Many parties are working on (parts of) a new ‘version’ of the Internet, Web3. This would allow manufacturers and consumers to take back (regain) more control over their own creations and over their own personal data. Web3 could break the power of major centrally run tech platforms like Amazon, Google and Facebook. Is this the future of the internet or is it a dreamlike image of a free and open utopian internet that has existed since the dawn of the internet but has been overtaken by reality more than once?
Web3 is a new ‘design’ of the Internet in which data, software, and services are not stored in a few central places, but distributed to many different places spread over a large network of computers. The philosophy behind this is that no single party can exercise such control over that data.
How can Web3 break the power of platforms?
It is the wish of many idealists of Web3 that the decentralized Internet will also break the power of the main platforms. After all, these platforms derive their market power from the integration of countless products and services around a single platform. central market.
Platform providers provide the infrastructure in which various offers and demands come together and also determine the ‘governance’, the rules and conditions under which trading is allowed. Linked to this, they provide support services such as reputation systems, payment services, inventory management, customer profiles, distribution, and customer knowledge. And in exchange for all this, users of the platform have to pay a ‘fee’, which can reach up to 30% of the sale price at Apple and Google, for example. Something to which there is growing resistance.
Consumers often also pay with their data, which becomes the property of the platform, also giving platform providers a strategic advantage in the marketplace. Successful platforms know how to use the ‘winner takes all’ principle whereby they gain a strategic, near-monopoly position in market access.
“Web3 can overcome power by breaking down the unified parts of a platform, namely market management (governance) and decouples the market infrastructure, including associated services.”
Market management is done decentrally at the ‘protocol layer’ of Web3 and no longer needs to be provided via a platform as a central node. The verification of (the authenticity and trustworthiness of) the providers and applicants and the follow-up of the transactions (payments) is carried out in the network itself, for example, through central accounting such as those used with chains of blocks.
Each provider and each ecosystem of companies can build their own infrastructure and develop associated services using the protocol layer. When all these services are based on the same agreements, they can work together automatically and seamlessly. Anyone who wants to sell a product or service to a customer no longer has to use the integrated offer of a platform provider, but can choose between different providers.
Therefore, Web3 may trigger more competition among infrastructure and service builders. Businesses and consumers can choose from several different providers, for example, one for search engine or reputation systems, one for planning, and one for logistics and distribution. More competition then leads to lower costs for services, thus cheaper transactions.
And if all the different services use the same agreements, users can more easily switch between different services, for example between TikTok and YouTube, and between Whatsapp and Signal or Twitter and Facebook, something currently made impossible by platform providers. User profiles, personal data and reputations no longer have to be linked to an account with one of the platforms, but are stored elsewhere, decentralized and with more control for the customer or consumer. Thus, Web3 can break the power of large embedded platforms.
So much for the ideal scenario of Web3 proponents who envision an Internet open from the start where everyone around the world can move, express themselves and trade freely, with full transparency, privacy preservation and security. However, the practice so far has turned out to be different. It is no coincidence that the Internet has developed in the way it is today. After all, this method is not so much driven by technology, but by commercial interests (a revenue model for the ‘free’ internet) and the wishes of the government (combating harmful content and disinformation).
Businesses and consumers need the big picture and are looking for anchor points: parties they can trust, parties that provide secure and stable services. Reference is already being made to the proliferation of cryptocurrencies, i.e. protocols that hinder interoperability of services and a quick start of Web3. It is a realistic expectation that there will be a consolidation that will leave some reliable leading key players. But that puts us back in a situation similar to the current platform economy, with only a handful of big players with massive influence.
Furthermore, these players must also have an interest in investing in new and expensive technologies: there must be something to gain for them. The appreciation of a crypto currency (symbolic), could be a significant reward for developers, administrators, and investors in a particular blockchain. However, cryptocurrency price developments are anything but transparent and certainly now that they are fully tradable, they are also subject to erratic price fluctuations. Speculation and rumors may fuel this further. This can seriously undermine the stability and reliability of Web3.
Trusted third parties
Also, there are quite a few drawbacks in blockchain technology (distributed ledger technologies), which is difficult to scale, too slow to settle large volumes of transactions, and also consumes a lot of power. Additionally, it has been shown that blockchains can be manipulated when certain parties gain too large a stake in them.
Given the disadvantages of blockchains, alternatives are also being worked on, such as decentralized databases with shared supervision. Here is a paper for it. trusted third parties (TTP) that issue certificates and verify reliability. Perhaps this could become an important building block for Web3.
Perhaps most interesting of the developments around Web3 is that it could open up a role for independent ‘third parties’ who focus solely on building trust, ensuring fair and transparent transactions, as well as providing platforms and other services. A kind of transnational arbitrators, judges or notaries as neutral intermediaries and issuers of certificates. If these players are empowered and users gain more control over their own data, this could reduce the power of the big platform providers in their many current roles.
Cooperative Platform Economy
A more cooperative platform economy, in which all parts of the ecosystem have a say in governance, could also overcome many of the current drawbacks of the platform economy. Certainly in combination with a separation of duties whereby platform providers do not also provide competing services on their own platform. And, more competition and lower barriers to change could offer businesses and consumers more choice.
New technologies are constantly being developed, bringing with them opportunities and threats. Anyway, in my opinion, it is essential for companies to continually think about the rules of the Internet, the balance of power between players and the position of users. Regardless of what new technology is developed, how players use it remains decisive. That is why it is essential that governments and societies continually reflect on the rules of the Internet, the balance of power between players and the position of users.