revolutionary anymore, so they hope to invest a lot of money in future development creating a
market so strong that they can never be replaced.
 Business model 10

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