The ‘dating app phenomenon’ of digital platforms
by Atty. Amabelle C. Asuncion
August 28, 2018
The proposed traffic scheme banning single-rider vehicles along Edsa during rush hour has generated mixed, mostly satirical, if not downright sarcastic reactions from single drivers and commuters alike. Social-network posts range from complaints about discrimination to a mad rush for a “partner” just so they can pass Edsa.
Amid the controversy, a thought crossed my mind: Could this be a golden opportunity to invent an app to top all dating apps? Talk about a dating/ride-sharing app!
The idea sounds flippant but is a half-serious attempt at offering a solution to the thousands of singles passing Edsa to and from work every day. As I toyed with the idea, two things came to mind.
First, the app should have many registered users. The app is a digital platform—that is, a place where participants virtually meet and match. As a platform, its value rests on having many participants. In this dating/ride-sharing app, the participants are single drivers who need a “date,” as well as single commuters who need a ride along Edsa during rush hours.
For the dating/ride-sharing app to be successful, it should entice as many of these single drivers and commuters to register with the app, within the shortest possible time. This is important because people are more likely to join if there are many registered users, which increases the chances of getting a match.
This is like speed dating, where the number of participants is key to the success of the service. In a sense, all digital platforms are a version of a dating app where the goal is to meet and match as many people as possible.
In competition parlance, this is known as “network effects,” where the value of the platform increases with the number of users or participants. The classic example is the telephone line, where the value of the service increases with every additional subscriber since more people can call each other. When there are competing telephone service providers, a potential user is likely to choose the provider with more subscribers.
As the first of its kind, the dating/ride-sharing app also has the unique opportunity of getting the lion’s share of potential users, until a new app comes along. If most of the Edsa-passing single drivers and commuters have registered with this app, and the chances of getting a match are higher, then the registered users would see little benefit in switching to a competing app. The advantages of network effects are often available to the first mover, which can take on a “winner-take-all” position. Even if a new app comes along, users will not immediately bail out, if only because the new kid in town has fewer users, if any.
The second thing that came to mind about this dating/ride-sharing app is that it should consider the relevant dating preferences to ensure there are sufficient options for any registered user. However, this is tricky.
Assume for a moment that the registered users are heterosexual males and females. Apart from the natural imbalance in the population, males and females may also have different appetites for dating apps. If males are less likely to join such apps, it may be necessary to incentivize them to register. With too few males, females may no longer find it worth their while to register with the app.
To keep the females, the app must keep the males. At certain points, the numbers may shift, in which case the app may have to tweak incentives to maintain an appropriate ratio. So, it is not enough to have many registered users. There must also be enough participants from both sides of the platform. This is true for other platforms. Ride-hailing apps like Grab and Uber require sufficient riders and drivers, while AirBnB must have an ample number of hosts and guests.
As I pondered on these issues, it is very tempting to be selfish and aim for capturing all the Edsa-passing singles in the dating/ride-sharing app and database. The appeal of cordoning them off against competitor apps is simply irresistible. The impulse to drive away any competition is so strong that it almost feels justified given the cost of innovation. The desire to be the only dating/ride-sharing app for Edsa-passing singles cannot be easily ignored.
These explain why digital platforms must be guarded closely. While they represent innovation that brings benefits once thought inconceivable, these can also create monopolies that harm consumers, especially involving products that are imbued with public interest. While rapid innovation is encouraged, the market must be kept open for competition, and winner-take-all situations must be avoided. As the dating app thrives on network effects, the digital economy must live by a brand of network effects where competition is present to inspire more innovation, which, in turn, spurs competition.
Before her appointment to the Philippine Competition Commission, Commissioner Asuncion was engaged in corporate and commercial practice and served as chief legal counsel of a top company and a corporate partner of a law firm. She was also previously involved in legislative, law and policy reform, advocacy and adjudication work. Commissioner Asuncion has a master of laws degree (with distinction) in international legal studies from Georgetown University Law Center in Washington, D.C., and is admitted to the New York bar.
(Originally published on Business Mirror’s Competition Matters column on August 28, 2018 here.)