Aggregator
| Autor | Clara Almeida |
| Páginas | 37-38 |
37
Aggregator
3 Aggregator
Clara Almeida
The term ‘aggregators’ refers to digital platforms that have as an
economic activity the matching of providers with consumers. To
be considered an aggregator, a digital platform must present three
defining characteristics: (1) direct relationship with users; (2) zero
marginal cost for serving users; and (3) demand-driven multi-sided
networks with decreasing acquisition costs (Thompson, 2017). The
term was coined by Ben Thompson (2015) in his ‘Aggregation Theory’,
which explains why aggregators came to dominate the markets in
which they compete in (Abrol, 2017), by controlling the relationship
with consumers on a given value chain.
According to Thompson’s ‘Aggregation Theory’, any consumer
market’s value chain is divided into (1) suppliers, (2) distributors and
(3) user (consumer) experience. Before the digital era, competitors
wished to increase their profits by forming horizontal monopolies at
one stage of the chain, or vertical monopolies by integrating stages.
The formation of a vertical monopoly depended on controlling
distribution. The internet, however, made possible the costless
distribution of digital goods, ending the need of distributors to
maintain exclusive relations with suppliers. Also, the transaction costs
came down to zero, making it possible for distributors to connect
directly with consumers at scale (Thompson, 2015).
Since distributors no longer need to compete for exclusive relationships
with suppliers, the suppliers’ priority becomes reaching consumers.
The success of a business now no longer depends on controlling
the distribution stage, but the user experience. Aggregators are
able to directly access users, therefore, aim to provide the best
user experience to attract more users. The more users accessing
a platform, the more suppliers the platform will gather. With more
suppliers, the user experience is enhanced, which keeps a virtuous
cycle that benefits the aggregator (Thompson, 2015).
This cycle creates strong winner-takes-all effects on the market,
enabling the aggregator to become a horizontal monopoly over
the last stage of the chain. Given the characteristics of aggregators,
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