[Davos Recap Video] Towards or away from centralization?

January 23, 2019 James Niccolai

 

While digital networks have made it easier than ever for small producers to sell their goods worldwide, the platforms they use are increasingly dominated by large players. So in this age of decentralization are we actually becoming more centralized?

“We need to put the power and value back into the hands of the individual participants and not in large marketplaces,” said Yorke Rhodes III, co-founder of Blockchain @Microsoft.

Technology trends are making that possible, he said, including the rise of open source software and blockchains.

The trend in some markets has been towards greater centralization, said Greg Medcraft, Director of the Directorate for Financial and Enterprise Affairs at the OECD. Research shows that the number of companies operating in certain markets in Northern Europe, for example, has decreased, he said.

But there’s also a growing skepticism of large, centralized players. A big driver of centralization was the lack of trust in smaller players, Medcraft said, and distributed ledger technologies can be a catalyst to fix that. The biggest players will succeed when they provide a way for other businesses to thrive on their platforms, he said.

That’s how many enterprises see their future. IBM gets 60 percent of its revenue from services, noted Mark Foster, SVP at IBM Global Business Services. “Yes we have products, but we’re focused on an open world. The platforms that businesses create need to be open and connecting into an ecosystem of other platforms.”

The rise of digital networks makes it harder to spot collusion, the panelists warned, and we need to be alert to the dangers of algorithmic bias.

“Transparency is critical because the technology has outstripped our ability to monitor it,” said Yorke.

Sylvest sees distributed ledger technologies as a democratizing force. They increase transparency and allow more players to participate in a network, which drives accountability. More players in a market also decrease the risk of disruption if one supplier goes down.

“Decentralization is attractive from a risk management perspective,” he said.

Asked where his organizations will be in 10 years, Foster said IBM will look completely different. “We’ll be in an ecosystem of partners that we work with in very different ways,” he said.

Microsoft will be “100 percent running on open source software” and “100 percent tokenized,” York said.

As a platform company, Tradeshift will focus on a specific set of services, and its ecosystem will generate 90 percent of the value for its network, Sylvest predicted.

“The the main value you can drive is the value that today is locked within a few large players in these ecosystems,” he said.

 

About the Author

James Niccolai

James Niccolai was a technology reporter and editor for 20 years in San Francisco and Paris. He is now a content director with Bateman Group.

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