What platforms like Amazon, WhatsApp, Spotify and Facebook have taught us over the last few years is that size matters. Once such a business reaches a certain scale, it produces customer benefits that cannot be matched by smaller platforms. This is often described as “network effects”.
These businesses then have almost monopoly power. Their access to huge amounts of data about their customers and their value chain enables them to continuously improve the user experience and/or extract more revenue from those users which, in turn, increases their market penetration and competitive advantage.
To date, we have not seen any platform businesses in energy, but my view is that we will see them soon. All that is needed is two things: a trusted customer-facing platform and a back-office platform that combines the purchasing and trading of energy together with the management of customer demand.
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